Every year, the Medicare Board of Trustees releases a detailed financial report on the program's health — and the 2026 edition carries some of the most consequential projections in recent memory. If you're currently on Medicare or approaching eligibility, this report isn't just a Washington budget document. It's a roadmap for understanding what your healthcare costs may look like in five, ten, or fifteen years, and why the decisions you make during open enrollment periods matter more than ever.
The centerpiece concern in the 2026 Trustees Report is the Hospital Insurance trust fund, which pays for Medicare Part A — the portion of Medicare that covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. The Trustees project that this trust fund could be depleted within approximately a decade if current spending and revenue trends continue unchanged. Depletion doesn't mean Medicare disappears. It means the program would only be able to pay out what it collects in payroll taxes in real time — which the Trustees estimate would cover roughly 89 cents of every dollar owed in benefits. That 11% gap would represent a real cut to hospital reimbursements, and ultimately, to the care beneficiaries receive.
To put that in concrete terms: if you're 68 years old today and the trust fund depletes in roughly ten years, you'd be 78 — likely in your peak years of healthcare utilization — when these pressures would hit hardest. Congress has historically acted before trust fund depletion becomes reality, as it did with Social Security adjustments in 1983, but there is no guarantee of the timing or form of any legislative fix. Beneficiaries who assume the status quo will hold indefinitely may be caught off guard.
Medicare spending overall is rising at a pace that outstrips general inflation and economic growth. The Trustees project that total Medicare expenditures will climb from roughly 3.1% of GDP today to over 6% of GDP by mid-century. The primary drivers are demographic — the last of the Baby Boomers turn 65 in 2029, swelling the Medicare rolls — combined with persistently high healthcare price inflation, expanded use of expensive specialty drugs, and the growing complexity of care for an older population managing multiple chronic conditions. According to CMS.gov data, Medicare covered approximately 67 million beneficiaries in 2024, and that number is expected to surpass 80 million within the next fifteen years as the population ages.
For Part B — which covers outpatient care, doctor visits, preventive services, and durable medical equipment — the funding mechanism is different from Part A. Part B is financed through a combination of beneficiary premiums (set to cover 25% of program costs) and general federal revenues. This means Part B doesn't face the same trust fund depletion risk, but it does mean premiums are structurally designed to rise as costs rise. The standard Part B premium in 2026 is $185.00 per month for most beneficiaries, up from $174.70 in 2024. Higher-income beneficiaries pay more through Income-Related Monthly Adjustment Amounts, or IRMAA, which in 2026 can push Part B premiums to over $600 per month for individuals with modified adjusted gross income above $500,000. If you had a higher-income year two years ago — Medicare uses a two-year lookback — you may be subject to IRMAA surcharges even if your income has since dropped. You can appeal an IRMAA determination using Form SSA-44 if you've had a qualifying life event like retirement.
The Part D prescription drug program is also under financial pressure, though the Inflation Reduction Act of 2022 introduced structural changes that are reshaping the landscape. The $2,000 out-of-pocket cap on Part D drug costs, which took effect in 2025, is a significant protection for beneficiaries with high drug costs — but it also shifts more financial risk onto Part D plans and, ultimately, onto premiums. The Trustees' projections account for these changes, and beneficiaries should expect continued volatility in Part D plan premiums and formularies during annual enrollment periods. Comparing plans each fall during the Annual Enrollment Period (October 15 through December 7) using Medicare's Plan Finder tool at Medicare.gov is not optional if you want to avoid overpaying.
Data Snapshot: According to CMS.gov data, there were approximately 4,000 Medicare Advantage plans available nationwide in 2025, with an average monthly premium of around $17 for plans that include drug coverage. CMS star rating data for 2025 showed that roughly 45% of Medicare Advantage enrollees were in plans rated 4 stars or higher — a metric that affects plan bonuses and, indirectly, the benefits plans can offer. These figures shift annually, so beneficiaries should verify current plan availability and star ratings at Medicare.gov each fall before the December 7 enrollment deadline.
