Upcoming Adjustments to Medicare in the Year 2026
The Inflation Reduction Act of 2022 has brought significant changes to Medicare, particularly in the realms of prescription drug costs and coverage. The Act introduces a $2,000 annual cap on out-of-pocket prescription drug spending, effective from 2025, which will gradually increase to $2,100 in 2026 [1][2][4][5]. Additionally, the law caps insulin copays at $35 per month for Medicare Part D enrollees. It also eliminates the Part D coverage gap ("donut hole") and provides free vaccines under Part D [1][2][4][5].
The Act grants Medicare the power to negotiate prices for certain high-cost medications, with this negotiation beginning in 2026. However, it excludes "orphan drugs" (for rare diseases) from this price negotiation, limiting cost-control in some drug categories [3].
To address concerns that these changes could cause premium fluctuations in Part D, the Centers for Medicare & Medicaid Services (CMS) launched a voluntary Part D Premium Stabilization Demonstration from 2024 through 2027. This program limits year-over-year premium increases for stand-alone Part D plans and provides subsidies to participating insurers to reduce premium volatility [1][5].
Regarding prior authorizations, the Inflation Reduction Act does not seem to have explicit changes affecting prior authorizations for traditional Medicare. The main focus appears to be on drug costs and coverage design changes rather than utilization management policies [6].
Starting from 2026, Medicare beneficiaries will have a maximum out-of-pocket expense of $2,100 for prescription drugs. After meeting the full deductible of $615 for 2026, you pay 25% coinsurance for both generic and brand-name drugs in Medicare Part D [7].
The Medicare Prescription Payment Plan (MPPP) allows those with Medicare prescription drug coverage to spread costs over the calendar year instead of paying in full at the pharmacy counter each time. Beginning in 2026, participants in the MPPP will be automatically re-enrolled the following year unless they opt out [8].
For those needing assistance with reviewing their Medicare options, the State Health Insurance Assistance Program (SHIP) offers unbiased help in finding the Medicare Advantage plan with coverage that matches your needs [9].
It's crucial for Medicare beneficiaries to review their coverage annually to ensure they have the best coverage and to save money, as Medicare costs, benefits, and providers can change each year [10]. The average health care and medical expenses throughout retirement for a 65-year-old retiring in 2024 is expected to be $165,000 according to Fidelity [11].
Beginning in 2023, Medicare beneficiaries will have zero cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), permanently thereafter [12]. A human being will review the information for prior authorization decisions, and technology will support the review process [6].
Sources:
[1] Centers for Medicare & Medicaid Services. (n.d.). Medicare Prescription Drug Plans. Retrieved from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/PartD-Plans.html
[2] Centers for Medicare & Medicaid Services. (n.d.). Inflation Reduction Act of 2022. Retrieved from https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Inflation-Reduction-Act-of-2022
[3] Centers for Medicare & Medicaid Services. (n.d.). Medicare Negotiation of Certain Prescription Drugs. Retrieved from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Medicare-Negotiation-of-Certain-Prescription-Drugs
[4] Centers for Medicare & Medicaid Services. (n.d.). Insulin Costs in Medicare Part D. Retrieved from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Insulin-Costs-in-Medicare-Part-D
[5] Centers for Medicare & Medicaid Services. (n.d.). Part D Premium Stabilization Demonstration. Retrieved from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Part-D-Premium-Stabilization-Demonstration
[6] Centers for Medicare & Medicaid Services. (n.d.). Prior Authorization for Medicare Part D. Retrieved from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Prior-Authorization-for-Medicare-Part-D
[7] Centers for Medicare & Medicaid Services. (n.d.). Medicare Costs at a Glance. Retrieved from https://www.cms.gov/Medicare/Medicare-General-Information/Medicare-Costs-at-a-Glance
[8] Centers for Medicare & Medicaid Services. (n.d.). Medicare Prescription Drug Payment Plan. Retrieved from https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Medicare-Prescription-Drug-Payment-Plan
[9] Administration for Community Living. (n.d.). State Health Insurance Assistance Program (SHIP). Retrieved from https://www.acl.gov/Aging-Network/SHIP
[10] Medicare.gov. (n.d.). Choose a Medicare Plan. Retrieved from https://www.medicare.gov/find-a-plan
[11] Fidelity. (2022). Retirement Health Care Costs Data Center. Retrieved from https://www.fidelity.com/viewpoints/retirement/health-care-costs-data-center
[12] Centers for Disease Control and Prevention. (n.d.). Adult Vaccines. Retrieved from https://www.cdc.gov/vaccines/adults/index.html
- The Inflation Reduction Act of 2022, a piece of science and policy-and-legislation, has made influential changes in the medical-conditions realm, particularly in health-and-wellness, affecting Medicare.
- This Act has introduced a $2,000 annual cap on out-of-pocket prescription drug spending, to be effective from 2025, which will rise to $2,100 in 2026, impacting general-news and politics, as it aims to curb rising medical costs.
- To further discuss this issue, it's notable that this Act empowers Medicare to negotiate prices for certain high-cost medications, though exemptions exist for "orphan drugs" used to treat rare diseases, thus limiting cost-control in some drug categories.
- In the realm of health-and-wellness and policy-and-legislation, the Act also grants Medicare the ability to provide free vaccines under Part D and eliminate the Part D coverage gap ("donut hole") beginning in 2023, which will benefit many Medicare beneficiaries.
