Key Medicare Changes to Expect in 2026

debraholtham
Jun 5
4 min read

Understanding Medicare changes and benefits can help you decide between Original Medicare and a specific Medicare Advantage plan. Rising medical expenses, driven by inflation and advancements like biosimilars, are a concern.

According to Fidelity, a 65-year-old retiring in 2024 should expect to spend about $165,000 on healthcare in retirement. Choosing the right Medicare policy can help manage these costs.

With five months until Medicare open enrollment, discussions have intensified following a new administration. Dr. Mehmet Oz, a strong advocate for Medicare Advantage plans, has been appointed as the CMS Administrator. His confirmation will provide insights into potential changes to Medicare benefits as CMS prepares for open enrollment.

The major discussion was whether the Trump administration would keep or reverse the Medicare changes from the Inflation Reduction Act of 2022, particularly regarding drug price negotiations. Currently, the administration appears to be maintaining these changes, albeit with modifications to align with their objectives.

Some provisions of the Inflation Reduction Act of 2022 (IRA) needed codification to avoid expiration. The Trump administration didn't implement all previous recommendations, such as declining to cover GLP-1 receptor agonists, but proceeded with Medicare price negotiations. Here are provisions of the IRA, with modifications, remaining after 2025.

1. Prescription payment plan updates

2025 was the first year that the Medicare Prescription Payment Plan(MPPP) enabled those with Medicare prescription drug coverage to spread the costs of their prescription drugs over the calendar year rather than paying in full at the pharmacy counter each time they fill a prescription. Keeping this arrangement just got easier.

Automatic renewal of plan participation. Beginning in 2026, if you participate in the MPPP, you will be automatically re-enrolled the following year unless you opt out. Also, a separate renewal notice must be sent after the end of the annual election period and include the payment plan’s upcoming terms and conditions.

If you decide to opt out, CMS will require plan sponsors to process opt-out requests within three calendar days, rather than the initially proposed 24-hour timeframe, to reduce administrative burden.

2. Cap on Part D prescription drug expenses indexed for inflation

Many of us are familiar with inflation indexing from our tax returns; every year, certain limits, such as how much you can contribute to an IRA, are adjusted for inflation. However, that doesn't mean it will necessarily change every year; the formula that is applied could result in no change in a given year.

In 2026, the cap on out-of-pocket prescription drug costs is going up to $2,100, a $100 increase over the 2025 limit of $2,000. That means you'll be liable for an additional $100 in drug costs over the year in 2026.

3. Limit on special supplemental benefits for the chronically ill (SSBCI) on Medicare Advantage

Medicare Advantage (MA) plans are known for the extra benefits they provide to their subscribers. Some MA plans tailor the special benefits based on the enrollee's medical condition. The CMS finalized and codified a non-exhaustive list of non-allowable supplemental benefits that are on offer under the Special Supplemental Benefits for the Chronically Ill (SSBCI) category.

In the Final Rule, the CMS adopted the non-exhaustive list of non-primarily health related items or services that do not meet the standard of having a reasonable expectation of improving or maintaining the health or overall function of the enrollee.

Here is a list of examples of items or services that may not be offered as SSBCI, including all of the following:

Alcohol
Tobacco
Cannabis products
Non-healthy food
Life insurance
Hospital indemnity insurance
Funeral planning and expenses
Procedures that are solely cosmetic in nature and do not extend upon Traditional Medicare coverage
Broad membership programs inclusive of multiple unrelated services and discounts

4. Insulin costs capped

Insulin costs for Medicare beneficiaries were capped at $35 per month or less in 2023, depending on negotiated or maximum fair prices. This cap will now apply annually, beginning in 2026. And watch your benefit statements, as no deductible should be applied to insulin.

For 2026 and each subsequent year, the applicable cost-sharing amount is the lesser of:

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

Medicare beneficiaries have had access to a limited number of free vaccines since 2023. However, free vaccines are now a permanent feature of Medicare Part D plans. Part D insurers must continue to waive deductibles and cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP). The list of free vaccines is updated every year, so just because a vaccine is on the list this year doesn't mean it will be on the list next year.

If you are traveling outside of the country, you may want to consult the CDC's list of recommended vaccinations depending on your destination. We are in the midst of a global Measles outbreak; the CDC suggests that you make sure you are up to date with all of your routine vaccines, as "the majority of measles cases imported into the United States occur in unvaccinated U.S. residents who become infected during international travel." As an extra measure of caution, you can see which countries in the world have reported measles outbreaks before you travel.

Review your Medicare plan annually

Each year, Medicare beneficiaries have at least one chance to modify their plans; you can enroll in, switch, or drop a Medicare Advantage Plan or Medicare Part D drug plan, transition to Original Medicare, or maintain your existing coverage. If you've evaluated your options and are satisfied with your current plan, no action is required.

Reviewing your coverage annually is straightforward and worthwhile. Medicare costs, benefits, and providers may vary each year. Comparing your options might lead to better coverage or cost savings. If you need help, find your state SHIP program (State Health Insurance Assistance Program) for impartial assistance. They can help you navigate the Medicare Advantage plans in your area to find one that suits your needs.