Author: Michael Johnes

Senior citizens in America will see their health insurance premiums rise significantly in 2026. Medicare Part B premiums will rise nearly 10% next year. This is the largest increase in four years and the second-largest increase in dollar amounts in the program’s history. The standard monthly premium will be $202.90, up by $17.90 from this year, according to the Centers for Medicare and Medicaid Services. This increase will take nearly one-third of the $56 monthly Social Security cost-of-living adjustment that retirees will receive in 2026.

The big jump in Medicare Part B premiums happens when health insurance premiums are also rising for people with job-based coverage and Affordable Care Act plans. This trend makes it harder for Americans who are already struggling with high prices for food, utilities, and other everyday needs.

Jeanne Lambrew, director of healthcare reform at The Century Foundation, said, “In a world where people worry about the cost of healthcare and basic needs, it’s distressing that this increase is so large.” Higher costs for medical services and drugs, as well as more people using these services, are common reasons for rising healthcare premiums.

Medicare is also facing challenges from the growing number of baby boomers becoming eligible for enrollment. Additionally, more surgeries and medical services are now being done at outpatient facilities instead of hospitals, where Medicare Part A covers the care, said Rachel Schmidt, a research professor at Georgetown University’s Medicare Policy Initiative.

Monthly Premiums Might Gain $11 Increase

The Centers for Medicare & Medicaid Services (CMS) indicated that monthly premiums would have increased by an additional $11 if they had not approved a change in the payment structure for skin substitutes. This change is expected to reduce spending on these wound care products by nearly 90%. Last year, Medicare spent over $10 billion on skin substitutes, a significant rise from just $256 million in 2019.

In addition, Medicare Part D prescription drug policies offered by insurers will see fewer changes in 2026 than this year. Last fall, the Biden administration quickly started a multibillion-dollar subsidy program for insurers. This step aims to prevent big premium increases linked to the Inflation Reduction Act. This law, passed by Congress in 2022, requires insurers to pay more for drug costs once enrollees exceed the $2,000 catastrophic coverage limit.

According to consulting firm Oliver Wyman, the number of plans available for 2026 will slightly decrease, with the firm noting that Elevance is withdrawing from the market. Many insurers are planning to raise their premiums by as much as $50 for the upcoming year, while some are reducing or maintaining their current rates.

“If seniors in the standalone PDP market are willing to shop around, there is still stability,” said Brooks Conway, a principal at Oliver Wyman.

Currently, approximately 69 million Americans are enrolled in Medicare, which also includes coverage for individuals with disabilities. The annual open enrollment period for Medicare ends on December 7.

The Medicare Advantage Market is Experiencing a Contraction

Medicare Advantage currently serves just over half of all Medicare beneficiaries. It is undergoing significant changes for the second year in a row. These changes are due to medical costs rising faster than the payments from the federal government that insurers receive to cover Medicare enrollees.

As a result, many enrollees will need to search for new coverage for 2026, as the total number of available plans is expected to decrease by 10%, dropping to 3,373 plans, according to a report by Oliver Wyman. Major insurers, including CVS Aetna, Elevance, Humana, and UnitedHealthcare, are cutting their plan offerings in at least 100 counties. This reduction is anticipated to affect just over 2 million individuals.

It is important to note that these figures do not include special needs plans, which cater to enrollees with chronic conditions or those who are dually eligible for Medicaid. These special needs plans are projected to have more offerings for 2026 compared to this year.

In certain counties, there will be fewer policies available with $0 premiums and a reduced number of PPO plans, which typically feature broader provider networks. According to Greg Berger, a partner at Oliver Wyman, insurers are mainly looking to withdraw from or scale back their less profitable products and geographic areas.

“A lot of MAPD plans are trying not to grow,” Berger noted, referencing Medicare Advantage plans that include prescription drug coverage.

Some Plans Will Offer $0 Deductibles for Prescription Drugs

For the first time, some Americans will have no Medicare Advantage plans available to them. Blue Shield of Vermont, Blue Cross, and UnitedHealthcare have chosen to discontinue their coverage in Vermont, leaving traditional Medicare as the only option for residents in eight counties.

Despite these reductions, most Medicare beneficiaries will still have a variety of options in 2026, with an average of 39 plans available, down from 42 plans this year.

“Millions of Medicare beneficiaries will continue to have access to a huge range of affordable coverage options in 2026,” stated Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services (CMS).

However, fewer plans will offer $0 deductibles for prescription drugs, and the maximum out-of-pocket limits for medical care will increase by $490, or about 10%, on average. For Medicare Advantage plans that include drug coverage and have a monthly premium, the average premium will rise to $66 next year, up from $60 this year.

Additionally, the supplemental benefits provided by Medicare Advantage plans, such as funds for over-the-counter medications, dental care, and vision services, are becoming less generous. For example, the average dental allowance is decreasing by 10% to $2,107, according to Berger.