Medicare 2026: 3 Cost Changes Every Beneficiary Must Know

If you're on Medicare and haven't looked closely at your costs lately, 2026 is the year to pay attention. Three significant financial changes are hitting Medicare simultaneously — one affects nearly every person on Original Medicare, one could save people on expensive medications thousands of dollars, and one reshapes how Medicare Advantage plans compete for your enrollment. Understanding all three before the Annual Enrollment Period closes on December 7 could make a real difference in what you pay next year.

Let's start with the Part B premium, because it touches everyone on Medicare Part A and Part B — which is the foundation of Original Medicare. The standard monthly Part B premium for 2026 is $185.00, up from $174.70 in 2025. That's a $10.30 monthly increase, or about $123.60 more per year coming out of your Social Security check or your bank account if you pay directly. For most beneficiaries, this is automatic — it's deducted before your Social Security payment hits your account. The Part B deductible also increased to $257 in 2026, up from $240 in 2025. You pay that deductible once per year before Medicare starts covering 80% of approved outpatient services. If you have a Medigap supplement plan — also called Medicare Supplement Insurance — your plan may cover that deductible depending on which letter plan you hold. Plan G, for example, covers the Part B deductible for people who enrolled before January 1, 2020, while newer Plan G enrollees are subject to it. Plan N requires you to pay the deductible plus copays of up to $20 for office visits.

Higher-income beneficiaries pay more through what's called IRMAA — the Income-Related Monthly Adjustment Amount. If your modified adjusted gross income from two years ago (meaning your 2024 tax return affects your 2026 premium) exceeded $106,000 for an individual or $212,000 for a married couple filing jointly, you're already paying a surcharge on top of the standard $185.00. The IRMAA tiers in 2026 range from an additional $74.00 per month at the lowest income bracket all the way up to an additional $443.90 per month for individuals earning above $500,000. If you had a significant income drop — due to retirement, the death of a spouse, or loss of income-producing property — you can file Form SSA-44 with the Social Security Administration to request a reduction based on your current income rather than your two-year-old tax return.

The second major change is the one that could genuinely transform life for people who take expensive medications. The Inflation Reduction Act, passed in 2022, phased in a $2,000 annual out-of-pocket cap on Part D prescription drug costs, and that cap takes full effect in 2026. Before this law, there was no hard ceiling on what you could spend on drugs in a given year. People on cancer medications, specialty biologics, or multiple high-cost drugs could face $5,000, $8,000, or even more in annual drug costs. Starting in 2026, once you've paid $2,000 out of pocket for covered Part D drugs — whether you have a standalone Part D plan or a Medicare Advantage plan with drug coverage — your cost-sharing drops to zero for the rest of the calendar year. This is not a loan program or a deferred payment arrangement; it's a true cap. The law also introduced a Medicare Prescription Payment Plan, which lets you spread your drug costs across monthly installments throughout the year rather than paying large lump sums early in the year when deductibles reset.

To put the $2,000 cap in concrete terms: if you take a specialty rheumatoid arthritis medication that costs $1,500 per month at the pharmacy counter, you would historically have blown past $2,000 in drug costs by February. Under the new cap, you hit your limit early in the year and pay nothing for covered drugs for the remaining months. For someone on multiple brand-name medications, the savings can easily exceed $3,000 to $5,000 annually. This change is significant enough that beneficiaries who previously avoided Part D coverage because they couldn't afford the cost-sharing should reconsider enrolling — particularly if they're currently paying full retail price for medications without any drug coverage at all.

The third change involves how Medicare Advantage plans are adjusting their benefit structures in response to both the drug cap and CMS reimbursement rate changes for 2026. Medicare Advantage plans — the private insurance alternative to Original Medicare — have been trimming some of the extra benefits that made them attractive in recent years, including dental, vision, and over-the-counter allowances. According to CMS.gov data, there are approximately 4,800 Medicare Advantage plans available nationally for 2026, but the average number of plan options per county has decreased slightly compared to 2024's peak of over 43 plans per county on average. Simultaneously, average Part D plan premiums have shifted, and some plans that previously offered $0 premiums have introduced modest monthly costs. This makes the Annual Enrollment Period comparison process more important than ever — the plan that worked well for you in 2025 may have changed its formulary, its network of doctors, or its cost-sharing structure for 2026.

Data Snapshot: According to CMS.gov data from the 2026 Medicare Plan Finder, the average Medicare Advantage plan premium nationally sits at approximately $17 per month in 2026, down slightly from prior years in raw premium terms, but many plans have reduced supplemental benefits to offset the cost of the new Part D drug cap requirements. CMS reports that as of early 2026, more than 33 million beneficiaries are enrolled in Medicare Advantage plans — representing roughly 54% of all Medicare-eligible individuals. The star rating system, which CMS uses to grade plan quality on a 1-to-5 scale, shows that approximately 37% of Medicare Advantage enrollees are in plans rated 4 stars or higher, which matters because 5-star plans offer a special enrollment period allowing you to switch into them at any point during the year.

During the Annual Enrollment Period — October 15 through December 7 — you can make any of the following changes: switch from Original Medicare to a Medicare Advantage plan, switch from Medicare Advantage back to Original Medicare, change from one Medicare Advantage plan to another, join a standalone Part D drug plan, switch Part D plans, or drop Part D coverage entirely. Changes made during AEP take effect January 1 of the following year. If you miss this window, the Open Enrollment Period from January 1 through March 31 allows Medicare Advantage enrollees to switch to a different MA plan or return to Original Medicare — but you cannot use OEP to add or change a standalone Part D plan.

If you're considering switching from Medicare Advantage back to Original Medicare, be aware that Medigap underwriting rules apply in most states. Outside of your initial Medigap open enrollment window — which is the six months starting the month you turn 65 and enroll in Part B — insurance companies can generally review your health history and deny coverage or charge higher premiums. There are 13 states with birthday rule protections: California, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Missouri, Nevada, New Jersey, New York, Oklahoma, and Oregon. In these states, you have a 30-day window around your birthday each year to switch to an equal or lesser Medigap plan without medical underwriting. If you live in one of these states and are unhappy with your Medicare Advantage plan, your birthday window may be your best opportunity to move to a Medigap supplement without health screening.

For people staying on Original Medicare with a Medigap plan, the 2026 cost changes are mostly felt through the higher Part B premium and deductible. Plan G remains the most comprehensive Medigap option for new enrollees, covering everything except the Part B deductible. Average Plan G premiums nationally range from roughly $100 to $200 per month depending on your age, gender, tobacco use, and location — with significant variation by state. Plan N typically runs $30 to $60 less per month than Plan G but requires copays of up to $20 for office visits and up to $50 for emergency room visits that don't result in inpatient admission. For healthy beneficiaries who rarely see specialists, Plan N's lower premium may more than offset those copays over the course of a year.

To make the most of the 2026 enrollment period, start by pulling up your current plan's Annual Notice of Change — it should have arrived in your mailbox by late September. This document lists every change your plan is making for the coming year, including premium increases, formulary changes, and network adjustments. Then use the Medicare Plan Finder at Medicare.gov to compare plans in your ZIP code. Enter your specific medications to see which plans cover them at the lowest cost. If you want personalized help at no cost, contact your State Health Insurance Assistance Program — SHIP — counselors are federally funded, unbiased, and available in every state. You can find your local SHIP contact at shiphelp.org. These counselors can walk you through a side-by-side plan comparison and help you understand how the $2,000 drug cap applies to your specific medication list.