Higher Premiums, Drug Price Drops, and Looming Program Cuts

2. Part D’s Catastrophic Threshold Is Going Up

The Inflation Reduction Act (IRA) instituted a cap on out-of-pocket drug costs for people with Medicare Part D. This catastrophic threshold is similar to an out-of-pocket maximum in other health plans, but it just applies to prescription drugs. After you meet it, the plan pays 100% of your costs. The threshold will increase in 2026 from $2,000 to $2,100. 

Even with the increase, “for seniors on fixed income or low income, there’s strong protection against catastrophic drug costs,” said Harry Nelson, health care attorney and managing partner of Nelson Hardiman.

3. It’ll Get Easier to Participate in Prescription Payment Plans

Last year, you had the chance to sign up for the Medicare Prescription Payment Plan (MPPP), which allows you to spread your out-of-pocket drug costs across the calendar year instead of paying everything at once at the pharmacy if you have a Part D plan. 

This year, if you sign up for the payment plan, it’s going to be easy to keep the payment plan going in the future without having to think about it. If you enroll in 2026, you’ll automatically stay enrolled in 2027 unless you opt out. You’ll get a renewal notice at the end of each election period outlining any new terms and conditions. If you decide to leave, providers must process your request within three calendar days.   

4. Your Medicare Advantage Plan Might Have Fewer Supplemental Benefits

Beginning in 2026, Medicare Advantage (MA) Plans, a long-time alternative to Original Medicare, are getting new guardrails on what they can offer under Special Supplemental Benefits for the Chronically Ill (SSBCI). SSBCI are non-medical benefits that are supposed to contribute to the well-being and functioning of people with certain chronic conditions. Now, they must exclude: 

• Non-healthy food
• Alcohol
• Tobacco
• Life insurance

The new provisions continue a trend that has seen private insurers pare back MA plan supplemental benefits, including for over-the-counter medications, transportation services, nutrition services, and meals, in recent years. 

However, Nelson said these changes don’t represent a fundamental reshaping. “They’re kind of sanding down the edges,” he said. Plus, the scale back could encourage seniors to focus on a plan’s core value.

“For the individual, it does remove the distractions,” said Brandy Thompson, CEO of benefitbay, a platform that helps employers offer their employees money to buy health insurance, including Medicare Supplement plans. In prior years, “they may have just focused on that supplemental thing that was eye-catching … Now they’re going to be forced to make the decision on actual network access, drugs, and their needs.” 

5. You Might Face Prior Authorization Requirements for Original Medicare

Six states—Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington—will test a new model that effectively requires you to get pre-authorization for an expanded set of services if you have Original Medicare (Parts A and B). In other words, Medicare must approve the treatment before you can get care.

These services include, but are not limited to, skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis. They exclude inpatient and emergency services. 

Historically, Original Medicare only required pre-authorization for durable medical equipment and certain outpatient hospital department services. 

Prior authorization rules are already common among Medicare Advantage plans, with 99% of enrollees shouldering prior authorization requirements for at least some services, including hospital stays, nursing facility stays, and chemotherapy. 

6. 10 Negotiated Drug Prices Should Fall—With More Price Cuts to Come

The Inflation Reduction Act gave Medicare the authority to directly negotiate the price of high-cost, single-source drugs with pharmaceutical manufacturers. Previously, it relied on commercial prices set by private health insurance companies.

In 2026, the first set of negotiated prices will take effect. They apply to the following prescriptions: 

• Eliquis
• Enbrel
• Entresto
• Farxiga
• Imbruvica
• Januvia 
• Jardiance
• Fiasp/NovoLog
• Stelara
• Xarelto

Given that the list of drugs is relatively short, next year’s cost savings may be minimal—and the program’s long-term effects remain hard to gauge. 

Broadly speaking, however, “the price negotiation program, combined with other provisions of the [IRA] … is expected to make prescription drugs more affordable for millions of seniors, particularly those with high medication costs,” said Luke Eckley, chief revenue officer at Apollo Insurance Group. 

The Centers for Medicaid and Medicare (CMS) announced in January that its 2027 slate of 15 drugs for price negotiations would include weight loss drugs Ozempic, Rybelsus, and Wegovy. 

7. Insulin Costs Could Drop Even More

The IRA introduced a hard $35 cap on what you pay for monthly insulin supplies covered under Part B and Part D back in 2023. It also required insulin to be covered before you meet your deductible. 

Starting in January 2026, this cap gets more flexible to allow for deeper savings, with Medicare enrollees paying the lesser of:

• $35;
• 25% of the maximum fair price established for the covered insulin product under the Medicare Drug Price Negotiation Program; or
• 25% of the negotiated price under the standalone Medicare prescription drug plan (PDP) or MA plan with prescription drug coverage (MA-PD plan).

