Federal subsidy for Medicare Part D ends: thousands of Puerto Ricans will pay more for medications in 2027

The Centers for Medicare and Medicaid Services (CMS) confirmed in late July that it will not extend the program that, for two years, has kept Medicare Part D premiums low — the prescription drug coverage that hundreds of thousands of seniors on the island depend on ¹². The practical result: starting in 2027, many beneficiaries with a stand-alone drug plan will see their monthly bill go up, right as the cost of living in Puerto Rico is already squeezing retirees’ wallets.

The program being phased out is called the Part D Premium Stabilization Demonstration, created in response to the changes the Inflation Reduction Act (IRA) brought to drug coverage design. According to independent analysis from KFF (Kaiser Family Foundation), the demonstration cost the federal government $9.8 billion between 2025 and 2026, money used to lower insurers’ base premiums and cap how much costs could rise year over year ³. In 2025, that cap prevented increases of more than $35 a month; in 2026, the cap dropped to $50, but the government still absorbed an average of $16 a month per beneficiary ³. Without that cushion, the projected national base premium for 2027 is $41.33, though the actual amount each person pays depends on their specific plan ².

CMS Administrator Mehmet Oz defended the decision, saying the previous administration sent billions of taxpayer dollars directly to insurance companies and that, in his view, the market has stabilized enough to function without the subsidy ². Reporter Maricarmen Rivera Sánchez of El Nuevo Día noted the move affects thousands of patients in Puerto Rico who rely on this help to afford their medications every month ¹.

Here is a key detail for understanding the real impact on the island: Puerto Rico has one of the highest rates in all of the United States and its territories of people enrolled in Medicare Advantage plans with drug coverage built in (so-called MA-PD plans), which average just $8 a month because the insurer uses part of its federal rebate to subsidize the premium ³. Anyone with one of those plans likely will not feel much of a hit. The problem is for those with Original Medicare plus a stand-alone drug plan (PDP) — nationally, enrollment in these plans grew from 22.8 million in 2024 to nearly 24.9 million this year ³ — a group that includes veterans, people with conditions requiring specific medications, and those who for whatever reason do not qualify for or do not want an Advantage plan.

What this means for you

If you are a Medicare beneficiary in Puerto Rico, the first step is confirming what type of plan you have. If your drug coverage comes bundled inside a Medicare Advantage plan, the hit is likely minimal or nonexistent, since those premiums are already low and insurers have more room to absorb the change. But if you have Original Medicare plus a stand-alone Part D plan, expect your monthly premium to rise once open enrollment arrives later this year, effective January 2027. The Inflation Reduction Act still sets a ceiling: base premium growth cannot exceed 6 percent annually through 2029, so it is not an unlimited increase, but for a retiree on fixed income, every dollar counts.

How to handle it / Checklist

1. Review your Annual Notice of Change (ANOC) letter, which your plan sends in September or October; it will show your new 2027 premium.
2. Compare plans during open enrollment (October 15 to December 7) using the Medicare.gov plan finder or by calling 1-800-MEDICARE.
3. Ask whether you qualify for Social Security’s Extra Help program, which reduces or eliminates the premium and deductible based on income.
4. If you have Original Medicare, evaluate whether a Medicare Advantage plan with built-in drug coverage makes more sense this year, since those plans average lower costs than a stand-alone plan.
5. Call a free counselor through Puerto Rico’s Medicare SHIP counseling program before making any plan change.
6. Keep this year’s medication receipts; they will help you calculate whether switching plans is worth it compared to any difference in pharmacy network.

What’s next

Medicare open enrollment for 2027 begins in October, and that is when each beneficiary will see the exact number they owe. CMS has not yet published plan-by-plan detail for Puerto Rico, but insurers operating on the island must notify new prices before that date. Meanwhile, patient organizations and retiree groups on the island will likely start pushing for some form of continued assistance, as has happened with other federal subsidies that have wound down this year. CoquiList will keep monitoring this story and publish Puerto Rico-specific numbers as soon as CMS releases them.

Sources: ¹ El Nuevo Día — https://www.elnuevodia.com/negocios/economia/notas/fin-a-la-ayuda-federal-para-el-pago-de-medicamentos-en-la-parte-d-de-medicare/ ² Univision Noticias — https://www.univision.com/noticias/estados-unidos/medicare-parte-d-eliminan-subsidio-a-aseguradoras-y-beneficiarios-pagaran-mas-en-2027 ³ KFF (Kaiser Family Foundation) — https://www.kff.org/quick-insights/cmss-decision-to-end-temporary-subsidies-to-medicares-stand-alone-drug-plans-could-mean-larger-premium-increases-for-some-beneficiaries-next-year/