Medicare Part D Subsidies Are NOT Going Away

Wow, there is SO much blatantly wrong information circling right now regarding the "Trump cut your Medicare Part D" articles, I want to take a minute to set the record straight. Also, before I get started, this is NOT a political post in any way, shape, or form; its just the facts!

President Trump is NOT ending Medicare Part D drug subsidies.

Let me start with, President Trump is NOT ending Medicare Part D drug subsidies. Medicare Part D is still HIGHLY subsidized. In reality, the subsidies are significantly higher today than they have been over the life of the Medicare Part D program.

The subsidies that are ending were additional TEMPORARY payments that were put in place to reduce the impact on cost for Medicare recipients due to the changes of the Inflation Reduction Act (IRA). The IRA eliminated the Part D coverage gap, commonly referred to as the donut hole, and capped a Medicare recipients' annual out-of-pocket cost to $2,000 in 2025. These changes also moved more financial responsibility from the Medicare program to the insurance companies. The IRA also allowed Medicare to start negotiating prices on select medications to REDUCE the overall cost to the program.

Due to the UPFRONT additional cost of these reforms, CMS and the Biden administration implemented a temporary demonstration program to help stabilize premiums while the IRA was being implemented. The program was always supposed to end. As part of the IRA, Congress passed a subsidy program allotting $50 per month per member on a stand-alone part D plan for 3 years. However, in year 1 (2025) just over $100 was used per month per member. In year 2 (2026) the balance of the allowed subsidy money was paid out to the insurance companies. Claims that money has been pulled away from seniors is just flat out false. Congress would need to pass and allow an extension of these expired funds to keep this subsidy going. The IRA was very expensive and upended the entirety of the Medicare system. This was a temporary Band-Aid that lessened some of the cost and that Band-Aid has just expired.

So what does this ACTUALLY mean?

Stand alone Part D plans will most likely see premium increases this fall. However, your personal plan may or may not. We will not know for sure until the end of September when the Annual Notice of Changes are released and you can check how your plan compares to other plans as of October 1st. This was always going to happen when the subsidies expired and they were ALWAYS supposed to expire.

This also ONLY effects stand alone Part D plans — this does not affect Medicare Advantage's built in drug plans. If you have a Medicare Advantage plan, the removal of this temporary subsidy does not affect your benefits at all!

It also does not affect the Medicare Extra Help or LIS program. If you have extra help from your state, this coverage was not affected in anyway shape or form to you as the member. Levels and payments for the extra help program are NOT affected.

The Bottom Line

The reality is the headlines right now are being designed to get clicks, create panic, or drive you to be upset with certain portions of our government. The most important item I can stress is review your coverage when you get your notice of change this fall. Talk to your agent or broker and make sure your plan still works for you as we go into 2027.