What’s next for premiums, drug prices and program discounts

2. The Part D catastrophic threshold is rising

The Inflation Cap Act put a cap on drug costs for people with Medicare Part D. This catastrophic threshold is similar to the maximum out-of-pocket drug costs in other health plans, but applies only to prescription drugs. After you meet these requirements, the plan pays 100% of your costs. The limit will increase in 2026 from $2,000 to $2,100.

Even with this increase, “for seniors on fixed or low incomes, there is strong protection against unaffordable drug costs,” said Harry Nelson, a health care attorney and managing partner of Nelson-Hardiman.

3. It will become easier to participate in prescription payment plans

Last year, you had the opportunity to sign up for the Medicare Prescription Payment Plan (MPPP), which allows you to spread your out-of-pocket drug costs over 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 a payment plan, it will be easy to continue the payment plan in the future without having to think about it. If you enroll in 2026, you will automatically remain enrolled in 2027 unless you opt out. You will receive a renewal notice at the end of each election period setting out any new terms and conditions. If you decide to leave, providers must process your request within three calendar days.

4. Your Medicare Advantage plan may have fewer supplemental benefits

Starting in 2026, Medicare Advantage (MA) plans, a long-standing alternative to original Medicare, will get new guardrails on what they can offer under the Special Supplemental Benefit 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:

• Unhealthy food
• Alcohol
• Tobacco
• life insurance

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

However, Nelson said these changes do not represent a fundamental reconfiguration. “They kind of smooth out the edges,” he said. Additionally, downsizing can encourage seniors to focus on the core value of the plan.

“For the individual, it eliminates distractions,” said Brandi Thompson, CEO of Benefitbay, a platform that helps employers offer their employees money to buy health insurance, including Medicare Supplement plans. In previous years, “they might have been just focusing on that extra thing that was eye-catching… Now they’re going to have to make the decision about their actual access to the network, their medications, their needs.”

5. You may face prior authorization requirements for Original Medicare

Six states — Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington — will test a new model that actually requires you to get prior authorization for an expanded range 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, implantable electrical nerve stimulators, and knee arthroscopy for the treatment of knee osteoarthritis. It excludes inpatient and emergency services.

Historically, Original Medicare only required prior authorization for durable medical equipment and some hospital outpatient department services.

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

6. Negotiated drug prices for ten drugs should fall, with further price reductions to come

The Inflation Control Act gave Medicare the authority to directly negotiate prices for high-cost, single-source drugs with drug manufacturers. It was previously based on commercial rates set by private health insurance companies.

In 2026, the first set of negotiated prices will come into effect. The following descriptions apply to them:

• Eliquis
• Enbrel
• Entresto
• Farxiga
• Imbruvica
• Januvia
• Guardians
• fiasp/novolog
• Stellara
• Xarelto

Because the drug list is relatively short, the cost savings next year may be minimal, and the long-term effects of the program remain difficult to measure.

However, in general, “the price negotiation programme, together with other provisions of the FTA [IRA] “It is expected to make prescription medications more accessible to millions of older adults, especially those struggling with high drug costs,” Luke Eckley said. Chief Revenue Officer at Apollo Insurance Group.

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

7. Insulin costs could fall further

The IRA introduced a $35 cap on what you pay for monthly insulin supplies covered under Part B and Part D in 2023. It also requires that insulin be covered before the deductible is met.

Beginning in January 2026, this cap becomes more flexible to allow for greater savings, as Medicare enrollees pay less than:

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

8. Some dual eligible enrollees will lose access to Medicaid and Medicare

The GOP’s major bill introduced strict work and enrollment requirements for all Medicaid beneficiaries. The OBBBA exempts seniors 65 or older or with disabilities from work requirements, but if you’re in that group, you still must follow the new registration and eligibility verification rules. The administrative burden of meeting these requirements every six months may be too much for some people, especially those with disabilities. This could cost them their Medicaid coverage, even though they qualify for it.

Medicaid “covers a range of services not covered by Medicare, such as long-term care, home and community-based services, and dental, vision and hearing care,” Eckley said. “Losing Medicaid means losing access to these important benefits.”

OBBBA also delayed implementation of a Biden administration rule aimed at reducing barriers to enrollment in 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 are not able to enroll in an MSP and receive benefits, you may find that you are unable to afford Medicare.

9. Bloating national deficit may lead to cuts in Medicare

Trump’s massive bill doesn’t make many direct changes to Medicare, but its effects on the national deficit could lead to deep cuts to the program’s funding. The bill’s provisions are expected to add $3.4 trillion to the deficit by 2034, and could trigger a “sequestration cliff,” which triggers automatic spending cuts under a “pay-as-you-go” law once the deficit reaches a certain amount.

“We will reach a ‘sequestration cliff’ that leads to mandatory cuts to Medicare unless Congress acts to solve the problem, so although… [the OBBBA] “No one is intentionally cutting Medicare,” said Dylan Roby, chair and professor of health, society and behavior at the University of California, Irvine. “It could lead to significant cuts to Medicare.”

The Congressional Budget Office estimates that Medicare will face cuts of $45 billion for fiscal year 2026, and a total of $536 billion by 2034.

Even if Congress addresses the issue, the bill’s sweeping changes to Medicaid are expected to limit access to health care by raising health care costs, cutting services, and causing hospital closures.

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

How to prepare for Medicare enrollment in 2026

Medicare open enrollment begins October 15 and continues through December 7. During that time, you can join, drop, or switch Medicare Advantage or Part D drug plans. You can also switch back to Original Medicare from a Medicare Advantage plan.

You can navigate the upcoming changes to Medicare — and your health insurance — by taking the following steps:

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

Bottom line

On paper, Medicare changes for 2026 look fairly routine. Premiums, deductibles and other cost-sharing expenses tend to rise year after year, and some changes, such as negotiated drug prices and free vaccinations, simply expand or formally introduce the IRA provisions. However, uncertainty looms, given the impact of OBBBA on the national deficit and the health care system overall. Prepare for open enrollment by learning about the changes — and what options you have in a best- or worst-case scenario.