The Trump administration announced it will phase out a Biden-era Medicare subsidy program for prescription drug coverage, arguing the initiative primarily benefited insurance companies rather than seniors. The subsidies will expire at the end of this year and will not be renewed for 2027.

The decision means enhanced subsidies tied to Medicare Part D prescription drug plans will end after 2026. Medicare Part D, which is administered through private insurance companies, provides optional prescription drug coverage to help Medicare beneficiaries pay for both brand-name and generic medications. Enrollees can purchase it as a standalone plan alongside Original Medicare or receive it through a Medicare Advantage plan.

The subsidy program was created during the Biden administration as part of broader changes to Medicare’s prescription drug benefit. Those reforms introduced a $2,000 annual ceiling on out-of-pocket prescription drug costs and also authorized Medicare to negotiate prices for certain high-cost medications covered under Part D.

Most participants receiving the subsidies are senior citizens or individuals with disabilities, many of whom are now waiting to learn what their monthly premiums will be once the program ends.

The Centers for Medicare & Medicaid Services (CMS) said updated premium information is expected to be released sometime between mid-September and late September.

According to CMS, the national average monthly bid amount for Medicare Part D plans in 2027 will be $296.05, a figure used to determine the federal government’s direct subsidy payments to participating insurance plans.

The agency also announced that the standard Medicare Part D beneficiary premium for 2027 will be $41.33.

Reuters reported that approximately 25 million Americans are enrolled in standalone Medicare Part D prescription drug plans.

Defending the decision, CMS Administrator Dr. Mehmet Oz wrote Tuesday on X: “We are stabilizing the market so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients, with many even seeing LOWER premiums.”

Oz added, “Every Medicare beneficiary still has access to low-cost plans, and we will continue to lower prescription drug prices for every American patient, from more MFN deals to our policy giving seniors access to GLP-1s for $50 a month.”