Millions of Medicare beneficiaries are waking up to a new financial reality in 2026: significantly higher premiums that will chip away at their Social Security benefits. The standard monthly premium for Medicare Part B has jumped to $202.90, up $17.90 from $185.00 in 2025—a 9.7% increase that ranks as the second-highest in the program's history.

For retirees already struggling with persistent inflation, the increase couldn't come at a worse time. And because most Medicare enrollees pay their Part B premium as a deduction from their Social Security check, the higher cost will directly reduce the benefit many were counting on.

The Premium Increase Explained

The Centers for Medicare & Medicaid Services (CMS) announced the 2026 premium increase in late 2025, citing rising healthcare costs and increased utilization of medical services. The $17.90 monthly increase translates to an additional $214.80 per year for beneficiaries on the standard plan.

The annual deductible is also climbing. Medicare Part B beneficiaries will pay a $283 deductible in 2026, up $26 from the $257 deductible in 2025.

"Healthcare costs continue to rise faster than overall inflation, and Medicare premiums reflect that reality. For beneficiaries on fixed incomes, this creates a real squeeze."

— Franklin Templeton Retirement Analysis

Higher-income beneficiaries will pay even more. Income-related monthly adjustment amounts (IRMAA) push premiums to between $284.10 and $689.90 per month for those with modified adjusted gross income above certain thresholds.

How It Eats Into Your COLA

Social Security recipients are receiving a 2.8% cost-of-living adjustment (COLA) in 2026, which the Social Security Administration estimates will add about $56 per month to the average retirement benefit—bringing it from $2,015 to $2,071.

But here's the catch: most Medicare enrollees have their Part B premium automatically deducted from their Social Security payment. That means the $17.90 premium increase immediately reduces the effective COLA by nearly a third for many recipients.

Instead of seeing a $56 monthly increase, the average beneficiary who pays the standard Part B premium will see their check grow by just $38.10 per month.

Part D Drug Coverage Changes

There's a silver lining on prescription drug costs. The Inflation Reduction Act's $2,000 annual cap on out-of-pocket costs for Medicare Part D drugs, which took effect in 2025, continues in 2026 with a modest increase to $2,100.

The legislation also eliminated the infamous "donut hole" in drug coverage entirely as of 2025, and that protection remains in place. Medicare Part D enrollees continue to receive recommended vaccines at no cost, and insulin products remain capped at $35 per month.

For beneficiaries who previously faced thousands of dollars in annual drug costs, these protections provide meaningful relief that may offset some of the Part B premium pain.

Income Thresholds for Higher Premiums

Beneficiaries with higher incomes pay surcharges on top of the standard premium based on their modified adjusted gross income from two years prior. For 2026, the IRMAA thresholds are:

  • $106,000 or less (single) / $212,000 or less (married filing jointly) — Standard premium of $202.90
  • $106,001 - $133,500 (single) / $212,001 - $267,000 (married) — $284.10 per month
  • $133,501 - $167,000 (single) / $267,001 - $334,000 (married) — $405.50 per month
  • $167,001 - $200,000 (single) / $334,001 - $400,000 (married) — $526.90 per month
  • $200,001 - $500,000 (single) / $400,001 - $750,000 (married) — $648.30 per month
  • Above $500,000 (single) / Above $750,000 (married) — $689.90 per month

Why Healthcare Costs Keep Rising

The Medicare Part B premium increase reflects broader trends in healthcare spending. Hospital costs, physician services, and especially outpatient procedures have all risen faster than general inflation over the past year.

The aging population is also driving utilization higher. As more baby boomers enter their late 70s and 80s, the demand for healthcare services—and the costs of providing them—continues to climb.

Some analysts point to expensive new treatments and biologics as contributors to rising costs. Breakthrough therapies for Alzheimer's disease, cancer, and other conditions often carry six-figure annual price tags that get spread across the Medicare system.

What Retirees Can Do

While there's no way to avoid the premium increase, retirees have some options to manage the impact:

  • Review Medicare Advantage plans — Some MA plans have $0 Part B premium reductions that can offset the increase
  • Check for Extra Help eligibility — Low-income beneficiaries may qualify for programs that reduce or eliminate premiums
  • Plan for IRMAA appeals — If your income has dropped due to retirement, life changes, or other qualifying events, you can request a reduction in income-related surcharges
  • Maximize the $6,000 senior deduction — The new federal tax deduction for Americans 65 and older can help offset increased healthcare costs

The Bottom Line

The 9.7% Medicare Part B premium increase in 2026 is a significant financial hit for the 65 million Americans enrolled in the program. Combined with a modest 2.8% Social Security COLA, many retirees will find their purchasing power barely keeping pace with—or falling behind—rising costs.

Healthcare costs remain one of the largest expenses in retirement, and 2026's premium increase is a reminder that planning for those costs requires ongoing attention. For beneficiaries on fixed incomes, every dollar counts—and in 2026, Medicare is claiming more of them than ever before.