Medicare beneficiaries will find fewer prescription drug plan options during the upcoming open enrollment period, a trend continuing for 2026. While average monthly premiums are projected to decrease, consumers must carefully evaluate plan details like deductibles and covered medications to avoid unexpected costs. The enrollment window runs from October 15 to December 7.
Key Takeaways
- The number of standalone Medicare Part D prescription drug plans is decreasing for 2026, with a typical beneficiary seeing 8 to 12 options, down from nearly 30 in 2021.
- Average monthly premiums are expected to fall by nearly 10% to $34.50, but this may be offset by higher deductibles or more restrictive drug lists.
- Legislative changes, including the Inflation Reduction Act's $2,100 out-of-pocket cap, are contributing to market shifts and insurer exits, such as Elevance leaving the standalone market.
- Beneficiaries, especially those with low-income subsidies, are urged to actively shop for plans as options become more limited and plan discontinuations become more common.
Understanding Medicare Part D Coverage
Medicare Part D is the component of the federal health insurance program that covers prescription medications. It is essential for many older Americans and individuals with disabilities. However, it is not automatically included with Original Medicare (Part A and Part B).
Beneficiaries must actively enroll in a prescription drug plan. According to the healthcare research organization KFF, approximately 23 million people with Original Medicare have this type of standalone coverage.
An additional 34 million individuals are enrolled in Medicare Advantage plans. These are private insurance alternatives to Original Medicare and often bundle prescription drug coverage with other health benefits.
Who Needs to Shop for Part D?
Individuals enrolled in Original Medicare must select a separate, standalone Part D plan for their prescription needs. Those in Medicare Advantage plans should verify that their plan continues to meet their prescription requirements, as these bundled plans also change annually.
Fewer Choices for Beneficiaries in 2026
The landscape for standalone Part D plans is contracting. For the 2026 plan year, a typical shopper will have between eight and 12 plans to choose from, according to Juliette Cubanski, a Medicare expert at KFF. This represents a significant reduction from the 12 to 16 options available in 2025.
This decline is part of a longer-term trend. As recently as 2021, beneficiaries had nearly 30 different plans to consider in many markets, a figure highlighted by Gretchen Jacobson of the Commonwealth Fund.
Impact on Low-Income Individuals
The reduction in choices is particularly acute for those who qualify for low-income subsidies. KFF data shows that depending on the state, only one to four plans will be available at no premium for this group in 2026. This is a stark contrast to 2021, when eight such plans were available.
This narrowing of options can make it harder for the most financially vulnerable beneficiaries to find affordable coverage that includes all their necessary medications.
Insurer Market Exits
Several insurance companies are scaling back their presence in the standalone Part D market. Most notably, Elevance, a major Blue Cross-Blue Shield carrier, is exiting the market entirely. Analysts attribute these moves to increased financial pressure on insurers from new regulations.
Financial Pressures and Regulatory Changes
Industry experts point to the Inflation Reduction Act (IRA) as a key driver of the market shift. The law introduces significant changes aimed at lowering drug costs for seniors, which in turn affects insurer profitability.
A major provision of the IRA will cap annual out-of-pocket drug expenses for beneficiaries at $2,100 starting in 2026. The law also allows patients to spread their prescription costs throughout the year, rather than facing large bills at once. While beneficial for consumers, these changes place more financial risk on the insurance companies that offer Part D plans.
"I think there’s a lot of inertia and, frankly, people may be concerned that if they switch, they’re going to end up worse off," said KFF's Juliette Cubanski, highlighting why many beneficiaries avoid shopping for new plans despite market changes.
The trend of plan discontinuation is also forcing more people to shop. Research published in the Journal of the American Medical Association found that nearly 11% of people with standalone drug coverage had their plan discontinued in 2024. Dr. Christopher Cai, a study researcher, noted that this figure was typically below 1% before 2023.
Navigating Premiums and Plan Details
While the number of plans is decreasing, the Centers for Medicare and Medicaid Services (CMS) announced that average monthly premiums are expected to drop. The average premium is projected to be $34.50, a decrease of nearly 10%.
Furthermore, consulting firm Oliver Wyman reports that almost every region in the country will have at least one plan option with a monthly premium under $20.
Look Beyond the Premium
Experts caution beneficiaries not to focus solely on the monthly premium. A lower premium could be accompanied by other cost-sharing measures or limitations.
Shoppers should carefully review these key details:
- Deductibles: The amount you must pay before the plan begins to cover costs.
- Formularies: The official list of drugs covered by the plan. A plan may not cover all of a person's specific medications.
- Pharmacy Networks: Ensure your preferred pharmacy is considered in-network to avoid higher out-of-pocket costs.
It is also important to note that while some premiums are falling, insurers will be permitted to raise premiums by as much as $50 per month for 2026, an increase from the $35 limit in the current year. Cubanski stated that only some plans are expected to implement such a large increase.
How to Get Help and Make a Decision
The annual open enrollment period, from October 15 to December 7, is the primary opportunity to switch plans for the upcoming year. Given the changing market, proactive shopping is more important than ever.
Resources for Beneficiaries
Several resources are available to help individuals compare plans and make informed decisions:
- Medicare Plan Finder: The official federal government website allows users to compare plan prices, coverage details, and formularies based on their specific medications.
- State Health Insurance Programs (SHIPs): Every state has a SHIP program that offers free, unbiased counseling and assistance to Medicare beneficiaries.
Brokers advise against delaying the decision-making process. Many people wait until the first week of December, often after holiday discussions with family, which can lead to a crunch for assistance and potentially rushed decisions.
For some, switching to a Medicare Advantage plan that includes prescription coverage might be an option. However, these plans often have more restrictive networks of doctors and hospitals, which can be a significant drawback, especially for those in rural areas with fewer healthcare providers.
