WASHINGTON, DC – As Medicare open enrollment for 2026 launched on October 15, 2025, nearly 66 million beneficiaries face a landscape of significant changes: a new $2,100 out-of-pocket cap on prescription drug costs, substantial premium increases, benefit reductions on many Medicare Advantage plans, and new prior authorization requirements in six states. For many seniors, 2026 represents the most consequential Medicare changes in a decade.
The stakes are high. According to KFF (Kaiser Family Foundation), nearly seven out of ten Medicare beneficiaries don't compare plan options during open enrollment. That habitual inaction could be expensive in 2026—potentially costing thousands of dollars for those who don't actively review and adjust their coverage.
Understanding what's changing, how it affects you, and what actions to take during the October 15-December 7 enrollment window can mean the difference between adequate, affordable healthcare coverage and financial strain throughout 2026.
The Big Picture: Why 2026 Is Different
Three major factors converge to make 2026 uniquely challenging for Medicare beneficiaries:
1. The $2,100 Drug Cap Finally Arrives
After years of negotiations, Medicare Part D will implement a $2,100 annual out-of-pocket cap on prescription drug costs in 2026 (up from $2,000 in 2025). This cap represents the culmination of the Inflation Reduction Act's drug pricing reforms and will provide genuine relief for seniors with high medication costs.
However, this cap comes with tradeoffs: Insurers facing limited income from high-cost beneficiaries are responding by raising premiums, increasing costs for commonly prescribed medications, and reducing formulary coverage.
2. Financial Pressure on Medicare Advantage Plans
Medicare Advantage (Part C) plans face severe financial squeeze. Government payment increases haven't kept pace with medical cost inflation, forcing insurers to cut benefits, raise premiums, or both. Some major carriers including UnitedHealthcare have eliminated plans entirely in certain markets.
The result: Many beneficiaries will see reduced dental, vision, and hearing benefits, higher copays, more restricted provider networks, and increased costs in 2026.
3. New Prior Authorization Requirements
Beginning January 1, 2026, Medicare beneficiaries in Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington will need prior authorization for 17 specific medical services including pain management procedures and treatments for urinary incontinence. While intended to reduce fraud and unnecessary procedures, prior authorization adds administrative barriers and delays to healthcare access.
Breaking Down the Major Changes
Part B Premium Increase: 12% Jump to $206.50
The Medicare Part B monthly premium (covering doctor visits, outpatient care, preventive services, and medical equipment) will increase approximately 12% to $206.50 in 2026, up from $185 in 2025.
Annual Cost Impact: The increase adds nearly $2,500 to annual healthcare costs for Medicare beneficiaries.
Why the increase: Medicare actuaries cite several factors:
- Rising physician and hospital costs
- Increased utilization of expensive specialty drugs administered in clinical settings (covered under Part B, not Part D)
- Growing costs for home healthcare and durable medical equipment
- Actuarial adjustments to maintain Part B solvency
Who pays more: Higher-income beneficiaries face additional surcharges through the Income-Related Monthly Adjustment Amount (IRMAA). In 2026, anyone whose 2024 income exceeded $107,000 individually ($214,000 for joint filers) pays surcharges ranging from $76.40 to $448 monthly on top of the base $206.50 premium.
Example: A beneficiary with 2024 income of $130,000 will pay $283 monthly for Part B ($206.50 base + $76.50 IRMAA) totaling $3,396 annually—a $948 increase from 2025.
Action Step: If your income dropped significantly since 2024 due to retirement, job loss, divorce, or other life-changing events, you can appeal your IRMAA determination through Social Security.
Part D: $2,100 Cap Arrives with Higher Premiums
The Part D prescription drug benefit undergoes the most significant transformation in its 20-year history.
The Good News: Out-of-Pocket Cap
Starting January 1, 2026, no Medicare beneficiary will pay more than $2,100 out-of-pocket annually for covered prescription drugs. Once you hit the cap, all additional covered drugs cost $0 for the rest of the year.
This is revolutionary for beneficiaries with expensive medications:
Example—High-Cost Cancer Patient:
- 2024 costs: Patient taking Revlimid (cancer medication) with $180,000 annual cost paid approximately $8,200 out-of-pocket before reaching catastrophic coverage, then 5% coinsurance continued
- 2026 costs: Same patient pays maximum $2,100, saving approximately $6,100 annually
For patients with multiple expensive medications, annual savings can exceed $10,000.
