Medicare Stand-Alone Part D: Uncertain Future & What It Means
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# Medicare Part D Premiums: What the Future Holds for Prescription drug Coverage
Medicare Advantage Prescription Drug (MA-PD) plans often boast lower premiums than standalone Prescription Drug Plans (PDPs),a trend expected to continue in 2026. This disparity is partly due to MA-PD sponsors leveraging rebates to subsidize their Part D premiums,leading to a situation where most MA-PD enrollees pay no premium for their prescription drug coverage.However, the future of affordable Part D coverage, particularly for beneficiaries in traditional Medicare and rural areas, hinges on a crucial decision regarding the Part D premium stabilization demonstration.
## The Part D Premium Stabilization Demonstration: A Legal Review
The legality of the Part D premium stabilization demonstration has been a subject of debate. In response to a 2024 request from members of the House and Senate GOP, the U.S.Government Accountability Office (GAO) issued a legal decision.This decision affirmed that the demonstration is consistent with the authority granted to the HHS Secretary under Section 402 of the Social Security Act for conducting Medicare payment demonstrations. While the GAO’s assessment may temper criticism, it does not obligate the Trump management to extend the demonstration beyond 2025.
### What Comes Next for Part D premiums?
The Trump administration has yet to provide a definitive signal regarding the continuation of the PDP premium stabilization demonstration for 2026, including its specific parameters.An announcement is anticipated by the end of July. For Medicare beneficiaries, especially those in traditional Medicare and rural areas, the continuation of this demonstration could be vital for maintaining access to relatively affordable Part D coverage through PDPs in 2026.
Plan-level Part D premiums for 2026 will be announced in the fall and are expected to vary across diffrent plans. On average, MA-PDs are projected to have lower monthly premiums than pdps. This aligns with the 2025 landscape, where average monthly premiums were $7 for MA-PDs and $39 for PDPs. The lower average MA-PD premium is considerably influenced by the prevalence of zero-premium plans, as MA-PD sponsors utilize rebates to reduce their Part D premiums.
The premium differential between MA-PDs and PDPs could widen further in 2026 if the Trump administration chooses to scale back or terminate the PDP premium stabilization demonstration. Such a decision could also lead to a reduction in the availability of PDP options, impacting access to Part D drug coverage for beneficiaries enrolled in these plans. If PDPs become scarcer and more expensive, it could accelerate the migration of enrollees from traditional Medicare to Medicare Advantage. Given that the federal government spends more per beneficiary in Medicare Advantage than in traditional Medicare,this shift could result in increased federal spending over time.
This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.