Retirees may be ignoring a Medicare blind spot before 2027

Medicare’s annual open enrollment begins Oct. 15, 2026, giving more than 70 million Americans a chance to review their coverage for 2027.

But most beneficiaries don’t actively shop around. Nearly 70% stay in the same plan from year to year without comparing alternatives, according to a 2024 analysis by KFF, a nonpartisan health policy research organization.

This year, however, there are several reasons beneficiaries may want to take a closer look.

Three changes are set to reshape Medicare costs in 2027:

• The Part B premium is rising.
• The Part D out-of-pocket cap is increasing.
• A federal subsidy that helped keep drug-plan premiums down for the past two years is expiring, according to a July 28, 2026, memo from the Centers for Medicare and Medicaid Services (CMS).

Premiums, deductibles, and out-of-pocket caps all rise for the 2027 plan year

The 2026 Medicare Trustees Report projects the standard Part B premium at $209.50 per month for 2027, up $6.60 from $202.90 in 2026.

The projected 3.25% increase follows a nearly 10% premium rise between 2025 and 2026. The increase adds $79.20 per year in mandatory costs for every enrolled beneficiary, based on the 2026 Medicare Trustees Report projections.

The Social Security Administration’s (SSA) 2026 cost-of-living adjustment (COLA) added roughly $56 per month for the average retired worker. The 2026 Part B premium increase consumed nearly a third of that raise.

On the prescription drug side, the maximum Part D out-of-pocket cap rises to $2,400 in 2027 from $2,100 this year. The Part D deductible ceiling also climbs to $700 from $615, an $85 increase, according to CMS’s announcement of 2027 Part D payment policies.

An enrollee who hits both the deductible and the annual cap would pay up to $300 more in 2027 for prescription drugs alone.

Formularies, copay tiers, and networks also shift between plan years. Those changes vary by plan and do not appear in national projections.

Fidelity’s data shows pre-retirees underestimate lifetime Medicare costs

Fidelity’s 25th annual Retiree Health Care Cost Estimate put lifetime healthcare spending at $185,500 for a 65-year-old retiring in 2026. That figure marked a 7.5% increase from the prior year.

About 54% of pre-retirees incorrectly believe Medicare covers all their healthcare expenses.

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That misperception means many future enrollees have not budgeted for premiums, copayments, or deductibles that Medicare requires. Retirees have consistently spent more than they expected for over two decades, the firm’s analysis showed.

About 45% of that total goes to premiums for Parts B and D, and another 48% covers copayments, coinsurance, and deductibles, according to Fidelity’s analysis.

The remaining 7% covers out-of-pocket costs for branded, generic, and specialty drugs Part D does not cover.

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The federal drug plan subsidy expires, and stand-alone premiums may follow

A temporary federal subsidy that reduced stand-alone drug plan premiums since 2025 will not extend into 2027. CMS announced in the July 2026 Memo that the Part D Premium Stabilization Demonstration would end after 2026.

The program lowered premiums by an estimated $16 per month per enrollee this year, according to MedPAC. The program cost $9.8 billion over two years, the Government Accountability Office (GAO) reported.

Insurers now have enough experience under the Inflation Reduction Act’s (IRA) benefit redesign to set premiums without federal support, as reported in the memo.

The subsidy’s end will affect roughly 24.9 million Americans on stand-alone Part D plans in 2026, KFF’s June 2026 enrollment analysis confirmed.

Medicare Advantage plans with drug coverage receive separate rebates and were never part of the program.

Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF, said stand-alone enrollees face the most pricing uncertainty heading into the 2027 plan year because final plan-level premiums have not been released.

Without these extra subsidies in place for 2027, some Part D stand-alone drug plan enrollees could face a larger premium increase for drug coverage next year than in recent years, though plan-specific premium amounts are not yet known.

Beneficiaries who receive Extra Help through the Low-Income Subsidy (LIS) program remain shielded from the premium shift, KFF’s analysis noted. Enrollees outside that program will see plan-specific costs only once fall pricing arrives.

What your ANOC reveals about 2027 coverage costs

Medicare Advantage and Part D plan enrollees receive an Annual Notice of Change (ANOC) by Sept. 30, 2026, detailing premium, formulary, and network changes for the coming plan year, according to CMS Guide.

The enrollment window closes Dec. 7, 2026, and auto-renewal is the default for anyone who does not actively choose a new plan, Medicare.gov showed.

The document shows whether a plan’s drug formulary still covers an enrollee’s prescriptions and whether preferred providers remain in-network.

Those plan-level details have more weight this year because the subsidy removal, higher caps, and premium increases shift costs simultaneously, Cubanski’s research at KFF showed.

Enrollees who do not act during the enrollment window stay in their current plan at whatever costs the insurer sets for 2027, the CMS noted.

The annual enrollment period is the primary window for switching plans, though Medicare Advantage members have a second window from Jan. 1, 2027, to March 31, 2027, CMS confirmed.

Related: Medicare’s 2027 forecasts reveal a striking cost picture

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This story was originally published September 28, 2026 at 1:03 AM.