The current state of the Medicare Part D market is a mixed bag, with premiums declining but many payers scaling back options, according to a new analysis from KFF.
The report noted that the Centers for Medicare & Medicaid Services put an emphasis on "stability" in Part D when it announced premium estimates in late September, but KFF found that the total number of stand-alone Part D plans available will decrease in 2026, marking the third straight year of shrinking plan options.
Some payers are trimming down their offerings, per the report. For example, Centene is ending three drug plans offered through WellCare and Health Care Service Corporation is discontinuing one of Cigna's three Part D plans and pulling back from certain regions.
Other insurers, such as Elevance Health, are exiting the stand-alone Part D plan market entirely.
For 2026, beneficiaries in each state will be able to select from between eight and 12 stand-alone Part D plans, in addition to Medicare Advantage prescription drug coverage. Across the 34 Part D plan markets, a total of 360 plans will be made available by 17 parent organizations—a decrease of 22% from 2025.
The report says that there are multiple factors at play for insurers who are thinking of scaling back or eliminating their Part D offerings. For one, significant overhauls to Part D were finalized under the Inflation Reduction Act, which shifts a greater share of the high-drug cost enrollees to the plans, rather than the feds, thereby boosting payers' overall liability in this space.
This is especially a challenge for smaller players in the market who are now taking a hard look at the viability and profitability of their plan offerings, according to the report.
In addition, the report notes that multiple payers that offer both stand-alone prescription drug plans and Medicare Advantage prescription drug plans intend to lean more on the latter, as they tend to be more lucrative.
The overall decrease in premiums is a surprising turn of events, given the decline in tandem with plan options and other policy factors at play, according to the report. For instance, the Trump administration chose to pull back on support for premium subsidies under Part D as part of a demonstration kicked off in the Biden era.
The report said that for all but 10 prescription drug plans offered nationwide in 2025 that will remain available in 2026, enrollees will see their premiums decrease for the upcoming year. Relatively few plans are choosing to increase premiums by $50, the maximum allowed under the demonstration.
Enrollees will be able to choose from as many as six $0 premium Part D plans, depending on their location, per the report.
However, the analysis warns that there may be trade-offs to keep premiums low, and enrollees should scrutinize their plan closely for any changes that may worsen their benefits.
"Even if the monthly premium for a given Part D plan isn’t increasing, or is even decreasing, premiums are only one part of the story when it comes to Part D coverage," according to the report. "The trade-off with a reduction in premiums is that drug coverage may be getting less generous, which could mean fewer drugs covered, higher cost-sharing requirements, or greater utilization management restrictions—or likely some combination of all three."