Medicare Premiums and Plan Changes Signal Market Shifts for 2026

Medicare Part B premiums will increase by nearly 10% in 2026, marking the largest rise in four years and the second-largest in the program's history, with the standard monthly premium reaching $202.90.

This increase significantly impacts retirees, consuming nearly one-third of the anticipated $56 Social Security cost-of-living adjustment. The rise reflects broader trends in healthcare premium increases across job-based and Affordable Care Act markets, driven by escalating medical and pharmaceutical costs and higher service utilization. The shift toward outpatient services and an influx of baby boomer enrollees also contribute to cost pressures on Medicare.

The Centers for Medicare and Medicaid Services (CMS) noted that part of the premium increase was mitigated by reforms reducing spending on skin substitutes, a costly wound care product category. Meanwhile, Medicare Part D prescription drug plans will see fewer changes in 2026 after prior premium stabilization tied to a subsidy program established by the Inflation Reduction Act. However, plan availability is decreasing as insurers like Elevance exit parts of the market and some raise premiums by up to $50.

Medicare Advantage, covering over half of Medicare beneficiaries, faces significant shifts due to medical costs exceeding federal reimbursements. The number of Medicare Advantage plans is dropping 10%, with major insurers scaling back offerings, impacting more than 2 million enrollees. Some counties, including parts of Vermont, may lose all Medicare Advantage options, reverting beneficiaries to traditional Medicare only. Plan features are also adjusting, with fewer no-premium plans, fewer PPOs, higher out-of-pocket limits, and reduced supplemental benefits such as dental and vision allowances.

Despite these reductions and market exits, most Medicare enrollees will retain access to a diverse set of plans in 2026, with an average of 39 Medicare Advantage options available per county, down from 42. Industry experts note that while the market is contracting in some areas, Medicare Advantage remains an important and attractive segment for insurers. These premium hikes and plan adjustments underscore ongoing cost pressures and market realignments within the Medicare ecosystem moving into 2026.