What changes in Medicare prescription drug costs mean for beneficiaries

Medicare beneficiaries have until Dec. 7 to take advantage of the annual open enrollment period.

Experts say now is a good time for retirees who rely on prescription drugs to assess their medical costs for the coming year.

Medicare’s annual open enrollment allows beneficiaries to change their private Medicare Advantage plan, which includes drug coverage, or change their Medicare Part D prescription plan if they have Original Medicare, which includes hospital and medical insurance Parts A and B. Beneficiaries can also switch from Medicare Original to Medicare Advantage and vice versa.

While special opportunities to change Medicare coverage can occur at other times of the year, this is when beneficiaries “have the most flexibility throughout the year,” said Ryan Ramsey, associate director of the National Council on Aging, a national senior advocacy group.

For example, during another Medicare Advantage open enrollment period from January 1 to March 31, Medicare Advantage beneficiaries may choose to switch to another Advantage plan or Medicare Original coverage. However, existing original Medicare beneficiaries with Part D prescription plans will not be eligible to change their drug coverage at that time, Ramsey said.

Approximately 55 million people are enrolled in a single Medicare Part D prescription drug or Advantage plan, according to KFF, a nonpartisan health policy, research, polling and media organization.

Prescriptions can take up a significant portion of a retiree’s budget, so choosing the right coverage is important. According to a 2024 AARP survey, 78% of adults 65 and older say prescription drugs are “too expensive.”

In 2026, certain changes could help curb prescription drug spending for Medicare beneficiaries.

Premiums for average prescription drug plans and Medicare Advantage plans are generally scheduled to drop in 2026, which Ramsey said is a “welcome change.”

“Generally speaking, (Part D) premiums are not going up, and they may be going down even further in some areas,” said Alex Cotrill, senior policy analyst in KFF’s Medicare Policy Program.

“We shouldn’t necessarily be alarmed by large increases in costs,” Cottrill said. “However, we are seeing a decline in the number of plans offered across the board.”

Although the majority of private Medicare Advantage plans offer prescription drug coverage, the choice of plans available has not significantly decreased, he said.

Indeed, Medicare beneficiaries could face further cost increases in 2026. Standard Medicare Part B premiums are expected to rise 9.7% next year, the second-highest increase in program history.

The maximum out-of-pocket cost for prescription drugs will increase from $2,000 in 2025 to $2,100 in 2026. Once the beneficiary pays the plan’s deductible in full, they will pay 25% of the coinsurance cost up to the $2,100 limit. Your Medicare plan then pays 100% of your prescription drug costs for the rest of the year.

The cap applies to beneficiaries with either Medicare Original or Medicare Advantage insurance, Cottrill said. However, it does not apply to treatments not normally covered by Medicare Part D, such as Medicare Part B health insurance, he said. Out-of-pocket maximums also apply only to prescription drugs covered by the plan.

In 2026, prices for the first 10 prescription drugs subject to price negotiations between Medicare and drug companies will go into effect.

Mr Cottrill said plans should cover selected drugs. However, the cost burden varies depending on the plan. “Comparison shopping remains important,” he says.

The Biden administration estimates that the new prices will reduce out-of-pocket costs for beneficiaries by $1.5 billion in 2026. Medicare recently announced price reductions for a list of new drugs, including Ozempic, scheduled to go into effect in 2027.

Current Medicare Part D and Medicare Advantage beneficiaries should have received an annual change notification document in September detailing changes to prescription drug and other costs.

Ramsey said retirees can use Medicare’s online plan search tool to search for the drugs and pharmacies they want and identify the plan that best covers the treatment they need and costs the least.

Additionally, the State Health Insurance Assistance Program (SHIP) can assist with free counseling to compare plans and evaluate benefits and costs in 2026.

Retirees in need of financial assistance may consider applying to special government assistance programs for help with prescription costs and Medicare Savings Programs for help with insurance premiums and other costs.