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(CNN) — Senior citizens are the latest group of Americans to face steep increases in their health insurance premiums for 2026.
Medicare Part B premiums will jump nearly 10% next year, the largest increase in four years and second-largest hike, in dollar terms, in the program’s history. The standard monthly premium will be $202.90, an increase of $17.90 from this year, according to the Centers for Medicare and Medicaid Services. That will eat up nearly one-third of the $56 monthly Social Security cost-of-living adjustment that retirees will receive in 2026.
The steep increase in premiums for Medicare Part B — which covers doctors’ visits, outpatient hospital services, medical equipment and drugs administered by physicians, among other services — comes at a time when health insurance premiums are rising sharply for those with job-based coverage and Affordable Care Act policies. This upward trend puts more pressure on Americans already struggling with affordability as the prices of food, utilities and other necessities remain stubbornly high.
“In a world in which people are concerned about the affordability of health care and all other needs, it’s pretty distressing that this increase is so large,” said Jeanne Lambrew, director of health care reform at The Century Foundation.
Increasing medical and pharmaceutical costs, as well as usage, are common drivers of the rise in health care premiums across coverage types.
Medicare is also contending with the continuing wave of baby boomers becoming eligible to enroll, plus the ongoing shift toward surgeries and other medical services being performed at outpatient facilities, rather than in hospitals, where care is covered by Medicare Part A, said Rachel Schmidt, research professor at Georgetown University’s Medicare Policy Initiative.
CMS noted that monthly premiums would have risen by another $11 had it not approved a change in payment for skin substitutes that the agency says will reduce spending by nearly 90% on the wound care products. Medicare shelled out more than $10 billion for these products last year, up from $256 million in 2019.
Meanwhile, Medicare Part D prescription drug policies, which are offered by insurers, will see fewer changes for 2026 than they did for this year. The Biden administration had to rush last fall to stand up a multibillion-dollar subsidy program for insurers to prevent steep premium increases stemming from the Inflation Reduction Act. The law, which the Democrat-led Congress approved in 2022, required insurers to be on the hook for more of the drug costs once enrollees hit the catastrophic coverage phase above a $2,000 cap.
The number of plans being offered for 2026 will decrease modestly, according to consulting firm Oliver Wyman, which noted that Elevance is exiting the market. Many insurers are hiking their premiums by as much as $50 for next year, though some are lowering them or holding them steady.
“If seniors in the standalone PDP market are willing to shop, there is still stability,” said Brooks Conway, a principal at Oliver Wyman.
Roughly 69 million Americans are enrolled in Medicare, which also covers people with disabilities. The annual open enrollment period ends December 7.
Medicare Advantage market retrenches
Medicare Advantage, which covers just over half of Medicare beneficiaries, is going through a second year of major changes. The overhaul is being spurred by medical costs outpacing reimbursements from the federal government, which pays insurers to offer coverage to Medicare enrollees.
Many enrollees will have to search for new coverage for 2026 since the number of offerings is tumbling 10% to 3,373 plans, according to Oliver Wyman. Major insurers, including CVS Aetna, Elevance, Humana and UnitedHealthcare, are reducing their plan options in at least 100 counties. The changes are expected to affect just over 2 million people.
(These figures do not include special needs plans that cater to enrollees with chronic conditions or those who are dually eligible for Medicaid. These plans will have more offerings for 2026 than they did this year.)
In certain counties, there will be fewer policies offered with $0 premiums and fewer PPO plans, which have wider provider networks, said Greg Berger, a partner at Oliver Wyman. Insurers are primarily seeking to exit or scale back their less profitable products and geographic areas.
“A lot of MAPD plans are trying not to grow,” Berger said, referring to Medicare Advantage plans with prescription drug coverage.
And for the first time, some Americans will have no Medicare Advantage plans to choose from. Blue Cross and Blue Shield of Vermont and UnitedHealthcare decided to discontinue their coverage in the Green Mountain State, leaving traditional Medicare as the only option for residents in eight counties.
Yet even with the pullbacks, most Medicare beneficiaries will have an array of options in 2026 — 39 plans, on average, down from 42 plans this year.
“Millions of Medicare beneficiaries will continue to have access to a broad range of affordable coverage options in 2026,” Dr. Mehmet Oz, CMS’ administrator, said in a statement.
Also, fewer plans will offer $0 deductibles for prescription drugs, while maximum out-of-pocket limits for medical care are rising $490, or about 10%, on average. Among Medicare Advantage plans with drug coverage that have a monthly premium, the average premium will increase to $66 next year, up from $60 this year.
What’s more, the supplemental benefits that Medicare Advantage offers enrollees, such as funds for over-the-counter medicines, dental care and vision services, are getting skimpier. The dental allowance, for instance, is declining 10% to $2,107, on average, Berger said.
The current disruptions in the market, however, don’t mean that Medicare Advantage will continue to shrink. Over the longer term, the program is still an attractive market for insurers, Schmidt said.
“It’s not going away any time soon,” she said.
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Tami Luhby and CNN
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