One of the most important — and underappreciated — implications of rising Medicare spending is what it means for Medigap (Medicare Supplement) insurance. Original Medicare's cost-sharing structure has no out-of-pocket maximum. In 2026, the Part A hospital deductible is $1,676 per benefit period, and there is no cap on how many benefit periods you can have in a year. The Part B deductible is $257 annually, and after that, you typically pay 20% of covered services with no ceiling. A serious illness — a hip replacement, a cardiac event, a cancer diagnosis — can generate tens of thousands of dollars in 20% coinsurance charges. Medigap Plan G, the most comprehensive plan available to beneficiaries who became eligible for Medicare after January 1, 2020, covers that 20% coinsurance, the Part A deductible, skilled nursing facility coinsurance, and foreign travel emergency care. Average monthly premiums for Plan G vary significantly by age, gender, tobacco use, and location — ranging from roughly $100 to over $300 per month — but for beneficiaries with significant health needs, the math often favors the predictability of a Medigap plan over the uncertainty of bare Original Medicare.
If you're considering switching Medigap plans, timing matters enormously. Outside of your initial six-month Medigap Open Enrollment Period (which begins the month you turn 65 and are enrolled in Part B), insurers in most states can use medical underwriting to deny coverage or charge higher premiums based on your health history. However, thirteen states have enacted birthday rule protections that give you a 30-day window each year around your birthday to switch to an equal or lesser Medigap plan without medical underwriting: California, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Missouri, Nevada, New Jersey, New York, Oklahoma, and Oregon. If you live in one of these states and your current Medigap plan has become expensive or your needs have changed, your birthday window may be your best opportunity to shop.
For lower-income beneficiaries, the financial pressures highlighted in the Trustees Report make it even more critical to understand available assistance programs. The Medicare Extra Help program (also called the Low-Income Subsidy) can eliminate or dramatically reduce Part D drug premiums and cost-sharing for individuals with limited income and resources. In 2026, individuals with income below roughly $22,590 (or couples below $30,660) may qualify. The Medicare Savings Programs, administered through state Medicaid offices, can pay your Part B premium — worth $185 per month — and in some cases your Part A premium and cost-sharing as well. These programs are chronically underutilized; millions of eligible beneficiaries are not enrolled. Applying through your state Medicaid office costs nothing and can save thousands of dollars annually.
The Trustees Report also shines a light on the long-term trajectory of Medicare Advantage, which now enrolls more than half of all Medicare beneficiaries. The program's growth has been fueled by low or zero premiums, added benefits like dental and vision, and the appeal of an out-of-pocket maximum. But the Trustees and independent analysts have raised questions about whether Medicare Advantage plans are being overpaid relative to the cost of caring for their enrollees — a dynamic that contributes to overall Medicare spending growth. CMS has been adjusting risk adjustment models and audit practices, which may lead some plans to reduce extra benefits or exit certain markets in coming years. Beneficiaries who have built their healthcare strategy around specific Medicare Advantage plan benefits should review their plan's Annual Notice of Change each fall, which arrives by September 30, to understand what's changing before the October 15 enrollment window opens.
Finally, it's worth understanding what the Trustees Report does not mean for your immediate coverage. Your Medicare benefits are not changing tomorrow. The projections are long-range estimates with significant uncertainty built in — the Trustees themselves publish both optimistic and pessimistic scenarios alongside their central projections. What the report does is signal the direction of travel: costs are rising, the trust fund has a finite runway, and the program will require either new revenues, benefit adjustments, or both to remain solvent at current benefit levels. For individual beneficiaries, the practical response is to make sure your coverage is as efficient and protective as possible right now — not to wait for a crisis to prompt action. Review your plan annually, understand your Medigap options, check your Extra Help eligibility, and if you have questions about how these trends affect your specific situation, your State Health Insurance Assistance Program (SHIP) offers free, unbiased counseling. You can find your local SHIP counselor at shiphelp.org.