Why Medicare Premiums Will Increase in 2026 for Seniors
Rising medical expenses are shaping another expensive year for older Americans, and 2026 is already poised to hit wallets harder than expected. Seniors who rely on Medicare coverage will see notable changes in premiums, plan choices, and out-of-pocket limits, creating a tense backdrop for anyone trying to keep healthcare within a manageable budget.
The most immediate shift arrives with Medicare Part B. Costs for this essential coverage — which includes doctor visits, outpatient services, medical equipment, and physician-administered drugs — are climbing at one of the fastest rates in the program’s history. With day-to-day living costs already squeezing household budgets, the increase raises fresh concerns about affordability.
Medicare Part B Premiums Climb Nearly 10%
The Centers for Medicare and Medicaid Services announced that the standard Part B monthly premium for 2026 will be $202.90, a $17.90 jump from this year. This marks the most significant percentage increase in four years and the second-largest dollar increase since Medicare began tracking these adjustments.
That single change will consume nearly one-third of the $56 monthly Social Security cost-of-living adjustment retirees are set to receive in 2026.
Health policy expert Jeanne Lambrew, director of health care reform at The Century Foundation, described the spike as unsettling for people already pressured by rising costs of groceries, utilities, and other essentials. She noted that the growing price of medical care and prescription drugs continues to push premiums upward across nearly every type of coverage.
Forces Driving Costs Higher
Freepik | Medicare costs rise due to expensive medicine and more outpatient visits.
Multiple factors are fueling this significant increase:
1. Higher medical and pharmaceutical expenses
2. Increased usage of outpatient services
3. A growing number of baby boomers entering the Medicare system
4. Ongoing movement of surgeries and treatments from hospitals (covered by Part A) to outpatient facilities (covered by Part B)
Research professor Rachel Schmidt of Georgetown University’s Medicare Policy Initiative pointed out that these shifts place extra strain on Part B spending as more procedures move outside traditional inpatient settings.
CMS also confirmed that Part B premiums would have risen another $11 without a major policy change. The agency approved a new payment approach for skin substitutes, projecting almost 90% savings on wound-care products — a category where Medicare spending jumped from $256 million in 2019 to more than $10 billion in 2023.
Part D Plans Show Moderate Adjustments
Medicare Part D prescription drug coverage will undergo smaller changes in 2026. Last year, the Biden administration launched a multibillion-dollar subsidy program to prevent sharp premium hikes tied to the Inflation Reduction Act. That law requires insurers to shoulder more costs once enrollees reach the catastrophic phase above the $2,000 spending cap.
For 2026:
1. The total number of available Part D plans will drop slightly.
2. Elevance is exiting the market entirely.
3. Premium shifts vary widely — some plans are rising by as much as $50, while others are staying flat or even decreasing.
Brooks Conway, principal at Oliver Wyman, noted that seniors willing to compare options still have opportunities to find stable, affordable plans.
Roughly 69 million Americans rely on Medicare, including people with disabilities. The open enrollment window closes December 7.
Medicare Advantage Shrinks Again
Medicare Advantage — which covers just over half of Medicare beneficiaries — is shrinking again in 2026. Insurers are adjusting to rising medical costs that outpace federal reimbursements, upsetting the economics of many plan offerings.
Research from Oliver Wyman highlights several shifts:
1. Plan choices will fall by 10%, leaving 3,373 offerings nationwide.
2. Major insurers — including CVS Aetna, Elevance, Humana, and UnitedHealthcare — are cutting back their presence in at least 100 counties.
3. More than 2 million enrollees may need to shop for new coverage.
These changes do not apply to special needs plans for people with chronic conditions or those eligible for both Medicare and Medicaid. Those offerings will slightly increase.
Instagram | drozcms | Despite reductions, Dr. Oz assures Americans of continuous, affordable coverage.
Partner Greg Berger explained that many companies are retreating from unprofitable regions, especially plans with $0 premiums and PPO options with wider networks. He noted that many Medicare Advantage Prescription Drug (MAPD) plans “are trying not to grow” heading into 2026.
For the first time, some counties will have no Medicare Advantage plans at all. Blue Cross and Blue Shield of Vermont and UnitedHealthcare are pulling out of the state, leaving eight counties with only traditional Medicare.
On average, Medicare beneficiaries will still have access to 39 plans in 2026 — down from 42 this year. CMS administrator Dr. Mehmet Oz said Americans will continue to find a broad mix of affordable coverage options despite the reductions.
Out-of-Pocket Limits and Extra Benefits Shift
Medicare Advantage plans are also tightening supplemental benefits and raising cost thresholds:
1. Maximum out-of-pocket limits will increase by about 10%, or $490 on average.
2. Among MAPD plans with a monthly premium, the average cost will rise from $60 to $66.
3. Extra perks such as dental, vision, and over-the-counter allowances are becoming less generous.
4. The average dental allowance will drop 10% to $2,107.
Even with the short-term pullbacks, Schmidt emphasized that Medicare Advantage remains an attractive long-term market for insurers.
Seniors face a challenging year ahead as health-care costs rise across multiple parts of Medicare. Premium increases, fewer plan choices, higher out-of-pocket limits, and reduced supplemental benefits all contribute to a shifting landscape that requires careful review during open enrollment.
The changes may be complex, but understanding the specifics — from premium adjustments to plan exits — can help beneficiaries make informed decisions about their care in 2026.