The Complex News: How Premiums and Drug Coverage Are Changing
The $2,100 cap limits insurers' income, forcing them to adjust costs elsewhere:
Premium Increases: Part D monthly premiums can increase up to $50 in 2026 (compared to $35 maximum increase in 2025). For many beneficiaries, premiums could jump from $30-40 monthly to $70-90 monthly—an additional $480-600 annually.
Formulary Changes: Many plans are restructuring formularies (lists of covered drugs) to:
- Move some medications to higher tiers with larger copays
- Reduce coverage of certain drug classes
- Require generic substitutions or step therapy (trying cheaper alternatives first) more frequently
- Remove some brand-name drugs entirely
Copay Increases: Beneficiaries who don't hit the $2,100 cap may face higher copays throughout the year as insurers try to collect revenue before beneficiaries reach the cap limit.
The Math Problem: If you currently pay $600 annually for prescriptions, will you save money in 2026? Probably not. Your drugs will cost roughly the same or slightly more, but your premiums might increase $400-500 annually. The $2,100 cap helps high-cost beneficiaries but may increase costs for those with moderate drug needs.
The Great News: Negotiated Drug Prices
Medicare's new price negotiation authority delivers significant savings on ten high-volume medications in 2026:
Blood thinners:
- Eliquis: 38% discount from list price
- Xarelto: 41% discount
Diabetes medications:
- Januvia: 79% discount
- Jardiance: 66% discount
- Farxiga: 68% discount
Additional negotiated drugs include Entresto (heart failure), Enbrel (autoimmune disorders), Imbruvica (cancer), Stelara (autoimmune disorders), and Novolog (insulin).
Important: Part D plans can negotiate even lower prices than Medicare's negotiated list prices. Your actual copay depends on your plan's specific formulary and tier structure.
Action Step: If you take any of the ten negotiated drugs, compare plans carefully. Use Medicare's Plan Finder tool to enter your specific medications and see which plan offers the lowest total cost (premiums + copays) for your drug regimen.
Medicare Advantage: Shrinking Benefits and Rising Costs
Medicare Advantage (MA)—private insurance alternatives to original Medicare—faces significant challenges in 2026.
Why MA Plans Are Struggling:
Medicare pays MA insurers a fixed amount per beneficiary (risk-adjusted). That payment increased just 3.7% for 2026, well below medical cost inflation of 6-8%. Insurers must cut costs to maintain profitability.
What's Changing:
Benefit Reductions:
- Dental benefits being reduced (fewer covered procedures, lower annual maximums, higher copays)
- Vision benefits shrinking (less frequent eye exams, smaller allowances for glasses/contacts)
- Hearing benefits declining (reduced coverage for hearing aids, fewer follow-up visits)
- Over-the-counter (OTC) benefit allowances decreasing from $100-150 quarterly to $50-75
- Fitness benefits (gym memberships, fitness classes) being eliminated or reduced
Network Restrictions:
- Provider networks narrowing (fewer doctors and hospitals in-network)
- Specialist access becoming more limited
- Some plans eliminating out-of-network coverage entirely
Cost Sharing Increases:
- Higher copays for primary care visits (often $10-15, up from $0-5)
- Increased specialist copays (often $50-80, up from $35-50)
- Higher hospital copays and coinsurance
- Increased costs for imaging, lab tests, and procedures
Plan Exits: Major insurers are discontinuing specific plans. UnitedHealthcare, the largest MA provider, is not offering all 2025 plans in 2026. Humana, Anthem, and other carriers have also reduced plan offerings.
What This Means: If your plan is being discontinued, you'll receive notice and must choose a new plan. Don't default to your carrier's replacement recommendation—it may not be your best option. Shop all available plans.
