Personal Finance
What Medicare prescription drug cost changes mean for beneficiaries
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Medicare beneficiaries have until Dec. 7 to take advantage of an annual open enrollment period.
For retirees who rely on prescription drugs, experts say it’s a good time to evaluate the cost of those treatments for next year.
Medicare’s annual open enrollment lets beneficiaries change their private Medicare Advantage plans, which may include drug coverage, or change Medicare Part D prescription plans if they have original Medicare, including Parts A and B for hospital and medical insurance. Beneficiaries may also switch from Medicare Original to Medicare Advantage or vice versa.
While select opportunities to change Medicare coverage may come up at other times of the year, this is when beneficiaries “have the most flexibility in the entire year,” according to Ryan Ramsey, associate director at the National Council on Aging, a national advocacy organization for older adults.
For example, during a separate Medicare Advantage open enrollment period, which runs from Jan. 1 through March 31, Medicare Advantage beneficiaries may opt to switch to another Advantage plan or to Medicare original coverage. However, existing Medicare original beneficiaries who have Part D prescription plans will not be eligible to change that drug coverage at that time, according to Ramsey.
Roughly 55 million individuals are enrolled in either standalone Medicare Part D prescription drug or Advantage plans, according to KFF, a non-partisan health policy, research, polling and news organization.
Because prescriptions can represent a significant portion of retirees’ budgets, picking the right coverage is important. A 2024 AARP survey found 78% of adults ages 65 and over described prescription drugs as “too expensive.”
In 2026, certain changes may help curb Medicare beneficiaries’ prescription drug spending.
Changes to premium costs and plans
Average prescription drug plan and Medicare Advantage plan premiums are generally going down in 2026, which is a “nice change to see,” according to Ramsey.
“In general, [Part D] premiums have not gone up and may even be lower in some areas,” said Alex Cottrill, senior policy analyst at the program on Medicare policy at KFF.
“Folks shouldn’t necessarily be on the lookout for a big increase in costs,” Cottrill said. “But we are seeing that the number of plan offerings in general has gone down.”
Private Medicare Advantage plans, the vast majority of which offer prescription drug coverage, have not had as large a decrease in available plan options, he said.
To be sure, Medicare beneficiaries may face other rising costs in 2026. Standard Medicare Part B premiums are poised to jump 9.7% next year, the second-highest increase in the program’s history.
New out-of-pocket cap and limits on drug costs
In 2026, the limit on out-of-pocket prescription drug spending will increase to $2,100, up from $2,000 in 2025. Once beneficiaries pay a plan’s full deductible, they will owe 25% of the cost of coinsurance until the $2,100 cap is reached. After that, the Medicare plan will pay for 100% of prescription drug costs for the rest of the year.
That cap applies to beneficiaries who have either Medicare original or Medicare Advantage coverage, according to Cottrill. However, it does not apply to treatments that would not typically fall under Medicare Part D coverage, such as Medicare Part B medical insurance, he said. The out-of-pocket cap also only applies to prescription drugs covered by a plan.
In 2026, prices will go into effect for the first 10 prescription medications subject to cost negotiations between Medicare and drug companies.
Plans are required to cover the selected drugs, Cottrill said; however, cost sharing will vary from plan to plan. “Comparison shopping still matters,” he said.
The Biden administration estimated the new prices would lead to $1.5 billion in out-of-pocket savings for beneficiaries in 2026. Medicare recently announced price cuts for a new list of drugs, including Ozempic, set to take effect in 2027.
Tips for choosing coverage
Current Medicare Part D and Medicare Advantage beneficiaries should have received an annual notice of change document in September that details changes to prescription drugs and other costs.
Retirees may consult Medicare’s online plan finder to search for their medications and pharmacy of choice to identify the plans that best cover the treatments they need and will cost them the least, Ramsey said.
Additionally, the State Health Insurance Assistance Program, or SHIP, can help with free counseling to compare plans and evaluate benefits and costs for 2026.
Retirees who need financial help may consider applying for the government’s Extra Help program for assistance with prescription costs or Medicare savings programs for help with premiums or other costs.
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