Some Retirees May See Medicare Drug Costs Fall by 38% in 2027

Prescription drugs made up $467 billion in U.S. healthcare spending in 2024, according to the Centers for Medicaid and Medicare Services (CMS), marking a 7.9% increase from the year before. CMS also projects that prescription drug costs will climb by an average of 5.7% a year between 2025 and 2034. For Medicare beneficiaries hoping to limit what they pay out of pocket, Medicare Part D and Medicare Advantage (MA) plans can help cover prescription drug expenses. But in 2027, premiums for Part D and MA coverage are expected to move in different directions, with some rising and others falling.

CMS estimates that about 34 million people will be enrolled in MA plans in 2027. It says the average weighted premium for MA plans should decline by roughly 16%, dropping from $14.37 a month in 2026 to $12.00 in 2027. In some MA plans, monthly prescription drug premiums could fall by as much as 38%, from $11.32 to $7 after rebates are applied to help offset Part D costs. Even so, retirees may want to review plan choices during open enrollment rather than allowing coverage to renew automatically, so they can find the best mix of benefits and out-of-pocket costs.

Even with some lower prices, many expenses are still set to rise

Medicare premiums can differ based on a number of factors, including a provider's pricing approach, where someone lives, medical history, and the coverage selected. Even with CMS projections showing lower prices for some MA prescription drug plans and cuts on certain widely used medications, standard Part D premiums are expected to increase. A June 2026 estimate from KFF, a nonprofit health policy group, projects that average Part D premiums could rise to as much as $51 in 2027 from $34 in 2026 if current enrollees keep the same plans. More than 4 million low-income beneficiaries now in zero-premium plans are also expected to lose those plans.

Other prescription drug expenses could also become more costly. The maximum Part D deductible in 2027 will be $700, up from $615 in 2026. KFF further estimates that average deductibles, which were $540 for Part D enrollees and $360 for MA enrollees in 2026, will climb to $643 and $489, respectively. In addition, many enrollees will still face coinsurance of 15% to 35%, depending on the plan and the prescription, while the maximum annual out-of-pocket prescription drug limit is set to rise from $2,100 in 2026 to $2,400 in 2027.