MA vs. Original Medicare: The Core Tradeoff Remains
Despite 2026 changes, the fundamental choice between Medicare Advantage and original Medicare persists:
Medicare Advantage Advantages:
- Often lower monthly premiums than original Medicare + Medigap + Part D
- Built-in out-of-pocket maximum (federal maximum: $9,400 for 2026; many plans offer lower)
- Additional benefits: dental, vision, hearing, fitness, OTC allowances, transportation
- Integrated coverage (medical + prescription in one plan)
Medicare Advantage Disadvantages:
- Restricted provider networks (must use in-network doctors/hospitals or pay more)
- Prior authorization requirements (need plan approval before many services)
- Referral requirements to see specialists
- Limited coverage when traveling outside plan's service area
Original Medicare Advantages:
- See any doctor or hospital that accepts Medicare nationwide
- No referrals needed to see specialists
- No prior authorization for covered services
- Travel flexibility (coverage nationwide)
Original Medicare Disadvantages:
- Requires separate Part D drug plan purchase
- Requires Medigap supplemental plan for comprehensive coverage (adds $150-300+ monthly)
- No out-of-pocket maximum without Medigap
- No dental, vision, hearing benefits (must purchase separately)
- Total cost often higher ($400-500+ monthly when combining Part B + Part D + Medigap)
Critical Consideration for 2026: If you're on Medicare Advantage and considering switching to original Medicare, understand that in most states you can be denied Medigap coverage or charged higher premiums based on health conditions. The guaranteed-issue period for Medigap is only during your initial Medicare enrollment. Switching from MA to original Medicare later can be difficult and expensive if you have health issues.
Prior Authorization Expansion: Six States Affected
Beginning January 1, 2026, Medicare beneficiaries in Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington will need prior authorization for 17 specific services:
Procedures requiring prior authorization:
- Pain management injections and nerve blocks
- Urinary incontinence treatments
- Certain cardiovascular procedures
- Select outpatient surgeries
- Specific imaging studies (when high-cost alternatives exist)
Impact: Prior authorization adds administrative steps before receiving care:
- Provider submits authorization request to Medicare
- Medicare reviews medical necessity
- Approval or denial issued (typically 3-7 business days)
- If denied, patient can appeal or pay out-of-pocket
Concern: Medical advocacy groups worry prior authorization will delay necessary care and create barriers for seniors needing prompt treatment.
Why these states: CMS (Centers for Medicare & Medicaid Services) selected these states based on higher-than-average utilization rates for the targeted procedures, suggesting potential overutilization or fraud.
Action Step: If you live in an affected state and receive any of these services, discuss with your provider how to avoid authorization delays. Ensure medical necessity is well-documented in your records.
IRMAA: Higher Medicare Premiums for Higher Earners
The Income-Related Monthly Adjustment Amount (IRMAA) increases both Part B and Part D premiums for higher-income beneficiaries. In 2026, IRMAA thresholds and surcharges rise:
2026 IRMAA Structure (based on 2024 income):
Income: $107,000 or less individual / $214,000 or less joint
- Part B monthly premium: $206.50
- Part D monthly surcharge: $0
Income: $107,001-$133,500 individual / $214,001-$267,000 joint
- Part B monthly premium: $283 ($76.50 surcharge)
- Part D monthly surcharge: $13.70
Income: $133,501-$167,000 individual / $267,001-$334,000 joint
- Part B monthly premium: $392.30 ($185.80 surcharge)
- Part D monthly surcharge: $35.30
Income: $167,001-$200,000 individual / $334,001-$400,000 joint
- Part B monthly premium: $501.60 ($295.10 surcharge)
- Part D monthly surcharge: $56.90
Income: $200,001-$500,000 individual / $400,001-$750,000 joint
- Part B monthly premium: $610.90 ($404.40 surcharge)
- Part D monthly surcharge: $78.60
Income: Above $500,000 individual / Above $750,000 joint
- Part B monthly premium: $654.90 ($448.40 surcharge)
- Part D monthly surcharge: $91
Example—Affluent Retiree:
- 2024 income: $180,000 (individual)
- 2026 Part B: $501.60 monthly ($6,019 annually)
- 2026 Part D surcharge: $56.90 monthly ($683 annually)
- Total Medicare premium surcharge over base: $4,200 annually
Life-Changing Event Appeals: If your income dropped significantly since 2024 due to:
- Work stoppage/reduction
- Divorce or death of spouse
- Loss of income-producing property
- Loss or reduction of pension income
You can request IRMAA reconsideration through Social Security, potentially reducing or eliminating surcharges.
