Retirees, Get Ready for This Unpleasant Medicare Surprise in 2026

Key Points

• Medicare Part B premiums and deductibles are expected to soar next year.

• The steep increase is due to several factors, including higher utilization of Part B services.

• Some retirees may be able to take steps to lower their Medicare Part B premiums.

• The $23,760 Social Security bonus most retirees completely overlook ›

Is it too soon to begin looking forward to the new year? I don't think so. Only 87 days remain in 2025. The time will fly by quickly.

There's usually plenty of eager anticipation and hopefulness as one year ends and the next year begins. That's likely to be the case again as 2025 draws to a close. But retirees should get ready for an unpleasant Medicare surprise in 2026.

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Paying a premium price

Medicare Part B covers doctors' visits, outpatient care (including some prescription drugs), ambulance services, and more. The standard monthly Medicare Part B premium currently stands at $185. This amount rose roughly 5.9% from the standard premium of $174.70 in 2024. However, retirees should brace to pay much more next year.

In July, the Medicare trustees released a report that projected the Medicare Part B premium in 2026 would soar 11.6% higher to $206.50. That's almost twice the percentage premium increase for 2025.

This won't be the highest percentage increase for Medicare Part B. In 2022, the program's premium skyrocketed 14.5%. This jaw-dropping jump stemmed in part from the Centers for Medicare and Medicaid Services (CMS) anticipating significantly higher costs from a new Alzheimer's disease drug, Aduhelm. Those higher costs didn't materialize, so Medicare Part B premiums were actually lowered the following year.

But the dollar increase expected for Medicare Part B premiums is $21.50. That's almost as high as the $21.60 increase in 2022. And it will significantly offset the anticipated Social Security cost-of-living adjustment (COLA) of 2.7% next year for anyone receiving close to the average retirement benefit.

Unfortunately, there's more bad news. The Medicare Part B annual deductible will also likely increase by 12% to $288 next year. While some retirees may not reach this higher deductible, many will.

Why are Medicare Part B premiums jumping so much?

One key reason why Medicare Part B premiums are likely to jump so much in 2026 is a surge in utilization of Part B services. A quick look at the stock charts for Medicare Advantage providers underscores this issue. While Medicare Advantage is different from Medicare Part B, the challenges the programs face are similar. Shares of companies such as UnitedHealth Group (NYSE: UNH) plunged earlier this year in large part because the health insurance giant's profits were much lower than expected due to increased utilization of services.

Demographic trends are another related factor. More beneficiaries are enrolling in Medicare Part B. This, in turn, drives higher utilization of services.

Higher drug and technology costs play a role in increased Medicare Part B expenses as well. There isn't a single drug that we can point to in 2026 that's expected to drive higher costs, as there were in 2022. However, costs are continuing to rise.

Are the Trump administration's tariffs part of the reason behind the spike in Medicare Part B premiums? Maybe to some extent. The Kaiser Family Foundation reported in June 2025 that tariffs are pushing overall health insurance premiums higher. The prices that healthcare providers and, by extension, Medicare, must pay for imported products increase as a result of tariffs on those products.

What can retirees do?

Retirees who have low incomes should look into Medicare Savings Programs (MSPs). These programs, funded by Medicaid, help seniors pay for Medicare expenses such as Part B premiums. MSPs are run by the individual states, so you'll need to check with your state to see whether you qualify.

What about retirees on the other end of the spectrum with relatively high income? High-earning individuals pay Medicare Part B premiums that are higher than the standard premiums. For those in this group, taking steps to defer income to future tax years can lower Medicare Part B premiums. There's a catch, though: The 2026 Part B premiums will be based on income from 2024.

The reality for most retirees is that they won't be spared the unpleasant Medicare surprise coming next year.

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