Save $1,000: Seniors dodge 2027 drug plan premium hikes

Medicare beneficiaries who purchase stand-alone prescription drug plans will face a 50% increase in average monthly premiums in 2027. A new analysis by the Kaiser Family Foundation projects the average cost will rise from $34 to $51. Enrollees can avoid this jump by selecting cheaper options during the open enrollment period, which ends on December 7.

Robert Travis Scott of Abingdon, Virginia, already acted on this advice. He received a notice in late October stating his AARP-UnitedHealthcare plan would cost $121.90 per month in 2027, up from $39.60 in 2026. Scott compared prices online and found a Humana plan with similar benefits for $19.30 per month. He estimated this change saves him approximately $1,000 for the next year.

Scott said he was stunned by the magnitude of the increase in his current plan. He expressed concern that other seniors might not shop for alternatives. “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,” said Juliette Cubanski. Cubanski is the director of the Program on Medicare Policy at KFF.

President Donald Trump has claimed his administration succeeded in negotiating lower drug prices. Speaking at a campaign rally in Ohio on October 28, he stated, “We have the lowest drug prices anywhere in the world.” He added that the country moved from the highest prices to the lowest through favored nation policies. However, actual costs vary widely depending on specific medicines and individual insurance coverage.

The premium increase affects a distinct segment of Medicare recipients. Nearly 25 million people hold stand-alone prescription drug plans. About 31 million receive drug coverage through Medicare Advantage plans. The KFF analysis found that Medicare Advantage enrollees will see a much smaller rise. Their average monthly drug cost within the overall premium will be $9 in 2027, an increase of less than $2 per month.

Premiums are only one component of rising healthcare costs for seniors. Most enrollees will face an annual deductible for drug coverage in 2027. The average deductible will be $643 for stand-alone plans, up from $540 in 2026. For those in Medicare Advantage plans, the average deductible will be $489, up from $360 in 2026. Most enrollees will also pay coinsurance rather than fixed copayments, leading to less predictable out-of-pocket expenses.

One factor driving the premium hike is the Centers for Medicare & Medicaid Services decision to end a subsidy program early. The program originally ran for three years and paid subsidies to stand-alone plans in 2025 and 2026. CMS Administrator Mehmet Oz described the subsidy as an insurance industry bailout. KFF noted that CMS projected a smaller increase, from $35 to $36, based on September enrollment data. KFF stated that CMS did not explain its calculation methods and may have assumed many people would switch to lower-cost plans.