Medicare Changes in 2026 Every Retiree Needs to Know: The Good, the Bad, and the Ugly

Retirees are accustomed to changes in federal programs each year. Some are welcome changes, such as the annual Social Security cost-of-living adjustments (COLAs). Other changes aren't so positive.

There's a mixture of both in store for retirees this year with Medicare. Here are the good, the bad, and the ugly Medicare changes in 2026 that every retiree needs to know about.

Image source: Getty Images.

The good: lower prescription drug costs

Prescription drugs rank among the highest drivers of healthcare costs in retirement. The good news for retirees in 2026 is that their prescription drug costs could be lower (and, for some, significantly lower).

Following the passage of the Inflation Reduction Act (IRA) during the Biden administration, the Centers for Medicare & Medicaid Services (CMS) can now negotiate prescription drug prices for the first time. Lower prices for the first 10 drugs subject to CMS negotiation took effect on Jan. 1, 2026. These 10 drugs are:

Data source: CMS.

Additionally, some retirees enrolled in Medicare Part D plans will see their GLP-1 weight-loss drug prices capped at $50 per month. This change is due to an agreement between the Trump administration and GLP-1 drug makers Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO).

The bad: higher premiums and deductibles

A recent survey conducted by The Motley Fool found that 54% of Social Security recipients didn't think their 2.8% COLA would be enough. That number could be even higher after retirees saw how much their Medicare premiums and deductibles increased this year.

The standard Medicare Part B premium has jumped to $202.90 for 2026 from $185 last year. The annual deductible for Medicare Part B has also risen by $26 to $283. In addition, the maximum Medicare Part D deductible for private plans is now $615 per month, up from $590 in 2025.

High-income retirees could also be hit by a higher income-related monthly adjustment amount (IRMAA) this year. This IRMAA surcharge applies only to Medicare Parts B and D beneficiaries whose taxable income exceeds specified thresholds. The IRMAA income brackets used to determine who pays the surcharges will increase by about 3% in 2026, while the surcharges will increase by roughly 9%.

The ugly: Medicare Advantage mayhem

Now for the ugly Medicare change in 2026: There's mayhem in the Medicare Advantage market. Big health insurers such as Humana (NYSE: HUM) and UnitedHealth Group (NYSE: UNH) have withdrawn their Medicare Advantage offerings in hundreds of counties this year. Some plans have reduced benefits for extra services, including dental and vision. Many Medicare Advantage plans have also further limited their provider networks.

This problem could get worse going forward. CMS recently proposed a meager 0.9% increase to Medicare Advantage plans for 2027. Timothy Noel, CEO of UnitedHealth's health insurance business, said in his company's latest earnings call that the low payment increase could result in "a profoundly negative impact on seniors' benefits and access to care." UnitedHealth Group CEO Stephen Hemsley went further, stating that the slight increase will lead to "very meaningful benefit reductions" for Medicare Advantage members.

However, CMS won't finalize its 2027 Medicare Advantage payments until the spring. Retirees could perhaps be spared from even uglier news next year.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk and UnitedHealth Group. The Motley Fool has a disclosure policy.