Medicare Open Enrollment: Rising Costs and New Restrictions
Medicare open enrollment for 2026 runs through December 7, and several important changes are on the horizon. Many participants will likely face higher premiums, reduced benefits, and more restrictive provider networks.
The baseline Part B premium is expected to rise from $185 to $206 a month, representing a 12% increase. Some Part D prescription drug plans may see monthly increases of up to $50, and income-related surcharges (IRMAA) for higher earners will also rise.
In a significant policy shift, the Centers for Medicare and Medicaid Services will launch a new prior authorization program for Original Medicare next year. Historically, Original Medicare has required little to no pre-approval, but this initiative will target 17 high-cost outpatient services to reduce fraud and waste. The pilot program will operate in six states: New Jersey, Texas, Arizona, Washington, Ohio, and Oklahoma.
On the private insurance side, several large insurers are scaling back Medicare Advantage plans or exiting markets due to declining profitability. As a result, an estimated 1.2 million enrollees will lose access to their current Medicare Advantage plans. Many are expected to return to traditional Medicare to avoid potential care delays and network restrictions. Traditional Medicare generally provides broader access to care, though it often comes at a higher monthly cost.
For those enrolled in or considering Medicare Advantage, it’s important to note that switching back to traditional Medicare can be complicated. Applicants may face medical underwriting when applying for a Medigap Plan G policy unless they are enrolling for the first time.
Drug coverage is another area of change. The annual out-of-pocket cap for Part D will be set at $2,100 in 2026, offering meaningful relief to those with high prescription costs. Additionally, Medicare’s new drug-price negotiation program will introduce discounts ranging from about 40% to 80% on ten common medications, with another fifteen added in 2027. However, many drug plans are expected to raise deductibles to offset the reduced revenue from these price cuts.
Now is an important time to review coverage. Nearly 70% of Medicare beneficiaries do not evaluate their plans during open enrollment, which can lead to unnecessary expenses or coverage gaps. Using the Plan Finder tool at Medicare.gov or state health insurance assistance programs can help verify plan costs, coverage options, and prescription pricing. Those enrolled in Medicare Advantage should also review their Annual Notice of Change to confirm that their preferred providers and facilities remain in-network.
It is our strong recommendation to avoid Medicare Advantage plans and opt for Original Medicare with Medigap.
Please reach out to your Wealth Manager to discuss how these updates may affect your healthcare and retirement planning strategy.) periodically to understand exactly what you hold. Many participants aren’t aware that their plan may already include an annuity component or that they may have been defaulted into one. If your retirement accounts do include annuities, it’s a good idea to talk with your plan administrator and request more information for specifications.
Weekly Commentary
Wealth Planning Commentary – October 20, 2025
Mallon FitzPatrick
Medicare Open Enrollment: Rising Costs and New Restrictions
Medicare open enrollment for 2026 runs through December 7, and several important changes are on the horizon. Many participants will likely face higher premiums, reduced benefits, and more restrictive provider networks.
The baseline Part B premium is expected to rise from $185 to $206 a month, representing a 12% increase. Some Part D prescription drug plans may see monthly increases of up to $50, and income-related surcharges (IRMAA) for higher earners will also rise.
In a significant policy shift, the Centers for Medicare and Medicaid Services will launch a new prior authorization program for Original Medicare next year. Historically, Original Medicare has required little to no pre-approval, but this initiative will target 17 high-cost outpatient services to reduce fraud and waste. The pilot program will operate in six states: New Jersey, Texas, Arizona, Washington, Ohio, and Oklahoma.
On the private insurance side, several large insurers are scaling back Medicare Advantage plans or exiting markets due to declining profitability. As a result, an estimated 1.2 million enrollees will lose access to their current Medicare Advantage plans. Many are expected to return to traditional Medicare to avoid potential care delays and network restrictions. Traditional Medicare generally provides broader access to care, though it often comes at a higher monthly cost.
For those enrolled in or considering Medicare Advantage, it’s important to note that switching back to traditional Medicare can be complicated. Applicants may face medical underwriting when applying for a Medigap Plan G policy unless they are enrolling for the first time.
Drug coverage is another area of change. The annual out-of-pocket cap for Part D will be set at $2,100 in 2026, offering meaningful relief to those with high prescription costs. Additionally, Medicare’s new drug-price negotiation program will introduce discounts ranging from about 40% to 80% on ten common medications, with another fifteen added in 2027. However, many drug plans are expected to raise deductibles to offset the reduced revenue from these price cuts.
Now is an important time to review coverage. Nearly 70% of Medicare beneficiaries do not evaluate their plans during open enrollment, which can lead to unnecessary expenses or coverage gaps. Using the Plan Finder tool at Medicare.gov or state health insurance assistance programs can help verify plan costs, coverage options, and prescription pricing. Those enrolled in Medicare Advantage should also review their Annual Notice of Change to confirm that their preferred providers and facilities remain in-network.
It is our strong recommendation to avoid Medicare Advantage plans and opt for Original Medicare with Medigap.
Please reach out to your Wealth Manager to discuss how these updates may affect your healthcare and retirement planning strategy.) periodically to understand exactly what you hold. Many participants aren’t aware that their plan may already include an annuity component or that they may have been defaulted into one. If your retirement accounts do include annuities, it’s a good idea to talk with your plan administrator and request more information for specifications.
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