For the first time since Medicare Part D launched, no stand-alone prescription drug plan will be available at zero monthly premium in 2027 for enrollees who do not receive low-income subsidies. That structural change, combined with the Trump administration’s decision to end the Part D Premium Stabilization Demonstration a year ahead of schedule, is producing the steepest single-year premium disruption in the program’s history, one that will land on clients’ retirees before the December 7, 2026 open enrollment deadline.
The numbers come from KFF’s new analysis, Medicare Part D Premiums and Cost Sharing in 2027, based on Centers for Medicare and Medicaid Services (CMS) Medicare plan landscape and benefits data. If stand-alone prescription drug plan (PDP) enrollees make no changes during open enrollment, the average monthly premium will rise from $34 in 2026 to an estimated $51 in 2027, a 50 percent increase.
KFF projects the actual average will be lower than $51 once switching is accounted for, but the scale of disruption is already visible in the sub-group data. Three-fourths of PDP enrollees without low-income subsidies, about 10.4 million people, will pay a higher monthly premium in 2027 if they stay in their current plan. Of those, 2.4 million will face increases above $50 per month. In 2026, only 38,000 enrollees faced increases that large.
The stabilization demonstration, which ran from 2025 through 2026, paid approximately $9.8 billion in subsidies to PDP sponsors over two years and capped year-over-year premium increases at $35 in 2025 and $50 in 2026. Its early termination removed both the subsidy floor and the cap simultaneously.
The premium contrast between stand-alone PDPs and Medicare Advantage prescription drug plans (MA-PDs) is the sharpest it has been. The estimated average monthly premium for MA-PD drug coverage in 2027 is $7, compared to $51 for PDPs, a drop of 38 percent from $11.32 in 2026, according to CMS projections. The gap exists because MA plan sponsors can use rebate dollars from Medicare payments to buy down or eliminate their Part D premiums, a mechanism not available to PDP sponsors.
According to KFF, MA-PD sponsors allocated more than $600 per enrollee annually in rebates in 2026, over $50 per member per month, with a portion directed specifically to Part D premium reductions and benefit enhancements.
Nearly eight in 10 MA-PD enrollees paid no monthly premium for drug coverage in 2026. That structural advantage, now widened to a $42 monthly gap, gives MA plans a pricing edge that will influence how retirees choose coverage during this enrollment period and, in turn, how employers structure group drug benefits going forward.
Premium increases are not the only pressure point. The standard Part D deductible rises from $615 in 2026 to $700 in 2027. Among PDP enrollees, the weighted average deductible will reach $643, up from $540. For MA-PD enrollees, the average deductible climbs from $360 to $489, a larger proportional increase than for PDPs. Nearly all PDP enrollees (99.8 percent) will face a deductible in 2027, up from 96 percent in 2026.
Cost-sharing structure is also shifting toward coinsurance, which produces less predictable out-of-pocket exposure than fixed copayments. Virtually all PDP enrollees will face median coinsurance of 25 percent for preferred brand drugs and 35 percent for non-preferred drugs in 2027, according to the KFF analysis.
The combination of higher premiums, higher deductibles, and a widening MA-PD price advantage compresses the window for inaction on group PDP and EGWP arrangements, particularly for clients whose retirees are concentrated in stand-alone plans.
Employers sponsoring group PDPs or Employer Group Waiver Plans should review whether those arrangements remain competitive against the individual Medicare market, where the pricing dynamics have shifted materially this year. The creditable coverage threshold for employer-sponsored drug plans, which determines whether a plan meets the actuarial standard required to avoid late enrollment penalties for Medicare-eligible employees, warrants review for 2027 given the richer Part D benefit design now in place. CMS guidance on the updated threshold should be confirmed with an actuary before renewal.
Prescription drug costs are already the fastest-rising component of employer health spending. Hub International’s 2026 Benefits Cost Trends Report projected standalone pharmacy trends at 10 to 12 percent for 2026, driven by specialty drugs and GLP-1 utilization. The Part D changes do not directly affect commercial employer plans, but they reshape the Medicare landscape into which retirees move, and the decisions retirees make during this enrollment period will affect which group benefit structures employers need to maintain.
