Each year all the costs and benefits you finally seem to have figured out change! The Center for Medicare/Medicaid Services or ‘CMS’ usually announces changes to Medicare in the fourth quarter for the coming year. We have little time to adjust to it or educate our clients about it, especially amid the busy Annual Enrollment Season. So read on to get a run down of all the new numbers for 2026.
Part B Premiums
Unless individuals qualify for Medicaid (low income assistance by your state), everyone pays a monthly premium for Medicare Part B. Many beneficiaries do not even realize it as it comes directly out of their SS income check before that money is deposited in the bank. Think of it as a tax. This started in 1970 with a whopping $4 per month. Every year since, the premium has been adjusted and most of the time, increased. It is projected that by 2032, the premium will be around $285 per month. And that is before you add your Medigap Plan, Prescription Drug Plan or Advantage Plan. That money goes directly back into Social Security. For 2026, the standard rate for Part B is $202.90 per month. To add confusion, higher income earners pay a surcharge for Part B and D back to Social Security. For more information on that, see my previous blog: https://www.cdi-cares.com/blog/irmaa-and-your-part-b-premium-a-deeper-dive
Part B Deductible
This is a one time per year medical deductible. This is where Medicare beats other creditable coverage such as an employer plan. If you are on Original Medicare, in 2026 your medical deductible is $283, a slight increase from last year’s $257. When you add a Medigap plan, there are little or no out of pocket medical costs after that in a given year. And oftentimes, if you have an Advantage Plan, there is little to no medical deductible at all. Being someone on a high deductible employer (or commercial) plan, that sounds pretty good!
Prescription Drug Deductible and Copay Cap
For 2026, the drug deductible is a max of $615 set by Medicare and the cap or max out of pocket for covered prescription drugs is $2100, a slight increase from $2000 last year. Notice the mention ‘covered’ drugs. Not all drugs are covered on all plan formularies. If you take a prescription drug that is not covered on your formulary, whatever price you pay for it will not apply to the cap. Make sure you have consulted with your Independent Agent to ensure your drugs are covered on formulary. However, when you do pay the deductible on your covered drug, it does apply toward the cap. In other words, if you have a high Tier drug and you pay that sizable chunk early in the year, you have already made it over a quarter of the way to your cap. Many of my clients forget about the deductible and are a bit shocked in January when they pick up their first refill on a high Tier drug. Remember, those drugs likely retail for over $1000 per month. So yes, it is covered. Pay your deductible, and rest assured, the price will go down on the next refill.
Late Enrollment Penalty
Some Medicare Beneficiaries have a Part D Late Enrollment Penalty. That happens when you fail to enroll in a Part D drug plan when you are eligible for Medicare AND do not have other creditable drug coverage such as an employer group health plan. Each year the penalty is calculated at 1% times the “national base beneficiary premium” ($36.78 in 2025) by the number of full, uncovered months that you were eligible but did not have Medicare drug coverage (Part D) and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. CMS has not published the 2026 national base beneficiary premium yet, so the penalties are still calculated on 2025. This base can increase or decrease each year changing your penalty amount. It is up to the insurance company that has your drug coverage to notify you of the amount per month and collect that money. Then, they turn around and pay Social Security.
Overall Rising Costs
Due to many factors, costs have been rising more than usual in recent years. One area that has experienced a lot of fluctuation is in the rates on Medigap plans. Those are determined by the insurance companies and can happen at various times throughout the year depending on what company you are with. It does not line up with Medicare Open Enrollment or the calendar year. If you have a Medigap (supplement) plan and pay premiums, you will get a rate increase letter telling you the new rate and effective date. With the new Indiana Birthday Rule, there are more options and things we can do to help you keep your costs manageable. Reach out if you want to know more.
CDI is here to help you through this entire maze. We can meet in person or virtually. Reach out if you would like more information. Email carrie@cdi-cares.com or check out www.cdi-cares.com for a contact page and other helpful blogs.
"The bad news is time flies. The good news is you're the pilot." — Michael Altshuler
Data Source: Medicare and You Handbook 2026.pdf