How to Make Smart Decisions During Open Enrollment
The October 15-December 7 enrollment window is your opportunity to optimize coverage for 2026. Here's your action plan:
Step 1: Gather Your Information
Compile:
- Current medications (names, dosages, quantities)
- Current doctors and specialists (names, practices)
- Expected medical needs for 2026 (scheduled surgeries, ongoing treatments)
- Preferred pharmacies
- Current plan documents and costs
Step 2: Use Medicare's Plan Finder Tool
Medicare's official Plan Finder (Medicare.gov/plan-compare) is the most comprehensive comparison tool:
How to use it:
- Enter your ZIP code
- Input your medications with dosages
- Select your preferred pharmacies
- Choose your doctors (optional but recommended)
- Review results showing total estimated annual cost (premiums + drug copays)
The tool shows:
- All available Part D plans in your area
- All available Medicare Advantage plans
- Total estimated costs based on your specific medications and usage
- Star ratings for plan quality and customer satisfaction
Critical: Don't just compare premiums. Compare total annual cost including premiums, copays, and deductibles. A plan with a $20 monthly premium might cost more overall than a $45 premium plan if its drug copays are much higher.
Step 3: Consider HeyMOE for Part D Analysis
HeyMOE (heymoe.com, $30 annually) is a specialized Part D review service from 65 Incorporated that provides personalized analysis of Part D options based on your specific medication regimen. For beneficiaries taking multiple medications, especially if some are expensive, the $30 investment often pays for itself by identifying savings Medicare's generic tool might miss.
Step 4: Contact Your State Health Insurance Assistance Program (SHIP)
Every state operates a SHIP providing free, objective Medicare counseling:
SHIP counselors can:
- Review your specific situation
- Explain complex coverage rules
- Compare plans without sales pressure
- Help you understand notices from Medicare or your current plan
- Assist with appeals and grievances
Find your local SHIP at shiphelp.org or call 877-839-2675.
Why SHIP matters: Unlike insurance agents who earn commissions, SHIP counselors are independent and have no financial incentive to steer you toward specific plans. Their advice is truly objective.
Step 5: Don't Ignore Plan Change Notices
If you're on Medicare Advantage or Part D, you received (or will receive) an "Annual Notice of Change" (ANOC) detailing 2026 modifications to your plan:
Review carefully:
- Premium changes
- Benefit reductions
- Formulary changes (drugs added or removed)
- Network changes (providers added or removed)
- Cost-sharing changes (copay and coinsurance adjustments)
Red flags requiring action:
- Your plan is being discontinued
- Your medications are being removed from formulary or moved to higher tiers
- Your doctors are leaving the network
- Significant premium increases (20%+)
- Major benefit reductions in services you use frequently
If you see red flags, you must compare alternatives. Don't assume your current plan remains your best option.
Step 6: Special Considerations for Different Beneficiary Types
High Drug Costs (Spending $3,000+ annually on prescriptions):
- The $2,100 cap is genuinely helpful for you
- But premiums matter—find plans with lowest premium + drug cost total
- Check if your drugs are on formulary and which tier
- Confirm your pharmacy is in-network (mail-order often saves money)
- Consider manufacturer assistance programs and patient assistance foundations
Low Drug Costs (Spending less than $500 annually):
- You probably won't hit the $2,100 cap
- Focus on finding lowest-premium plans
- Consider plans with higher deductibles if monthly costs are low
- Watch for premium increases—you're paying more for a cap you won't use
Medicare Advantage Members Satisfied with Current Plan:
- Review ANOC carefully to confirm benefits aren't changing significantly
- Check if your doctors remain in-network
- Verify prescription formulary hasn't changed unfavorably
- Compare to other MA plans—competition may offer better options
Medicare Advantage Members Dissatisfied or Facing Major Changes:
- Compare other Medicare Advantage plans in your area
- Consider switching to original Medicare + Medigap + Part D (but understand you may face Medigap underwriting/higher costs if you have health issues)
- Consult SHIP counselor to review options objectively
Original Medicare with Medigap:
- Review Part D options annually—formularies and costs change every year
- Verify your medications are covered on your current Part D plan for 2026
- Consider whether Medigap plan changes might save money (only possible in some states without underwriting)
What About Dental, Vision, and Hearing Coverage?
Original Medicare doesn't cover routine dental, vision, or hearing care. Medicare Advantage plans often include these benefits, but they're shrinking in 2026.
If you need these services:
Dental insurance: Standalone dental plans (often $25-60 monthly) may provide better value than reduced MA dental benefits. Compare annual premiums + out-of-pocket costs vs. paying cash. For major procedures (crowns, root canals), dental insurance often pays for itself.
