KFF: Medicare Part D premiums could rise about 50% next year on average

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Dive Brief:

• Millions of older adults enrolled in standalone Medicare prescription drug plans may face much higher premiums next year unless they switch to a lower-cost option.
• Average monthly Part D premiums are projected to climb 50%, from $34 to $51 in 2027, assuming seniors remain in their current plans, according to a new KFF analysis.
• Premiums vary widely across available plans, ranging from $6 to $204 among national Part D carriers, KFF found. The health policy group said shopping for coverage during Medicare open enrollment, which runs through Dec. 7, is especially important.

Dive Insight:

The steep rise in Part D costs is the latest sign that rising healthcare expenses are squeezing household budgets. Policy changes may also have contributed after the Trump administration ended an early limit on premium increases.

About 25 million seniors receive prescription drug coverage through standalone Medicare Part D plans. KFF found that three-quarters of enrollees who do not qualify for financial assistance — about 10.4 million people — will pay more next year if they stay in the same plan.

That also includes more than 4 million seniors now in plans with no monthly premium, since KFF said there will be no zero-premium prescription drug plans available in 2027.

The least expensive standalone Part D option is Centene’s Wellcare Value Script Rx, with an average premium of $6.50. The most expensive is United’s AARP Medicare Rx Preferred, which carries an average monthly premium of $204.50.

Because prices differ so much, KFF said it is particularly important for seniors to review their choices and consider switching coverage rather than letting a current plan automatically renew.

“With some plans increasing premiums substantially, the stakes are higher this year for people with Medicare stand-alone drug coverage if they sit on the sidelines during open enrollment,” Juliette Cubanski, director of KFF’s Program on Medicare Policy, said in a statement.

KFF’s estimate — that enrollment-weighted premiums will rise by $17 a month on average next year — is far more dramatic than the Trump administration’s outlook. When the Centers for Medicare and Medicaid Services released 2027 Medicare plan data, it said average monthly Part D premiums would rise by less than $1.

Regulators did not explain how that figure was calculated. KFF researchers said the estimate may have accounted for plan switching.

Open enrollment changes usually push weighted premiums lower as new enrollees choose cheaper plans and current members move out of higher-cost ones. Last year, KFF projected an average standalone Part D premium of $44, but the actual figure was $34.

Beyond premium changes, seniors also need to examine other plan details that can affect prescription drug spending over the course of the year.

Most Part D enrollees will have a deductible of several hundred dollars next year, including nearly all people in standalone prescription drug plans and 85% of Medicare Advantage enrollees with drug coverage, KFF found. The standard Part D deductible is rising from $615 to $700.

In addition, most enrollees will face coinsurance rather than copays, meaning they will pay a percentage of a drug’s total cost instead of a fixed amount. That can make out-of-pocket expenses less predictable and potentially higher for brand-name and other expensive medications, KFF said.

Higher standalone Part D premiums could steer more seniors toward Medicare Advantage, the private alternative to traditional Medicare. Most Medicare Advantage plans include prescription drug coverage along with hospital and outpatient benefits, and their premiums are much lower — five times lower, according to KFF. Premiums for drug coverage in those plans are projected to average just $9 a month next year.

Even so, Medicare Advantage can have drawbacks, including narrower provider networks and broad use of prior authorization, which may delay or block care.

Benefits experts routinely advise seniors to compare their options instead of automatically renewing coverage on Jan. 1. That advice has become even more urgent as cost increases, benefit changes and plan departures have disrupted the Medicare market.

More than 4 million Medicare beneficiaries have seen their plans ended and will need new coverage in 2027, including more than 1 million people losing their standalone Part D plan.