The start of 2026 will bring several notable updates to Medicare coverage that could affect how much seniors pay and how they access care.
Some changes lean in consumers’ favor—especially around prescription drugs—while others raise costs. Experts say the most immediate impact for many beneficiaries will be higher monthly premiums and deductibles, along with adjustments to Part D spending rules and new prior-authorization testing in select states.
Why It Matters
More than 67 million seniors across the U.S. are enrolled in Medicare, according to the Centers for Medicare & Medicaid Services.
Whether a beneficiary is on traditional Medicare or a Medicare Advantage plan, annual updates can reshape household budgets and influence which plans make the most sense during open enrollment.
What To Know
Lower drug costs
Several prescription drugs are expected to become cheaper in 2026 through Medicare-negotiated pricing. These updates affect medications used for conditions including arthritis, blood clots, cancer, and diabetes.
CMS estimates beneficiaries’ out-of-pocket spending will drop by $1.5 billion over the course of 2026.
“Medicare finally has teeth on prescription pricing.…Negotiated prices on 10 of the most expensive medications kick in this year,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney, told Newsweek. “And that’s going to save people real money. Add the new out-of-pocket cap at $2,100, plus the ability to spread drug costs monthly instead of getting hammered upfront, and you’ve got meaningful protection that didn’t exist two years ago.”
Higher premiums and deductibles
Experts say the largest shift is the overall increase in Medicare costs. Monthly premiums are projected to rise from about $185 per person in 2025 to $202.90 per person in 2026.
Deductibles are also climbing. Part B deductibles are set to increase to $283. Meanwhile, the Part D out-of-pocket spending cap for prescription drugs is rising to $2,100, according to Kevin Thompson, a finance expert and founder of 9i Capital Group.
Part D out-of-pocket cap increases
Starting January 1, the $2,000 annual out-of-pocket limit for prescription drug plans will increase to $2,100.
The $100 bump is intended to reflect the annual percentage increase in average spending on covered Part D drugs in 2024.
No need to reenroll in monthly drug payment plans
In 2025, some Medicare recipients had the option to pay prescription drug out-of-pocket costs in monthly installments. In 2026, that process may become more seamless: beneficiaries who enrolled previously will be automatically reenrolled unless they opt out.
“Automatic renewal eases burden for both participants and plan sponsors,” CMS said.
Prior authorization pilot will use AI in six states
A pilot program using artificial intelligence for certain prior authorization decisions is scheduled to begin January 1 in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington.
Under current plans, AI will be integrated into prior authorization decisions in those states through December 2031, and the program could expand to additional states after the pilot concludes.
“This could cause some friction and slower access to care but since the pilot has not started we are not sure on the timeline of the prior authorizations yet,” Chris Fong, CEO of Smile Insurance and a Medicare specialist, told Newsweek.
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Beneficiaries should also pay attention to plan details, such as premiums and supplemental benefits can shift year to year, making open enrollment decisions more pivotal than in the past. These updates are designed to offer greater consistency of cost and financial relief, but only for those who stay proactive about how the changes affect their specific coverage.”
Michael Ryan, a finance expert and the founder of MichaelRyanMoney, told Newsweek: “The people who’ll feel this most are seniors on multiple brand name drugs who take 20 minutes to review their formulary in January. The ones who ignore it? They’ll keep overpaying.”
What Happens Next
With Medicare costs rising, Thompson said the increases may not be fully balanced out by Social Security’s cost-of-living adjustment.
“For some retirees, this could mean smaller net checks and higher out-of-pocket expenses in 2026, as Medicare costs are rising faster than the cost of living…” Thompson said. “It’s important to understand how your Social Security benefits may be impacted once these higher Medicare costs are factored in.”
