Medicare’s benchmark measure of what insurers are charging to run drug coverage next year is up sharply again. The federal government’s 2027 national average monthly bid amount for Part D plans came in at $296.05, up from $239.27 this year, a rise of nearly 24% in a single cycle.
What the National Average Monthly Bid Amount Actually Measures
The national average monthly bid amount, or NAMBA, is not a bill any individual pays. It is an enrollment-weighted average of the bids that Part D plan sponsors submit to the Centers for Medicare & Medicaid Services for covering the standard “basic” drug benefit, and CMS uses it to calculate how much government subsidy each plan receives. CMS confirmed the 2027 figure in its July 28 fact sheet, alongside a separate, capped base beneficiary premium of $41.33.
Because the bid amount reflects what insurers expect drug coverage to cost them to provide, a near-24% jump signals that sponsors are pricing in real cost pressure, even though a beneficiary’s own premium will not rise by that same percentage thanks to the separate statutory cap on the base premium.
The distinction matters because the two figures get confused often. The base beneficiary premium, capped at a 6% annual increase, is what most stand-alone Part D enrollees actually see reflected in their own plan’s baseline pricing. The bid amount is the number insurers report to the government about their own projected costs, and it moves independently, without the same statutory ceiling, which is exactly why it can rise nearly four times faster than the premium retirees pay in a given year.
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Why Bids Rose So Much in One Year
Part of the jump traces to the Inflation Reduction Act’s redesigned Part D benefit, which shifted more of the financial risk for high drug costs onto plan sponsors rather than the federal reinsurance pool that used to absorb most catastrophic spending. CMS also confirmed it will end the Part D Premium Stabilization Demonstration after 2026, a voluntary program that had let sponsors cap their own premium growth in exchange for extra federal support while insurers adjusted to the new benefit structure. With that support ending and sponsors now pricing bids on their own updated cost experience, the bid amount climbed well beyond the roughly 6% ceiling that applies specifically to the base beneficiary premium.
The gap between the near-24% rise in bids and the smaller, capped rise in the base premium is why a plan-by-plan comparison matters more than the national averages. Individual plan premiums, which are not subject to the same 6% cap that governs only the base premium, can move by very different amounts depending on how each sponsor priced its own bid.
Two Years of Outsized Bid Growth
This is not the first double-digit jump in the national average monthly bid amount since the Part D benefit was redesigned. The 2026 bid amount of $239.27 was itself up roughly 33% from $179.45 in 2025, meaning sponsors have now posted two consecutive years of unusually steep bid growth even as the rate of increase eased somewhat between the two cycles. Actuaries who track the program point to the same underlying cause both years: insurers absorbing more of the cost of expensive specialty and catastrophic drug claims under the IRA’s redesigned benefit, rather than passing that risk to the federal reinsurance pool the way the old benefit structure allowed.
Whether bid growth eases further in 2028 will depend largely on how insurers’ claims experience settles now that the Premium Stabilization Demonstration has ended and sponsors are pricing entirely on their own updated cost data.
The pattern also helps explain why some Part D sponsors have pulled back their offerings rather than simply raising prices. When bids come in high enough that a plan can no longer compete on premium in a given region, exiting that market or narrowing a drug formulary becomes the more attractive option for a sponsor than absorbing a loss to stay competitively priced, which is part of why plan availability, not just cost, has been shifting alongside these bid increases.
What This Means Heading Into Enrollment
CMS will not publish the actual 2027 premium for every specific plan until it releases the full Medicare Advantage and Part D landscape in mid-to-late September, ahead of Medicare’s Annual Enrollment Period, which opens October 15 and runs through December 7. Retirees on a fixed income who want to limit the damage from rising bids should plan to compare their current drug plan against alternatives once that full pricing list is public, rather than assuming a modest-looking premium increase tells the whole story.
Anyone receiving Extra Help, the federal low-income subsidy for Part D costs, is largely insulated from bid-driven premium swings, since benchmark plan premiums in that program are set through a separate calculation each year.
This article was produced with AI assistance and reviewed by The Financial Wire editorial team.
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Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