8. You’re Still Eligible for Free Vaccines, Though They May Be Harder to Come By

In 2023, the IRA eliminated deductibles, copays, and coinsurance for all adult vaccines recommended by the Advisory Committee for Immunization Practices (ACIP). This rule will stay in effect in 2026. However, there is uncertainty as to whether the current list, which includes the COVID-19, RSV, and Shingles vaccines, will change. ​

In June, U.S. Secretary of Health and Human Services (HHS) and noted vaccine skeptic Robert F. Kennedy Jr. removed all 17 members of the ACIP.

In light of growing vaccine hostility, “the economics of ordering and storing [vaccines] has gotten more difficult,” Nelson said. ”That may lead to shortages.”

9. Some Dual-Eligible Enrollees Will Lose Access to Medicaid and Medicare

The GOP’s big bill introduced stringent work and enrollment requirements for all Medicaid recipients.  OBBBA exempts seniors 65 and over or with disabilities from work requirements, but if you’re in this group, you still must follow new enrollment and eligibility verification rules. The administrative burden of meeting these requirements every six months could prove too much for some people, especially those with disabilities. That could cost them their Medicaid coverage, even though they’re eligible for it.

Medicaid “covers a range of services that Medicare does not, such as long-term care, home and community-based services, dental, vision, and hearing care,” Eckley said. “The loss of Medicaid would mean losing access to these critical benefits.”

The OBBBA also delayed the implementation of a Biden administration rule aimed at reducing barriers to enrollment in the Medicare Savings Programs (MSPs), which allow Medicaid to cover Medicare premiums and other out-of-pocket expenses for low-income individuals.

So, even if you are able to keep your Medicaid plan, if you’re not able to enroll in the MSP and receive the subsidies, you could find you’re not able to afford Medicare. 

10. The Ballooning National Deficit Could Force Medicare Cuts

Trump’s megabill didn’t make many direct changes to Medicare, but its effects on the national deficit could trigger deep cuts to program funding. Expected to add $3.4 trillion to the deficit by 2034, the bill’s provisions could lead to the “sequester cliff,” which triggers automatic spending cuts under the Pay-As-You-Go law once the deficit reaches a certain amount. 

“We are going to hit a ‘sequester cliff’ that causes mandatory cuts to Medicare unless Congress acts to solve the issue, so even though [the OBBBA] did not intentionally cut Medicare, it could result in big Medicare cuts,” said Dylan H. Roby, chair and professor of health, society, and behavior at the University of California, Irvine.

The CBO estimates Medicare would face $45 billion in cuts for fiscal year 2026, and a total of $536 billion by 2034.

Even if Congress addresses this issue, the bill’s drastic changes to the Medicaid program are expected to reduce access to health care by driving up health care costs, forcing reductions in services, and causing hospital closures.

“Access to care is my biggest concern in the long term,” Thompson said. “We have an overall health care crisis in America that is not Medicare-specific.”

How to Prepare for 2026 Medicare Enrollment

Medicare open enrollment begins Oct. 15 and runs until Dec. 7. During that time, you can join, drop, or switch Medicare Advantage or Part D drug plans. You can also return to Original Medicare from a Medicare Advantage plan.

You can navigate forthcoming changes to Medicare—and your health insurance—by taking these steps. 

• Avoid blindly re-enrolling in your current plan, as it can change significantly year to year. You may feel very loyal to your plan, but then suddenly find out that its provider network has shrunk and your doctor is no longer included, Thompson said. Confirm that your plan still offers the best coverage for your area and budget compared to alternatives. 
• Read the list of covered medications in Part D plans carefully. These lists are called formularies. “Medicare Part D plans and pharmacy benefit managers (PBMs) may need to re-evaluate their formularies and pricing strategies,” in light of negotiated drug prices, Eckley said. As a result, it’s essential to check if the medication you’re taking is covered before joining a plan in 2026. 
• Seek assistance. Work with a Medicare insurance broker, Huntley recommended. An independent broker (one who doesn’t just work for one insurance company) can help you understand your options, particularly if you’re considering a switch from Medicare Advantage to Original Medicare plus a Medigap plan. 

The Bottom Line

On paper, the 2026 Medicare changes seem fairly routine. Premiums, deductibles, and other cost-sharing expenses tend to rise year-over-year, and some changes, such as negotiated drug prices and free vaccinations, simply expand or formally introduce provisions of the IRA. However, uncertainty looms, given the OBBBA’s impact on the national deficit and the health care system in general. Prepare for open enrollment by familiarizing yourself with the changes—and your options in best- or worst-case scenarios.