A veteran who fills his prescriptions through the VA may have seen the headlines this week about Medicare drug premiums going up in 2027 and possibly felt worried.
For most veterans, there’s no need to get anxious, but for some, there might be. Basically, it all comes down to where you get your medication.
The Centers for Medicare and Medicaid Services announced Tuesday that it will end a federal subsidy that has helped hold down prescription drug premiums for the past two years. Some believe this move could raise monthly costs for some Medicare beneficiaries starting in 2027, and a portion of the veteran community is among them.
However, many veterans, including those who rely on the VA for their prescriptions, will not feel it at all. Here is who is affected, who is not, and what to check before the year is out.
What the Government Did
The program being eliminated is called the Part D Premium Stabilization Demonstration, and its purpose is stated plainly in its title.
CMS created it in 2025 to steady the prescription drug premiums that private insurers charge under Medicare Part D, cushioning the market as it absorbed changes from the Inflation Reduction Act.
The demonstration lowered the baseline used to set premiums and capped how much they could climb year to year. It reduced the average monthly stand-alone drug plan premium by about $26 in 2025 and $16 in 2026, according to the Medicare Payment Advisory Commission, and it cost roughly $9.8 billion across the two years.
Potential Costs of This Change
CMS said it is ending the program because insurers now have enough experience with the redesigned drug benefit to price their plans without the extra help. They aim to return the market to what the agency called traditional conditions in 2027.
The administration framed the subsidy as one it was glad to see go. CMS Administrator Dr. Mehmet Oz described it as a bailout of insurance companies and said that with the program gone, premiums would rise by less than $10 for most Medicare recipients, with some paying less.
Independent analysts were more measured. Juliette Cubanski, a Medicare expert at the health policy research group KFF, wrote that the subsidies “worked as intended” to keep premiums stable, but noted they never addressed the deeper forces pushing drug costs up, including rising prices and the growing use of expensive specialty medications. Those pressures, she wrote, are likely to continue.
Dr. Vytautas Vaicys, an emergency medicine physician in Dallas, told Military.com that the stakes of drug costs show up in his ER regularly. “When patients skip insulin, blood thinners, heart failure medications, or inhalers because of cost, medication adherence falls, and total healthcare utilization rises through preventable emergency visits, hospitalizations, ICU admissions, and long-term complications,” he said. “Saving money at the pharmacy often leads to much higher costs elsewhere in the healthcare system.”
One caveat remains, though. CMS will not release final 2027 plan premiums until September, which means no beneficiary yet knows exactly what their own coverage will cost.
Veterans Should Be Aware
To understand who among veterans is affected, it’s helpful to know that VA drug coverage and Medicare Part D are two separate systems that do not coordinate.
The VA provides prescription coverage to enrolled veterans through its own pharmacy benefit, typically with no premium and low or no copays, filled through VA facilities and the VA mail-order service.
That coverage is considered creditable under Medicare, which means a veteran who has it can skip Medicare Part D entirely and never face the late-enrollment penalty that applies to other seniors.
Part D, by contrast, is prescription coverage sold by private insurers to people on Medicare. For a veteran, it is optional. But hundreds of thousands carry it anyway, layered on top of or alongside their VA benefits, and roughly 300,000 veterans age into Medicare eligibility every year.
This group, the veterans holding a stand-alone Part D plan, is the one with an actual stake in this change.
Using the VA for Your Prescriptions vs. Part D Plan
For veterans who get their medications solely through the VA, the end of this subsidy changes nothing. VA prescription coverage is not part of Medicare Part D. Its premiums, its copays, and its formulary are set by the VA, not by the private insurers affected by the CMS decision.
A veteran who fills every prescription through the VA pharmacy will see no change to what they pay in 2027 as a result of this announcement. The headlines about premium increases simply do not apply to that coverage.
Veterans who should see this are the ones who bought a stand-alone Part D plan in addition to, or instead of, their VA coverage.
There are common and sensible reasons a veteran does this. A Part D plan lets you fill prescriptions at a local civilian pharmacy rather than waiting on VA mail-order. It can cover a drug that is not in the VA formulary. It offers more choice for veterans who want to see doctors outside the VA system.
For those veterans, the plan is real coverage they pay a real premium for, and that premium is what could move in 2027.
How much is not yet known. The administration has projected that about a quarter of Part D enrollees will see premiums hold steady or fall next year, roughly 30 percent will see increases under $10 a month, and about 45 percent could see monthly increases between $11 and $20.
The national base figure used to build individual premiums will be $41.33 for 2027. But the actualized number on any given plan will not be public until the fall.
What Veterans Can Do
The practical steps are short. Veterans who use only VA coverage do not need to do anything. For those with a Part D plan, the first move is to wait for the September premium release and then read the annual notice the plan is required to send, which will spell out all changes for 2027.
Any decision then happens during Medicare’s open enrollment period, which runs from Oct. 15 to Dec. 7. During those weeks, beneficiaries can compare plans and switch, or drop Part D altogether.
A veteran who has been paying for a Part D plan mainly out of habit or convenience may find this a good moment to weigh whether VA coverage alone now meets their needs. Because VA drug coverage is creditable, there is no penalty for making that choice.
For a national audience, this is a story about 25 million people on Medicare drug plans and billions of dollars in vanishing subsidies. For a veteran, it narrows to something much simpler: where do you get your prescriptions? Answer that, and you will know whether any of this is cause for concern.
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