Medicare open enrollment is officially underway, and beneficiaries are facing several significant changes to their health and prescription drug coverage in 2027.
For many, that means higher Part D cost thresholds and new prices for some of Medicare's most widely used medications.
The annual Medicare open enrollment period began October 15 and runs through December 7. It’s at this time that beneficiaries can compare their current coverage with other options, including original Medicare, privately run Medicare Advantage plans and prescription drug plans.
Coverage choices made during the period will take effect on January 1.
In 2027, the Medicare Part D out-of-pocket threshold is rising to $2,400, the federal government is ending a temporary program intended to stabilize standalone Part D premiums, and negotiated prices for 15 additional high-cost drugs will take effect.
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Why It Matters
Medicare plans can change their premiums, provider networks and cost-sharing requirements from one year to the next, so sticking with the same policy does not necessarily mean receiving identical coverage.
In 2027, some beneficiaries will face higher prescription drug cost thresholds while some Medicare Advantage insurers are fully withdrawing plans from particular areas and scaling back benefits.
At the same time, Social Security recipients will receive a 3.6 percent cost-of-living adjustment in 2027, adding an estimated $75 to the average retired worker's monthly benefit. The rising healthcare costs could fully absorb that increase for many.
Medicare Part D Costs Will Increase in 2027
The first major change affects prescription drug spending.
Medicare's annual Part D out-of-pocket threshold will rise from $2,100 in 2026 to $2,400 in 2027, meaning beneficiaries with high prescription costs could have to spend an additional $300 before reaching the program's annual limit.
The standard Part D deductible will increase from $615 to $700.
“A 14 percent increase in Medicare Part D's out-of-pocket cap and another 14 percent increase in the standard deductible will wipe away some of the purchasing power seniors receive from their 3.6 percent Social Security COLA,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
Medicare Part D Premium Program Is Ending
Another change is coming to what some beneficiaries pay in monthly Part D premiums.
The Centers for Medicare & Medicaid Services (CMS) is ending the Part D Premium Stabilization Demonstration at the end of the year.
CMS has said Part D insurers now have enough experience operating under the redesigned benefit to support their assumptions when setting bids. Therefore, they will be discontinuing the demonstration and returning to "traditional market conditions" in 2027.
“As temporary Medicare Part D subsidies expire, some seniors may see their premiums tick up a bit,” Thompson said. “The current administration is attempting to offset some healthcare expenses through targeted relief, but these measures do little to address the underlying costs.”
However, every beneficiary's premium will not suddenly jump by the same amount.
Premiums are plan-specific. CMS said the national base beneficiary premium will be $41.33 in 2027, but that number is a starting point used to calculate plan-specific basic premiums rather than the amount every beneficiary will pay.
The Inflation Reduction Act's separate premium stabilization provision also remains in effect, capping annual increases in the national base beneficiary premium at 6 percent from 2024 through 2029.
15 More Drugs Will Get Medicare-Negotiated Prices
The third major change could lower prescription costs for beneficiaries taking certain medications.
Negotiated prices will take effect in 2027 for 15 additional drugs selected under Medicare's Drug Price Negotiation Program. Among them are the diabetes and weight management medications Ozempic, Rybelsus and Wegovy.
The other affected medications include Trelegy, Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo and Austedo XR, Breo Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet and Janumet XR, and Otezla.
“Many of the Biden-era initiatives, such as Medicare-negotiated drug pricing, have allowed medications like Wegovy and Ozempic to be included in future negotiated pricing, potentially reducing costs for beneficiaries,” Thompson said.
CMS has predicted the negotiated prices will reduce out-of-pocket prescription costs for Medicare beneficiaries by approximately $685 million during 2027.
Medicare Advantage Plans Are Changing, Too
Beyond those three nationwide changes, some Medicare Advantage beneficiaries could face another issue: their existing plan, provider network or benefits may look dramatically different next year.
Some Medicare Advantage insurers are pulling plans from particular geographical areas, while other plans are scaling back supplemental benefits like dental coverage or potentially increasing cost-sharing.
“While negotiated prices on major medications could provide significant savings for some beneficiaries, others may face higher premiums, reduced dental and vision benefits, or the loss of their existing Medicare Advantage plans altogether, making it essential that seniors review their coverage carefully before the enrollment deadline,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.
What Seniors Should Check During Medicare Open Enrollment
For beneficiaries comparing plans before December 7, monthly premiums are only one component to consider.
“The primary concern is that even with a Social Security COLA in 2027, rising healthcare expenses could take up much of that increase, leaving many retirees with little additional financial support,” Beene said
Generally, for 2027, beneficiaries should look at monthly premiums and whether their current plan's premium is changing.
Drug deductibles and copays could also play a major role in affordability, especially given the higher Part D thresholds.
Their supplemental benefits, including dental or other perks, could be reduced or eliminated altogether.
What Happens Next
Medicare open enrollment runs through December 7, and the new coverage generally begins on January 1.
“Ultimately, all of these tactics place the impetus back on the consumer,” Thompson said. “While seniors may receive a larger Social Security check, much of that increase could be eaten away by healthcare costs, with the financial burden ultimately falling on the very people these programs are supposed to protect.”
Contact Newsweek editors on this story: Jason Lemon and Dave Siminoff.