Medicare Costs are Rising in 2026: How To Prepare

Medicare premiums and out-of-pocket expenses are projected to rise sharply in 2026. From higher Part B and Part D costs to bigger deductibles, here’s what to expect — and what you can do to help manage the increases. 

According to the Centers for Medicare and Medicaid Services (CMS), the standard monthly Part B premium is expected to reach $206.50, up from $185 in 2025. That’s an 11.6% increase, the largest jump in several years.¹ Deductibles and other out-of-pocket expenses are also projected to rise. Part B’s annual deductible could climb from $257 to $288, while Part D drug coverage costs will also move higher.¹ However, there are ways to prepare for, and possibly lower, your costs.  

Why are Medicare costs increasing?

Several factors are driving these hikes: 

• Rising demand as more Americans become eligible for Medicare 

• Growing expenses for hospital and outpatient care 

• Increasing drug prices 

• A steady Medicare payroll tax rate that hasn’t kept pace with program costs 

Part B premiums and deductibles

For 2026, the Part B premium is projected at $206.50, with a $288 deductible. High-income beneficiaries will also see a higher Income-Related Monthly Related amount (IRMAA), ranging from about $83 to nearly $496 more per month, depending on income level.¹ 

Part D prescription drug costs

Part D coverage, offered by private insurers, is also expected to become more expensive. The base beneficiary premium is estimated to rise 6%, from $36.78 to $38.99.¹ 

Additional changes include: 

• Deductibles increasing from $590 to $6151 

• Catastrophic coverage threshold rising from $2,000 to $2,1001 

• IRMAA surcharges for higher-income enrollees are climbing from $85.80 to $91, while the lowest income tier will pay between $13.70 and $85.80 per month¹ 

Part D changes coming in 2026

Three Part D improvements can help keep costs in check: 

1. Maximum annual out-of-pocket cost capped at $2,100. After reaching your deductible, you’ll pay your 25% cost-sharing. And when you reach $2,100 out of pocket, you’ll pay $0 for prescription drugs for the rest of the year. 
2. Medicare prescription payment plan (MPPP). 2025 was the first year that the MPPP allowed people with Medicare prescription drug coverage to spread the costs of their prescription drugs over the calendar year rather than paying in full each time they fill a prescription. Beginning in 2026, if you participate in the MPPP, you’ll be automatically re-enrolled the following year unless you opt out. 
3. Medicare negotiated drugs will be covered at lower costs. Medicare has selected 10 prescriptions for negotiations and imposed maximum fair prices for this subset. Learn more. 

What you can do to manage rising Medicare costs 

Did you know that Medicare plans can change each year? That’s why all beneficiaries should review their coverage annually to ensure it still fits their needs. The Annual Enrollment Period runs from October 15 to December 7 every year and is the time to make sure your coverage matches your health, medications, and budget for the upcoming year.   

With Medicare costs projected to rise in 2026, it’s more important than ever to take an active role in reviewing your plan. Here are three steps you can take to help manage rising costs: 

1. Read through your plan’s Annual Notice of Change (ANOC). This document outlines any updates to your plan, including changes in coverage, costs, or participating providers. 
2. Think about whether your plan still meets your needs. Your health situation, medications, and budget may have changed. Make sure your budget continues to align with your needs. 
3. Schedule your free Medicare consultation. All clients of Mercer Advisors who are aged 64 and older have free access to our partner, Chapter. With over 24,000 coverage options, Chapter’s Medicare experts can help guide you in choosing the best plan for your health and financial needs.  

As you evaluate your choices, keep the 3 Ps in mind: 

• Providers: Doctors, hospitals, institutions, and pharmacies are all listed under the “providers” umbrella. Is It important to continue seeing the same doctor, or are you open to seeing someone else? As you evaluate your choice between Medigap or Advantage, keep those preferences in mind. 

• Prescriptions: Prescription drug coverage can contribute a lot to your overall healthcare costs. Make a list of the prescription drugs you take and use it to evaluate your alternatives. 

• Priorities: People have different priorities for healthcare coverage. For some, low cost is critical. Others may decide based on their choice of providers. 

Another strategy to help keep rising costs in check is to reduce your IRMAA. Since IRMAA is based on prior-year income, strategies such as Roth IRA conversions or qualified charitable distributions may help lower taxable income. If your income has dropped due to a life event such as retirement, divorce, or the loss of a spouse, you may request an IRMAA adjustment from the Social Security Administration. 

Did You Know? On average, clients who spend 15 minutes reviewing the prescriptions save $1,100 per year — and the savings can be even more significant this year due to the regulatory changes to Medicare Part D.  Source: Chapter

Frequently Asked Questions About 2026 Medicare Costs

How much will Medicare Part B cost in 2026? 

The standard Medicare Part B premium is projected to be $206.50 per month in 2026, up from $185 in 2025. The Part B deductible is also expected to rise from $257 to $288.¹ 

Why are Medicare premiums increasing in 2026? 

Medicare costs are going up due to medical inflation, higher prescription drug prices, increased demand for services, and limited tax revenue growth. As a result, beneficiaries are paying more in premiums and deductibles. 

Will Medicare Part D premiums increase in 2026? 

Yes. The base Part D premium is projected to rise about 6%, from $36.78 to $38.00. Deductibles and the catastrophic coverage threshold will also increase, leading to higher out-of-pocket costs for prescriptions.¹ 

What is IRMAA, and how does it affect Medicare costs? 

The Income-Related Monthly Adjustment Amount (IRMAA) is an added surcharge on Part B and Part D premiums for higher-income enrollees.  

How can I lower my Medicare costs in 2026? 

There are several strategies to manage Medicare expenses: 

• Review your coverage during open enrollment for potential savings. 

• Lower your taxable income to reduce IRMAA surcharges, such as through Roth conversions or charitable IRA distributions. 

• Consider a Medigap policy to cover deductibles, coinsurance, and other expenses 

When is Medicare open enrollment for 2026 coverage?

The Medicare annual enrollment period runs from Oct. 15 to Dec. 7, 2025. During this time, you can switch between Original Medicare and Medicare Advantage, change or drop Part D coverage, or select a new Medicare Advantage plan. 

Medicare guidance for clients of Mercer Advisors

At Mercer Advisors, we prioritize improving financial outcomes and holistic well-being. That’s why we’re collaborating with Chapter, a Medicare advisor, to offer our clients age 64 and older free access to a dedicated Medicare team for personalized plan assessments. With over 24,000 coverage options, Chapter’s Medicare experts can help guide you in choosing the best plan for your health and financial needs. Contact your advisor to connect with Chapter’s team and make informed Medicare choices with ease. If you are not a client and would like to learn more, let’s talk.