Trump Administration Ends Medicare Drug Plan Subsidies A Year Early
On July 29, 2026, Centers for Medicare and Medicaid Services Administrator Mehmet Oz said a temporary subsidy for Medicare Part D plans will end after 2026, a year earlier than planned.[1]
The Inflation Reduction Act capped beneficiaries' annual out-of-pocket drug costs at $2,000 beginning in 2025, a change that shifted more drug costs onto insurers. The Government Accountability Office estimated the temporary subsidies would cost $9.8 billion across 2025 and 2026 and helped reduce average 2026 standalone Part D premiums by about $16. About 23 million people were enrolled in standalone Part D plans in 2025.
Consumer groups and some Democrats warned the early end could raise premiums and out-of-pocket costs for beneficiaries and complicate insurers' budgeting.[1] Policy experts say ending the subsidies early could push some people from standalone Part D plans toward Medicare Advantage.
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📌 Key Facts
- On July 29, 2026, CMS Administrator Mehmet Oz said the Part D subsidy demonstration will end after 2026, a year earlier than previously planned.
- The Inflation Reduction Act capped Medicare beneficiaries’ annual out‑of‑pocket drug costs at $2,000 starting in 2025, shifting more costs onto insurers.
- GAO estimated the temporary subsidies would cost $9.8 billion across 2025 and 2026 and helped reduce average 2026 standalone Part D premiums by about $16.
- Roughly 23 million people were enrolled in standalone Medicare Part D plans in 2025, and experts say ending the subsidies could push some toward Medicare Advantage plans.
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