Medicare open enrollment period arrives with rising costs, new rules for 2026

Older Americans enrolling or reenrolling in Medicare this fall will face an evolving landscape shaped by rising health care costs, fewer plan options, and new federal rules set to take effect in 2026.

Open enrollment runs from Oct. 15 to Dec. 7, when more than 67 million Americans with Medicare will decide whether to stay with their current coverage or make a change. During this period, beneficiaries can move between traditional Medicare and Medicare Advantage or adjust prescription drug and supplemental coverage.

Fewer standalone drug plans, higher costs

One of the biggest changes facing consumers this year is in the market for standalone Part D prescription drug plans, which are used by millions who enroll in traditional Medicare. These drug plans are optional and are offered through private insurers, and enrollees must pay monthly premiums.

The number of these Part D plans has been shrinking in recent years, and premiums are expected to rise — potentially up to $50 a month — next year. Part of the reason is a provision of the 2022 Inflation Reduction Act that capped out-of-pocket costs on prescription drugs, shifting more of the expense to insurers, said Diane Faligowski, CEO of Health Plans in Oregon, an insurance agency that receives funds from the state to help residents sort through health insurance plans.

The current out-of-pocket drug spending cap is $2,000, but that threshold will increase to $2,100 next year.

“Part D plans are having a hard time surviving,” Faligowski said.

Faligowski said Medicare also negotiated lower prices for 10 popular high cost drugs. She said these changes, too, have shifted costs onto insurers.

Meanwhile, a federal stabilization program that had helped cushion premium increases is being scaled back next year, according to David Lipschutz, co-director of the nonprofit Center for Medicare Advocacy.

The Trump administration is continuing the program but with less funding and is allowing insurers to raise premiums by as much as $50. That’s more than the $35 maximum increase allowed for plans this year.

The drug cap and other Inflation Reduction Act changes apply to both the standalone Part D drug benefit and the drug coverage offered as part of Medicare Advantage. But Medicare Advantage plans aren’t likely to increase the drug portion of their premiums since they’re paid more per member than what it costs taxpayers for traditional Medicare, according to Lipschutz.

“Medicare Advantage insurers get a lot of rebate dollars that they can use to reduce premiums, reduce cost sharing and add extra benefits … which are a huge driver of enrollment,” Lipschutz said. “With this excess funding, they can better cushion the blow of increased Part D costs in a way that standalone Part D prescription drug plans cannot.”

Medicare Advantage under pressure

Medicare Advantage, which is run by private insurers as an alternative to traditional Medicare, now covers more than half of all eligible beneficiaries. The share has grown rapidly in the past two decades, from 19% in 2007 to 54% in 2025, according to the Kaiser Family Foundation.

Paul Ginsburg, a professor at the University of Southern California and former vice chair of the Medicare Payment Advisory Commission, said that growth was fueled in part by generous federal payments.

“One of the reasons that it’s grown so fast is that the plans have been increasingly overpaid by Medicare, which has enabled them to offer really more attractive deals to beneficiaries,” he said.

But those payments are tightening. Ginsburg explained that some insurers have relied on aggressive coding practices to make patients appear sicker and collect higher payments. The Centers for Medicare and Medicaid Services has cracked down on this practice, phasing in stricter rules over three years.

At the same time, insurers miscalculated how quickly patients would return to elective surgeries after the pandemic, leaving some plans underpriced.

“Plans have found that they had set their premiums too low,” Ginsburg said. “Some lost money, some just didn’t make as much as they expected.”

As a result, some Medicare Advantage insurers are cutting back on supplemental benefits, scaling back coverage, or leaving markets altogether. UnitedHealthcare announced it will end certain PPO plans, affecting about 600,000 members. Humana has said it expects to lose about 550,000 members nationally as it drops unprofitable plans. Aetna has also said it will close roughly 90 plans across 34 states.

“We’re likely to see plans focus less on expanding benefits and more on stabilizing their margins,” Lipschutz said. Still, many plans are expected to keep offering low or zero premiums, since those remain a major draw for new enrollees.

Updated tool for consumers

For the first time, the Medicare Plan Finder website will display provider directory data to help beneficiaries see whether their doctors and hospitals are in a plan’s network. The update will also allow beneficiaries to search by provider and see directory information on the site. But experts say these directories are often inaccurate.

To address this, Medicare officials will allow a temporary special enrollment period in 2026. Beneficiaries who choose a plan using Plan Finder and later discover the provider information was wrong will be able to switch within three months. The safeguard applies only for the 2026 plan year.

Another update to the Medicare Plan Finder tool will allow beneficiaries to view details for Medicare Advantage supplemental benefits beyond dental, hearing and vision.

Broader policy changes ahead

President Donald Trump’s tax and budget reconciliation bill signed in July also introduces changes to Medicare.

Under longstanding rules, lawfully present immigrants could enroll in Medicare if they had enough work history and met the age or disability requirement. According to KFF, those without the required time worked could still buy into Medicare Part A after living legally in the U.S. for five continuous years.

The new law narrows that eligibility. Going forward, Medicare coverage will only be available to green card holders, Cuban and Haitian entrants and people residing in the U.S. under the Compacts of Free Association. That eliminates eligibility for other lawfully present groups, including certain refugees and those with work visas.

The Congressional Budget Office estimates the change will cause about 100,000 people to lose Medicare coverage.Lipschutz said current beneficiaries affected by the change will receive a termination notice next year and lose their coverage in January 2027.

The 2025 tax law also delays efforts to simplify enrollment in Medicare Savings Programs, which help low-income seniors pay premiums and cost-sharing. Lipschutz said the nine-year suspension means “fewer people will receive financial assistance they otherwise qualify for.”

And it narrowed Medicare’s authority to negotiate the cost of certain high-expense medications, including drugs for certain rare diseases.

“Fewer drugs under negotiation could mean higher out-of-pocket costs for patients who rely on those treatments and higher overall spending for Medicare,” Lipschutz said.

Medicare’s ability to negotiate drug pricing came in 2022’s Inflation Reduction Act, and the first 10 negotiated drugs are set to carry lower prices starting next year — such as Eliquis, a blood thinner that’s one of the most prescribed drugs for seniors on Medicare.

What beneficiaries should watch for

Experts say beneficiaries should pay close attention to communications from their insurers that arrived in the lead-up to open enrollment. Medicare Advantage insurers must send out Annual Notice of Change letters by Sept. 30, outlining how benefits and coverage will change in the coming year.

“These notices may not look exciting, but they contain some of the most important information beneficiaries will receive all year,” Lipschutz said. “It could have a real impact on your coverage.”

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