Vision insurance: Many standalone vision plans ($15-30 monthly) cover annual exams and provide allowances for glasses/contacts. Compare to discount programs (VSP, EyeMed) that cost less but offer smaller savings.
Hearing aids: Medicare doesn't cover hearing aids under original Medicare or most MA plans. Costs range from $1,000-4,000 per pair. Consider:
- Costco hearing aids (often $1,500-2,500/pair, high quality)
- Online direct-to-consumer brands (Lively, Audicus, often $1,000-2,000/pair)
- Veterans: VA benefits may cover hearing aids
- State programs: Some states offer hearing aid assistance for low-income seniors
The calculation: If you need extensive dental, vision, or hearing services, Medicare Advantage with supplemental benefits might be more economical than original Medicare + standalone coverage, even with 2026 benefit reductions.
Long-Term Care: Medicare's Big Gap
Neither original Medicare nor Medicare Advantage covers long-term custodial care (help with activities of daily living like bathing, dressing, eating). This is the largest healthcare expense gap facing seniors.
Average long-term care costs:
- Home health aide: $33/hour ($70,000+ annually for daily care)
- Assisted living facility: $60,000-90,000 annually
- Nursing home: $100,000-150,000 annually
Options to cover long-term care costs:
Long-term care insurance: Traditional long-term care insurance (policies purchased decades before needing care) pays benefits for nursing home, assisted living, or home care. Premiums are expensive ($3,000-8,000+ annually depending on age and benefits) but can prevent financial catastrophe if extended care is needed.
Hybrid life insurance/annuity policies: Life insurance or annuities with long-term care riders provide living benefits if you need long-term care, death benefits if you don't. Often more affordable than standalone long-term care insurance.
Medicaid: For low-income, low-asset seniors, Medicaid covers long-term care. However, Medicaid requires "spending down" assets and income limits, and not all nursing homes accept Medicaid.
Self-insuring: Wealthy individuals may choose to self-insure (pay out-of-pocket if needed). This requires substantial liquid assets ($500,000+).
Most seniors have no long-term care plan, putting their retirement savings and family finances at risk if extended care is needed.
The Bottom Line: What 2026 Really Means
Medicare in 2026 presents a paradox:
Better protection for high-cost beneficiaries: The $2,100 drug cap and negotiated drug prices provide genuine relief for seniors with expensive medication needs.
Higher costs for moderate-use beneficiaries: Premium increases and benefit reductions mean many beneficiaries will pay more in 2026 for similar or reduced coverage.
More complexity: With plans changing significantly, the need for active comparison and informed decision-making has never been greater.
The stakes are high: Making the wrong choice can cost thousands of dollars. But so can inaction—defaulting to your current plan when better options exist leaves money on the table.
The opportunity: For beneficiaries who actively shop, compare plans, and optimize coverage during open enrollment, 2026 can actually deliver better value than 2025. The key is taking action.
Medicare open enrollment isn't exciting. Reviewing plan documents, comparing formularies, and entering medications into comparison tools is tedious. But for most beneficiaries, one hour of focused effort during open enrollment saves $500-2,000 annually.
That's $500-2,000 per hour for your time. Few activities offer that return.
Don't be part of the 70% who don't compare plans. Be part of the 30% who do—and capture the savings available to those willing to invest the effort.
Need help navigating Medicare's 2026 changes? With significant shifts in premiums, benefits, and coverage options, making informed decisions during open enrollment requires expertise. Whether you're evaluating Medicare Advantage vs. original Medicare, comparing Part D plans, or trying to understand how the $2,100 drug cap affects your specific situation, working with knowledgeable advisors can help ensure you get optimal coverage at the best possible cost.
While traditional Medicare decisions are complex, modern insurance guidance platforms can help you understand options and make confident choices. For those also managing other insurance needs—home, auto, life—working with comprehensive insurance partners who understand the full picture of your coverage needs can ensure all your policies work together efficiently. Platforms like Soma offer streamlined insurance solutions that help you make informed decisions across all your insurance needs.
Sources: Centers for Medicare & Medicaid Services (CMS), KFF (Kaiser Family Foundation), Medicare Rights Center, AARP Medicare Guide, National Council on Aging, Medicare.gov, 2026 Medicare Open Enrollment Documentation