A rare pricing shift is coming for Medicare beneficiaries in 2027, but taking advantage of potential savings will depend on the coverage decisions they make before the December 7, 2026, enrollment deadline.
Medicare Advantage premiums are expected to fall next year, while Medicare Part B premiums are projected to rise more modestly than some retirees may have feared, according to the Centers for Medicare and Medicaid Services (CMS).
Prescription drug coverage, however, comes with a higher annual out-of-pocket limit and deductible in 2027.
Meanwhile, major insurers are reducing their coverage in some areas, leaving certain counties and limiting provider choices while cutting extra benefits like dental care in some regions.
The result for 2027 is that two neighbors in the same county could pay sharply different amounts starting in January 2027, depending on which plan they end up in after the shuffle.
KFF research published in September 2024 found that nearly 7 in 10 Medicare beneficiaries had not compared their coverage options during open enrollment for 2022. The finding highlights how many beneficiaries historically remain with existing coverage without evaluating alternatives.
Also read: Medicare Open Enrollment 2027: Don’t Let These 5 Mistakes Cost You
CMS projects a 16.5% drop in Medicare Advantage premiums for 2027
Average monthly Medicare Advantage premiums are projected to fall 16.5% from $14.37 in 2026 to $12 in 2027, CMS announced. The agency also projects that prescription drug premiums bundled into Medicare Advantage plans will fall from $11.32 to $7, a 38% decline after federal rebates.
Standalone prescription drug plan premiums move in the opposite direction, climbing from $35.09 in 2026 to about $36 in 2027. These figures show why lower Medicare Advantage premiums do not necessarily translate into lower overall healthcare spending for every beneficiary.
Enrollment in Medicare Advantage is expected to reach 34 million in 2027, representing about 47.4% of all Medicare beneficiaries nationwide. Access remains broad, with more than 99% of enrollees having at least one plan option and 97% having 10 or more.
CMS also estimates that roughly 8 in 10 Medicare Advantage enrollees will keep their current plan at the same or a lower premium. That assurance does not apply to every county, since some insurers have narrowed their service areas or restructured their benefits for 2027.
Drug caps, physician premiums, and state-level gaps widen 2027’s cost picture
The maximum out-of-pocket cost that Medicare Part D enrollees pay for covered prescription drugs rises from $2,100 in 2026 to $2,400 in 2027.
The standard annual deductible also climbs from $615 to $700, with 25% coinsurance applied until spending reaches the new cap, according to Medicare’s Contract Year 2027 rate announcement.
The Part D Premium Stabilization Demonstration, a temporary subsidy program CMS launched in July 2024 to offset premium increases driven by the Inflation Reduction Act’s benefit redesign, ends after 2026, removing the buffer that kept standalone Part D costs lower in recent enrollment cycles, CMS confirmed.
More Medicare/Medicaid:
- 20 million Medicare beneficiaries may get a one-time $90 payment
- Retirees may be ignoring a Medicare blind spot before 2027
- Medicare shoppers face a hidden Al problem this open enrollment
The standard Medicare Part B premium is projected to rise from $202.90 to $209.50 per month in 2027, an increase of $6.60. AARP’s analysis of the Medicare Trustees Report confirms the figure, with the agency expecting the Part B deductible to rise from $283 to $292.
Average Medicare Advantage premiums also mask steep state-level variation that national headlines rarely capture during the fall enrollment push.
Wyoming leads the nation at $69.23 per month, while Mississippi’s figure drops to $4.08, according to an analysis of CMS data by Becker’s Payer Issues.
Medicare’s 2027 cost changes include higher prescription drug caps, rising physician premiums, and sharp state-level differences in Medicare Advantage costs.
Open enrollment becomes the annual chance to lock in lower premiums
Medicare’s annual open enrollment period runs from October 15 through December 7, 2026, with all plan changes taking effect on January 1, 2027, CMS showed. The window gives beneficiaries roughly 8 weeks to join, drop, or switch Medicare Advantage and prescription drug plans for next year.
Juliette Cubanski, Vice President and Director of the Program on Medicare Policy at KFF, told the Associated Press that defaulting into last year’s plan risks missing cheaper options.
She described the window as the beneficiary’s main annual chance to catch savings or avoid worse coverage.
<em><strong>An opportunity to evaluate the coverage they have and see if there might be better options for them in terms of accessing the care that they need at possibly a lower cost,</strong></em>
Insurer footprints keep shifting behind the premium headlines, with UnitedHealthcare alone exiting counties that cover 600,000 members in 2026, Reuters reported.
Nearly 3 million Advantage plan members had to replace coverage for 2026 after insurers exited markets, according to a JAMA research reported by Reuters.
Early 2027 figures suggest another 3.2 million individual-plan enrollees face the same scramble this fall, CNN confirmed.
How to secure 2027 Medicare savings before the December 7 deadline
The Medicare Plan Finder on Medicare.gov allows beneficiaries to compare available plans using their prescription medications and preferred pharmacies.
The tool can help identify differences in monthly premiums, deductibles, prescription drug costs, and estimated annual expenses, according to CMS.
Beneficiaries should also review their insurer’s Annual Notice of Change, which outlines adjustments to premiums, copayments, covered services, prescription drug formularies, and provider networks taking effect in January.
Nancy LeaMond, AARP’s Executive Vice President and Chief Advocacy Officer, urged beneficiaries to shop around and compare their coverage options as healthcare costs and Medicare benefits change for 2027, the Associated Press reported.
KFF recommends that beneficiaries confirm their current doctors remain in-network and compare total annual costs, including deductibles and coinsurance, to catch the changes that national premium averages do not reflect.
For beneficiaries whose plans are being discontinued, reviewing replacement options before the December 7 deadline is particularly important.
Ultimately, the biggest Medicare savings in 2027 may not come from simply choosing the plan with the lowest advertised premium. Comparing prescription drug coverage, provider access, supplemental benefits, and expected out-of-pocket expenses could make a much greater difference to a retiree’s annual healthcare budget.
Related: Retirees may be ignoring a Medicare blind spot before 2027
