2026 Medicare Part D Updates: Premium Increases, Penalties, and Cost Caps

The Centers for Medicare and Medicaid Services (CMS) has announced key updates to Medicare Part D prescription drug plans for 2026, reflecting regulatory adjustments under the Inflation Reduction Act.

The base premium for Part D plans will increase by 6%, consistent with the Act's limits, impacting enrollees’ costs, though actual premiums may vary by plan. A notable change affects the penalty for delayed enrollment in Part D; individuals who delay enrollment beyond 63 days without credible coverage will face a monthly penalty of 1% of the base premium, resulting in gradual increases from previous years. CMS's premium stabilization demonstration, initiated to counterbalance the introduction of a $2,000 cap on out-of-pocket drug costs, will continue into 2026 but with a reduced subsidy, leading to a higher capped premium increase of $50, up from $35 in 2025, signaling potential premium growth for many beneficiaries.

Medicare Advantage plans, subsidized via government rebates exceeding $500 per enrollee in 2025, may provide more stable or no monthly premiums for the majority of enrollees, often accompanied by lower drug plan deductibles. Despite rising premiums and penalties, the maximum out-of-pocket cost for covered Part D drugs at in-network pharmacies will grow modestly by $100 in 2026. Beneficiaries are advised to attentively review the Annual Notice of Changes and evaluate their coverage options during the upcoming Open Enrollment Period to mitigate higher costs and optimize plan benefits.