For two years, a quiet federal program has been holding down your Medicare drug premium - about $16 a month, on average. It ends December 31. Your plan’s Annual Notice of Change must reach you by September 30, and this year it is the letter that decides your 2027 budget.
I wrote about this letter last week - how to read the ANOC and the three checks that take ten minutes. This article is the follow-up I promised myself: what actually changes in 2027, and why this year’s letter matters more than any letter you have thrown away before.
The short version: the subsidy that kept premiums quiet is going away, your plan’s real numbers arrive this month, and you have until December 7 to do something about it. Most people will not need to switch plans but everyone needs to check.
The quiet subsidy, explained
Since 2024, the government has been running a program called the Part D Premium Stabilization Demonstration. The name is bureaucratic, but the job was simple: hold drug plan premiums down while the big Medicare drug changes rolled out, so nobody got a shock bill in the middle of it.
It worked. In 2025, premiums were about $26 a month lower than they would have been without it. In 2026, about $16 a month lower - that is roughly $190 a year the program quietly saved the average person with a standalone drug plan. The whole thing cost about $9.8 billion across those two years, which is exactly why it is ending: in July, CMS - the agency that runs Medicare - announced it would stop the program at the end of 2026 and let drug plans price themselves under “traditional market conditions” again.
What does that mean in plain language? Starting January 1, 2027, the $16 cushion is gone. Your premium will be set the old-fashioned way, by your plan, against the real cost of your drugs. The CMS fact sheet from July 28 lays it out, and PBS News answered reader questions about it in plain language.
The good news inside that announcement: CMS expects most people to see less than $10 more a month. Some will see $10 to $20. A few will see more. The exact number for you is decided by your plan, and your plan has to tell you in writing. That is what the September letter is for.
What actually changes in 2027
Three numbers moved this year. None of them are catastrophes. All of them are worth knowing before the letter arrives, so it does not surprise you.
The premium. The cushion is gone, as above. One number you may see quoted - $41.33 - is CMS’s “base beneficiary premium” for 2027, the benchmark the agency calculates each year. It is up from $38.99, and it is not your bill. It is just the yardstick. Your bill is the number on your plan’s letter, and that number is the one that matters.
The deductible and the cap. If you have drug coverage, two cost numbers shift. The Part D deductible goes from $615 to about $700 - the amount you pay before coverage kicks in. And the yearly out-of-pocket cap - the most you can pay for covered drugs all year before your coverage pays everything - goes from $2,100 to about $2,400. The cap going up sounds like bad news, and it is a real increase. But it is worth remembering what the cap is for: once you hit it, your covered drugs cost nothing for the rest of the year. For anyone on an expensive drug, that number is a friend.
The good news, for once. On January 1, 2027, Medicare’s second round of negotiated drug prices takes effect - 15 drugs get lower prices, and the list includes the big one everyone has heard of: Ozempic, along with Wegovy and Rybelsus, plus drugs for cancer, asthma, COPD, and diabetes. If you take one of the 15, your plan’s cost for that drug drops, and your share usually drops with it. The letter’s drug list will show it. Look for your prescriptions by name.
The letter that cannot be skimmed
By law, your plan’s Annual Notice of Change has to be in your mailbox by September 30. This year, do not skim it. Here is why.
The letter is where your plan confesses the real numbers: the new premium, the new deductible, the drugs that moved tiers or fell off the list, the doctors who left the network. Last year, most of those changes were small enough to shrug at. This year, the premium line is the first one in years that might actually move - because the cushion is gone.
And for a specific group of people, the letter is bigger news than a price change. Humana - one of the largest Medicare Advantage insurers - is ending some of its plans in 2027, and roughly 600,000 members are getting a letter this September saying their plan will not exist next year. If that letter is yours, the first thing to know is: you are not stuck. You are not losing coverage. When a plan ends, you get special rights - including a window to buy a Medigap policy without answering medical questions, which is normally the hardest thing in Medicare to get. The window runs from 60 days before your coverage ends to 63 days after. Put that letter somewhere safe, and treat it as a to-do list, not a catastrophe.
One more thing the letter may mention: the income-based surcharge on Part B and Part D premiums - the IRMAA. For 2027, it is based on your 2025 income. If your income dropped in 2025 - you retired, you lost work, a spouse passed - you do not have to just accept the surcharge. There is a form, the SSA-44, and a phone call can lower it. The letter is the reminder; the form is the fix.
The three checks (you have done these before)
Last week I gave you the three checks for the ANOC letter. They are the same checks this year, with one addition. Run them when the letter lands. It takes ten minutes:
- Check one: does my plan still exist? If your letter says your plan is ending - the Humana case - you move to the front of the line for switching. If it does not say that, you stay.
- Check two: are my drugs still on the list, and at what tier? Look for your prescriptions by name, including the 15 negotiated drugs. Moved or gone? That is a reason to shop during open enrollment.
- Check three: what is the actual premium number? Not the $41.33 benchmark. Your number. Read it, write it down, and decide whether it fits your budget.
Most people will run these checks and find nothing alarming - a few dollars more a month, the same drugs, the same doctor. That is the likely outcome. You do not need to switch plans because the news says premiums are rising. You need to check your own letter, because the news is about averages and your letter is about you.
Do not get pushed
I hate to keep repeating myself, but open enrollment season brings it every year: the phone calls. Plans call, “agents” call, people claiming to be from Medicare call. The rules from the gold bar article and the rest of the scam series apply here exactly: Medicare never calls you, no legitimate plan needs your Medicare number over the phone, and nothing about open enrollment is urgent enough to decide on a call.
If a call makes you curious, take the plan name and hang up. Then look it up yourself on the free official Plan Finder - the same tool the counselors use - or call your state’s free SHIP counselors, who will walk you through it with no sales pitch. The person who decides from the Plan Finder and the person who decides from a phone call get the same coverage. Only one of them got to see every option.
What to do now
Nothing is due today - the letter has not landed for most people. But three things are worth doing now, while the calendar is on your side:
- Put a reminder in your calendar for mid-September: “Medicare letter should be here.” The official plan-by-plan numbers come out mid-to-late September, and your letter must arrive by September 30.
- Tell the person you trust that the letter is coming. Same advice as last week, and it matters more this year: the premium is changing, and someone should know where the letter lives so they can help you decide.
- If your income fell in 2025, note it now. The SSA-44 form exists for exactly this situation, and it is easier to file before the deadline rush.
Then, when the envelope arrives, give it ten minutes. Run the three checks. Write down your number. And decide by December 7 - because open enrollment closes then, and whatever you chose, or did not choose, is what January brings.
The letter is not a bill and not a threat. It is a calendar reminder: you have until December 7 to decide - and deciding is the whole job.
I am not a Medicare counselor or a benefits expert. I am a grandmother who has read these letters for years, and I am telling you: this year, read the one in your mailbox.
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