If you buy a stand-alone Medicare drug plan, two things are about to happen to you at once. The most you can be charged before coverage kicks in is going up. And a federal subsidy that’s been holding down your premium for two years is disappearing.
Neither one made the evening news. Both will show up on your bill in January.
I’ve been a CPA since 1981, and I’ve learned that the biggest money changes are usually the ones announced in a press release nobody reads. This is one of those.
Let me walk you through what’s changing, who’s going to feel it and what you can do about it before open enrollment.
What’s changing on Jan. 1
Start with the deductible. In 2026, no Medicare drug plan can charge you more than $615 before it starts paying its share. In 2027, that ceiling rises to $700, according to Kiplinger’s review of the federal benefit parameters. That’s an $85 jump, or about 14%.
The annual cap on your out-of-pocket drug spending moves too, from $2,100 to $2,400. That cap is a real protection — once you hit it, you pay nothing more for covered drugs the rest of the year. But it’s now $400 higher than when it debuted in 2025.
Then there’s the premium. The federal government sets a benchmark called the base beneficiary premium each year. For 2027, Medicare has set it at $41.33, up about 6% from this year.
Your plan’s actual premium will differ from that benchmark, sometimes by a lot. And here’s where the second shoe drops.
The subsidy you never knew you had
When Congress overhauled the drug benefit a few years ago, it shifted a lot of cost from taxpayers and drugmakers onto the insurance companies. Insurers responded the way insurers do: They threatened to raise premiums through the roof.
So in 2024, Medicare created a temporary program to keep stand-alone drug plan premiums from exploding. In 2025, it paid plans $15 a month per enrollee and capped any single plan’s premium increase at $35. For 2026, the payment dropped to $10 and the cap loosened to $50.
According to the nonpartisan health research group KFF, that program lowered the average stand-alone plan premium by about $26 a month in 2025 and $16 a month in 2026. It cost taxpayers roughly $9.8 billion over the two years.
Now it’s over. Medicare’s official reasoning is that insurers have had enough time to figure out how to price the new benefit. The plain-English version: The training wheels are off, and whatever your insurer decides to charge, the government isn’t going to soften it anymore.
Who’s going to feel it
Roughly 24.9 million people are in stand-alone drug plans, according to KFF. That’s mostly people on traditional Medicare who buy drug coverage separately, and it skews rural: about 6 in 10 beneficiaries in the most rural parts of the country use these plans.
Those folks are already paying more. KFF’s 2026 data puts the average stand-alone plan premium at $36 a month, versus $8 for drug coverage bundled into a Medicare Advantage plan. And 78% of stand-alone enrollees are in plans that charge the full deductible.
They also have fewer places to run. The number of stand-alone plans nationwide has collapsed from 709 in 2024 to 464 in 2025 to just 360 this year, KFF reports. Some big names have left the market entirely.
Nobody knows yet exactly how much premiums will rise, because insurers haven’t published their 2027 prices. Medicare says it will release final figures this month. KFF’s read is that some enrollees could face bigger increases than they’ve seen in recent years. That’s careful language. I’d translate it as: Brace yourself.
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The nudge toward Medicare Advantage
Here’s the part that bothers me most. Every squeeze on stand-alone drug plans makes Medicare Advantage look cheaper by comparison, and that’s not an accident of the market.
Medicare Advantage insurers get billions in federal rebates they can use to buy down their drug premiums. KFF calculated that they used about $13 billion that way in 2026 — roughly 3.5 times the subsidy stand-alone plans got.
The result: 79% of Medicare Advantage drug enrollees pay no drug premium at all, compared with 28% of stand-alone enrollees.
So when your stand-alone premium jumps, a $0-premium Advantage plan will be waiting with open arms. Just remember what comes with it: a network. The average Advantage enrollee can see about 48% of the doctors available to someone on traditional Medicare, along with prior-authorization rules that traditional Medicare doesn’t have.
That may be a fine trade for you. It should be a decision, not a default.
What to do before Dec. 7
Open enrollment runs Oct. 15 through Dec. 7, and anything you change takes effect Jan. 1. Here’s how I’d spend the next few weeks.
Read your Annual Notice of Change. Your plan has to mail it by Sept. 30, and it will spell out your 2027 premium, deductible and any drugs being dropped or moved to a pricier tier. If you don’t get it, call your plan provider.
Run your prescriptions through the Medicare Plan Finder once 2027 plans load, typically around Oct. 1. Don’t compare premiums alone.
A plan with a $20 higher premium and a $0 deductible can beat a cheap plan that charges you $700 before it pays a dime. The tool does that math for you.
Check whether you qualify for Extra Help. If your income is under about $23,940 as an individual or $32,460 as a couple, with limited savings, this federal program can wipe out your premium and deductible and cap your copays at a few dollars. Plenty of eligible people never apply.
Ask about the Medicare Prescription Payment Plan. Every drug plan now has to offer it. It doesn’t lower your costs, but it spreads your out-of-pocket spending into monthly bills instead of hitting you with the full deductible in January.
And if you’re tempted to just drop drug coverage because it’s getting expensive, don’t. Go without for more than 63 days and Medicare charges you a late-enrollment penalty that follows you for life.
Who to blame
Not yourself. You didn’t design a system where the government caps its own benchmark premium at a 6% increase but leaves the price your insurer actually charges wide open. You didn’t decide to pour $13 billion into one kind of plan and $3.6 billion into the other.
But you’re the one who has to live with it. So use the one tool the system still gives you: the right to walk away. Between Oct. 15 and Dec. 7, every insurer in America has to compete for your business. Make them.
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