Medicare Costs and Plan Changes Expected in 2027

Medicare beneficiaries may see important changes to prescription drug costs and Medicare Advantage benefits in 2027. Recent federal data and industry reports indicate that prescription drug spending continues to increase, while insurers are preparing adjustments to some Medicare Advantage plans. These developments could affect premiums, copayments, deductibles, drug coverage and other benefits available to beneficiaries.

Understanding these potential changes can help Medicare enrollees prepare for the next enrollment period and review whether their current coverage continues to meet their healthcare and financial needs.

Prescription Drug Costs Could Increase

Prescription drug spending has been rising in recent years, with changes to Medicare’s prescription drug program contributing to shifts in how costs are distributed among beneficiaries, insurers, drug manufacturers and the federal government.

The Inflation Reduction Act introduced an annual out-of-pocket limit for Medicare Part D prescription drug expenses. The limit was set at $2,000 in 2025 and increased to $2,100 in 2026, with future adjustments tied to an indexing formula.

The cap has reduced the amount beneficiaries are required to pay once they reach the annual limit. However, increased medication use and higher spending beyond the out-of-pocket threshold can shift more costs to insurers, manufacturers and Medicare.

Cancer and diabetes medications have accounted for substantial portions of prescription drug spending, while spending on GLP-1 medications has also increased. As overall drug costs continue to change, beneficiaries may experience adjustments to premiums, deductibles and copayments.

Part D Premium Changes May Affect Beneficiaries

Changes to federal support mechanisms could also influence Medicare Part D costs. The Part D Premium Stabilization Demonstration has helped limit premium increases for participating plans, but changes to the program could result in beneficiaries facing higher premiums in the future.

Additional changes are expected after 2029, when the current limit on annual increases in the Part D base premium is scheduled to expire. Without further policy changes, beneficiaries could eventually face higher premiums and other cost-sharing requirements.

Some plans may also respond to increased expenses by modifying their formularies or changing coverage for certain medications. This makes it particularly important for beneficiaries to review their plan’s drug coverage during each enrollment period.

Medicare Advantage Plans Could See Benefit Reductions

Medicare Advantage plans are also expected to undergo changes in 2027. Insurers have already adjusted their offerings in recent years by leaving certain markets, reducing the number of available plans and modifying supplemental benefits.

Early information from insurance brokers suggests that some major insurers could make additional benefit reductions for 2027. Potential changes include lower dental coverage, higher specialist copayments and adjustments to prescription drug benefits.

Some Medicare Advantage plans also provide benefits that help cover part or all of a member’s Medicare Part B premium. Those benefits could be reduced or eliminated by certain insurers as they respond to increasing healthcare costs.

Insurers have cited rising medical expenses and increased use of healthcare services as factors behind proposed changes. Some plans may also limit enrollment in certain circumstances, making it important for beneficiaries to pay attention to plan availability and enrollment deadlines.

Medicare Advantage Fraud Remains a Concern

Fraud involving durable medical equipment and other healthcare supplies continues to present challenges for Medicare Advantage programs.

A federal review found that some Medicare Advantage organizations could strengthen their safeguards against improper payments involving equipment and supplies. Examples of potentially problematic claims include equipment billed for beneficiaries who had died or for individuals who had not requested the products.

Durable medical equipment can include items such as wheelchairs, prosthetics and orthotic devices. One issue identified in the review is that certain suppliers billing Medicare Advantage organizations may not be subject to the same Medicare enrollment and screening requirements that apply when suppliers bill traditional Medicare directly.

Stronger supplier screening, monitoring and other safeguards could help reduce improper payments and protect Medicare resources.

As healthcare systems increasingly adopt technology to improve patient services and administrative processes, understanding the role of AI in healthcare can provide additional context. Learn more about generative AI in healthcare and patient care  and its potential applications across the healthcare industry.

What Medicare Beneficiaries Can Do

With several potential changes approaching, Medicare beneficiaries should review their coverage rather than automatically renewing the same plan each year. Comparing premiums, deductibles, copayments, prescription coverage, provider networks and supplemental benefits can help identify changes that may affect annual healthcare expenses.

Beneficiaries who take several prescription medications should pay particular attention to whether their medications remain covered and what they will pay under their plan’s updated drug benefits.

Reviewing plan information during the appropriate Medicare enrollment period can also provide an opportunity to consider alternatives if current coverage becomes more expensive or no longer provides the benefits a beneficiary needs.

Conclusion

Medicare is entering a period of significant cost and coverage adjustments, with prescription drug spending, Part D costs and Medicare Advantage benefits all subject to change. Some beneficiaries may see higher premiums or cost-sharing requirements, while others may experience reductions in supplemental benefits.

Keeping track of official Medicare information and carefully reviewing plan details before making coverage decisions can help beneficiaries better understand how 2027 changes may affect their healthcare expenses.

FAQs