Medicare Part D premiums will increase next year, the Centers for Medicare & Medicaid Services (CMS) announced as the agency adjusts a Biden-era program.
The base premium will be $38.99, up from $36.78 last year. The national average monthly bid amount, used by the government to calculate subsidies to plans, will increase from $179.45 to $239.27.
In a news release Tuesday, the CMS said it took “unprecedented action” against insurers engaging in large premium increases. The feds negotiated bid terms and denied certain bids, the agency said.
“Following these negotiations, CMS approved some revised bids and, for the first time, rejected standalone [Part D premium] bids that failed to address concerns regarding significant year-over-year premium increases and that were also market outliers compared to similar plans in the same region,” the press release reads.
Premiums were capped from increasing more than 6% due to a provision in the Inflation Reduction Act (IRA) that will be in effect through 2029.
Last year, the Biden administration created a voluntary demonstration program to minimize plan price variation for standalone prescription drug plans. The program sent funds to insurers to minimize premium increases.
Among other changes, the premium stabilization program reduced the base premium by $15 for all prescription drug plans.
Republicans slammed the program, saying it was only implemented because of flaws inherent within the IRA. The CMS later said premiums in Medicare Advantage (MA) would be $17, a decrease year over year, and that the stabilization program would cost $5 billion. Federal payments to Part D plans totaled $6.2 billion, an official told The Wall Street Journal.
The Trump administration is choosing to continue the stabilization program but is decreasing the base premium from $15 to $10. Also changing is the increase limit on a plan’s Part D premium (from $35 to $50) and removing the ability to change risk corridors.
“By reducing the amount of premium stabilization from the government in 2026, we are facilitating the program’s return to operating under regular market conditions,” the CMS said.
Stabilization program participants that wish to remain in the the program must notify the feds by Aug. 4. Final average MA and Part D premiums will be released in September.