Medicare Cost Increases in 2026: What You Need to Know
The Rise in Medicare Part B
Medicare Part B,
covering outpatient services, physician visits, and some therapies, is expected to see a significant spike in costs next year. The standard monthly premium is projected to rise from $185 in 2025 to $206.50 in 2026—an 11.6% increase, the largest jump since 2022. Additionally, the annual deductible is expected to climb by $31, reaching $288.
What’s Changing with Part D (Prescription Drug Coverage)
Part D costs vary based on individual plans, but key benchmarks are changing:
- The national base beneficiary premium is projected at $38.99, up about 6% from 2025, thanks to caps established by the Inflation
Reduction Act.
- The deductible will increase from $590 to $615.
- The out-of-pocket cap for drug spending will rise from $2,000 to $2,100 .
IRMAA: Higher-Income Beneficiaries Pay More
Income-related surcharges (IRMAA) apply to both Parts B and D for beneficiaries above certain income thresholds, based on 2024 tax returns that affect 2026 premiums:
- Part B IRMAA is projected to rise by about 1.04%.
- Part D IRMAA is expected to climb by over 6%.
Clients with MAGI over the thresholds should anticipate notable increases in their Medicare costs.
The Impact on Social Security and Budgets
With a projected Social Security Cost-of-Living Adjustment (COLA) of approximately 2.6–2.7%, recipients could see an average benefit increase of about $54/month. However, the Part B premium increase alone could absorb roughly 40% of this raise —a significant hit to those on fixed incomes.
How Clients Can
Prepare
- Review and Estimate Total Costs Ahead of Open Enrollment (Oct 15–Dec 7)
- Evaluate combined expenses for premiums, deductibles, IRMAA, and potential out-of-pocket costs.
- Compare Original Medicare with Medicare Advantage (MA) or Medigap options that may offer cost-saving advantages for 2026.
- Manage Income to Reduce IRMAA Exposure
- Employ tax strategies like Roth IRA conversions, qualified charitable distributions, or timing income to stay below IRMAA thresholds.
- Appeal IRMAA if Your Income Changed Dramatically
- Life events—such as retirement, loss of
spouse, or income reduction—may allow for an IRMAA appeal via SSA‑44.
- Explore “Extra Help” and Low-Income Subsidies
- For eligible clients, this can substantially reduce premiums and cost-sharing under Part D
- Seek Professional Guidance
- Utilize SHIP counselors or licensed Medicare advisors to help clients navigate plan choices and implement tax strategies proactively
Final Thoughts
With Medicare costs climbing
sharply in 2026—particularly for Part B—beneficiaries (especially retirees and those with moderate incomes) face real pressure on their budgets. Proactive planning—through income management, strategic enrollment decisions, and potentially appealing IRMAA—can help mitigate the financial impact and stretch every dollar of monthly benefits.
Please don’t hesitate to
reach out—we’re here to help.
Sincerely,
Capstone Investment Financial Group
lsimek@capstoneinvest.com
rturbyfill@capstoneinvest.com
References:
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