The final numbers aren’t in yet, but it looks like premiums for Medicare Part D prescription drug insurance policies will increase for 2026, and they could increase substantially.
Part D policies are insurance policies issued by private sector companies and overseen and regulated by the Centers for Medicare and Medicaid Services (CMS). The program has been in existence since 2006 and is partly subsidized by the federal government.
There were substantial premium increases and reductions in benefits for 2025. Several factors caused those changes, such as higher use of prescription drugs and price increases for some drugs.
Another reason Part D premiums increased from 2024-2025 was the change in Medicare’s coverage of catastrophic prescription drug expenses.
Previously, there was a coverage gap, also known as the doughnut hole. The coverage gap began after a beneficiary’s prescription medication spending exceeded a certain level for the year. Then, the beneficiary paid all prescription drug expenses until out-of-pocket spending for the year hit a certain level. After that, the beneficiary paid only 5% of costs for the rest of the year.
The Inflation Reduction Act eliminated the coverage gap and phased in a change. For 2025 and later years, a Part D policyholder’s out-of-pocket prescription drug spending is capped at $2,000 per year.
The law required the insurance companies to pick up most of the cost after a beneficiary’s spending exceeded the $2,000 limit. That pushed Part D premiums higher for 2025, despite a $6.2 billion increase in the federal government’s subsidies to the insurers for the year.
The subsidy is expected to be decreased by about 40% in 2026.
Insurers still are developing their plans for 2026 and submitting bids to CMS. But insurers told The Wall Street Journal that premiums are likely to increase significantly for 2026 because of higher costs (due to tariffs and higher claims), regulatory changes and the subsidy reduction.
CMS officials told the Journal that premiums are expected to rise about $10 per month solely because of the reduced subsidy. They expect the total increase in the average premium for 2026 to be no more than $50 per month. The increases will vary between policies and insurers.
Details of Part D policies won’t be known until the Open Enrollment season begins on October 7. But beneficiaries should begin preparing now.
Beneficiaries should expect that some current policies won’t be available in 2026.
They also should expect to pay higher Part D premiums in 2026 and beyond for all policies. CMS said in a Fact Sheet on July 28 that it took unprecedented action to avoid significant year-to-year price increases.
Actions it took included negotiating with insurers on their bid terms for 2026 Part D policies and denying bids it considered unacceptable.
CMS hasn’t published data on the range of 2026 premiums and plan terms. It said data such as average premiums will be released in mid- to late September.
Beneficiaries of original Medicare should plan to pay higher Part D premiums in 2026 and beyond.
Some beneficiaries might think they can avoid the premium increases and reduced benefits by enrolling in a Medicare Advantage plan.
Prescription drugs are a component in those plans instead of a separate benefit. But Medicare Advantage plans face the same rules and conditions on their prescription drug benefits as do insurers who offer standalone Part D policies. The changes can’t be avoided by enrolling in a Medicare Advantage plan.
