Trump to end Medicare Part D subsidy in 2026

The Trump administration plans to terminate a subsidy program that helped keep premiums down for Medicare Part D prescription drug plans. The Centers for Medicare & Medicaid Services has stated that the program will end at the conclusion of contract year 2026, a year earlier than originally scheduled. The subsidy was introduced during the Biden administration and has been used to control premiums for older adults enrolled in Medicare drug coverage.

Under the program, insurers received billions of dollars to support Medicare Part D offerings. CMS materials describe the decision as a non-renewal of the subsidy beyond 2026 rather than an immediate cut. The policy change focuses specifically on standalone Medicare Part D prescription drug plans, a key source of coverage for outpatient prescription medicines for seniors.

In 2026, insurers are receiving an estimated $3.6 billion in subsidy support under this program. These funds have been directed to companies that offer Medicare Part D plans, with the intent of helping to hold down monthly premiums for enrollees. The subsidy has been one of several tools used to manage drug plan costs within Medicare.

Nearly 25 million people were enrolled in standalone Medicare Part D prescription drug plans in 2026. This large enrollee base underscores the broad reach of any change to premium support mechanisms. With the subsidy ending after contract year 2026, the financial structure underpinning many of these plans will shift.

An administration official has said that premium effects will vary across Medicare Part D beneficiaries after the subsidy expires. About 25% of beneficiaries are expected to see their premiums remain unchanged or even decline next year. Roughly 30% are projected to face monthly increases of less than $10.

These figures indicate that while some enrollees may avoid higher costs, a significant portion could see noticeable, if relatively modest, premium increases. The exact impact will depend on how individual insurers adjust their plan pricing once the subsidy is no longer in place. Beneficiaries will see the results of these changes reflected in future plan offerings and premium notices.

The current decision sets an end date for the subsidy at the close of contract year 2026. Until that point, the existing support structure for Medicare Part D premiums remains in place. After 2026, the program will not be renewed, removing a temporary source of federal funding for insurers.

This timeline gives insurers and beneficiaries a defined window to prepare for the transition away from the subsidy. Plan sponsors will have to price coverage without this additional support, and enrollees will need to review their options in light of any premium adjustments that follow.