The Trump Administration’s $90 Payment to Medicare Beneficiaries, Reminiscent of a Similar Proposal Six Years Ago, May Not Offset Rising Costs
The Trump administration’s plan to provide a one-time $90 payment to millions of Medicare beneficiaries ahead of the 2026 election is reminiscent of a similar proposal from President Trump during his first term, also right before an important election. According to the Centers for Medicare & Medicaid Services (CMS), the $90 payments being sent in early October will make Medicare “more affordable” for enrollees. But, as with the earlier proposal, this one-time payment may not go far at offsetting rising costs for health care and other everyday essentials.
The $90 payment, characterized by CMS as a Part B “premium rebate,” will be sent by direct deposit to 21 million people enrolled in Part B under traditional Medicare who don’t pay income-related premiums or receive premium assistance from Medicaid. (The 35 million Medicare beneficiaries enrolled in private Medicare Advantage plans aren’t eligible, though many also pay the Part B premium.)
Medicare’s standard Part B premium is $2,435 this year and is projected to increase by $79 annually for 2027 – meaning this increase alone would consume most of the $90 payment, which less than half of all beneficiaries will receive. New KFF analysis also shows that Part D drug plan premiums could increase modestly for many enrollees in 2027 but much more for others if they don’t switch drug plans. Beneficiaries might also see other health care costs rise in 2027, including deductibles and cost sharing for medical and drug benefits, and premiums for those with Medigap supplemental policies that help cover Medicare cost sharing, which cost $2,600 annually on average.
Around this time six years ago, just ahead of the 2020 presidential election, President Trump unveiled a similar proposal to send payments to millions of Medicare beneficiaries – in that case, a $200 drug card to help with out-of-pocket drug costs. The cards were to be provided under a Section 402 demonstration designed to test whether lowering out-of-pocket drug costs would improve medication adherence, reduce unnecessary health care use, and lower Medicare spending. Ultimately, the drug cards were never sent, amid questions about the design of the experiment and its nearly $8 billion projected cost.
CMS will draw the new $90 payments from the Medicare Improvement Fund, established by Congress in 2008 to “make improvements under the original fee-for-service program,” with an initial allotment of $2.2 billion for fiscal year 2014. Since then, Congress has modified the amount in the fund, but CMS has never used the money. The $90 payments would largely deplete the fund, which currently stands at just over $2 billion.
Tapping the Medicare Improvement Fund for $90 direct payments to beneficiaries may have fewer strings attached than using Section 402 demonstration authority – notably, no requirement to test anything. And sending payments via electronic direct deposit involves fewer logistical hurdles than printing and mailing millions of pre-funded drug cards. But it may also be easier for the payments to go unnoticed if people aren’t receiving a check in the mail.