Millions of American seniors and individuals with disabilities will face a significant increase in their Medicare Part B premiums starting in 2026. The standard monthly premium is set to jump by nearly 10%, marking the largest percentage increase in four years and placing additional financial pressure on household budgets.
The Centers for Medicare and Medicaid Services (CMS) confirmed the standard monthly premium will rise to $202.90, an increase of $17.90 from the current year. This hike is expected to consume a substantial portion of the anticipated Social Security cost-of-living adjustment for retirees.
Key Takeaways
- The standard Medicare Part B monthly premium will increase by $17.90 to $202.90 in 2026, a nearly 10% rise.
- This is the second-largest dollar increase in the program's history and will impact roughly 69 million Americans.
- The Medicare Advantage market is also contracting, with 10% fewer plans offered and reduced supplemental benefits.
- Rising medical costs, increased service utilization, and a growing number of enrollees are driving the premium hikes.
Details of the Part B Premium Increase
The upcoming $17.90 monthly increase for Medicare Part B is a significant development for the approximately 69 million Americans enrolled in the program. This adjustment represents the second-largest dollar-amount hike in Medicare's history and will directly impact the disposable income of seniors.
For many retirees, this increase will offset a considerable part of their annual Social Security benefit adjustment. Projections indicate the premium hike could absorb nearly one-third of the expected $56 monthly cost-of-living adjustment (COLA) for 2026, tightening budgets already strained by elevated costs for food and utilities.
"In a world in which people are concerned about the affordability of health care and all other needs, it’s pretty distressing that this increase is so large," said Jeanne Lambrew, director of health care reform at The Century Foundation.
This rise in Medicare costs is part of a broader trend of escalating health insurance premiums, affecting those with employer-sponsored coverage and plans through the Affordable Care Act marketplace.
Factors Driving Higher Costs
Several factors are contributing to the upward pressure on Medicare premiums. A primary driver is the general inflation of medical and pharmaceutical costs across the healthcare sector. Additionally, there has been a notable increase in the utilization of medical services by beneficiaries.
The demographic shift of baby boomers aging into Medicare eligibility continues to expand the program's enrollment. Another key factor is the ongoing trend of performing more medical procedures, such as surgeries, in outpatient facilities rather than hospitals. Care in outpatient settings is covered by Medicare Part B, shifting costs away from Part A, which covers hospital stays.
Averted a Larger Hike
According to CMS, the monthly premium increase would have been even higher, by an additional $11, if not for a recent policy change. The agency adjusted payment rules for skin substitutes used in wound care, a move projected to cut spending on these products by nearly 90%. Spending on these items had surged from $256 million in 2019 to over $10 billion last year.
These combined pressures create a challenging financial environment for the federal health program, necessitating adjustments to premiums to maintain its solvency.
Changes in the Medicare Advantage Market
The landscape is also changing for the more than half of Medicare beneficiaries enrolled in Medicare Advantage (Part C) plans. These private insurance plans are undergoing a significant contraction for the second consecutive year as medical costs begin to outpace the reimbursement rates they receive from the federal government.
Fewer Plans, Reduced Options
For 2026, the total number of Medicare Advantage plans available nationwide will fall by 10% to 3,373. This reduction is not uniform, with major insurers like CVS Aetna, Humana, and UnitedHealthcare pulling back plan offerings in at least 100 counties. These changes are expected to directly impact more than 2 million people, who may need to find new coverage.
Vermont Loses All Advantage Options
In an unprecedented move, some beneficiaries will have no Medicare Advantage plans to choose from. Both Blue Cross and Blue Shield of Vermont and UnitedHealthcare are discontinuing their coverage in the state, leaving residents in eight counties with traditional Medicare as their only option.
Despite the cutbacks, most beneficiaries will still have multiple plans to choose from. The national average will be 39 plans per person, down slightly from 42 this year. "Millions of Medicare beneficiaries will continue to have access to a broad range of affordable coverage options in 2026," stated Dr. Mehmet Oz, the CMS administrator.
What Beneficiaries Can Expect
Beyond fewer plan choices, Medicare Advantage enrollees will likely encounter higher costs and less generous benefits in 2026. Many insurers are adjusting their offerings to remain profitable in the current economic climate.
Key changes include:
- Higher Premiums: The average monthly premium for Medicare Advantage plans that include prescription drug coverage will rise to $66, up from $60 this year.
- Rising Out-of-Pocket Limits: The maximum out-of-pocket limit for medical care is increasing by an average of $490, or about 10%.
- Fewer $0 Deductibles: The number of plans offering a $0 deductible for prescription drugs is expected to decrease.
- Skimpier Supplemental Benefits: The popular extra benefits offered by these plans, such as dental, vision, and over-the-counter allowances, are being scaled back. For example, the average annual dental allowance is projected to decline by 10% to $2,107.
Industry experts note that insurers are strategically exiting less profitable markets. "A lot of MAPD plans are trying not to grow," commented Greg Berger, a partner at the consulting firm Oliver Wyman, referring to Medicare Advantage Prescription Drug plans.
Despite the current market disruptions, the long-term outlook for Medicare Advantage remains strong, as it continues to be an attractive market for insurers. The annual open enrollment period for Medicare ends on December 7, giving beneficiaries a window to review their options for the upcoming year.
