Big Changes Coming to Medicare Drug Plans in 2026

Medicare Open Enrollment starts this week and changes coming in 2026 warrant close consideration. Many will face fewer choices and higher costs, particularly for people who rely on traditional Medicare and purchase stand-alone prescription drug plans.

Slightly less than half of Medicare’s 63 million beneficiaries enroll in traditional or fee-for-service Medicare (Parts A and B) compared to Medicare Advantage plans (Part C). Among rural beneficiaries, traditional Medicare is particularly popular. Beneficiaries who prefer traditional Medicare purchase stand-alone Part D plans for their prescription drug coverage.

Fewer Plans to Choose From

The Centers for Medicare and Medicaid Services (CMS) just released new data, and here’s the headline: the Medicare Part D market is shrinking again in 2026.

• The number of standalone prescription drug plans (PDPs) will drop by 22% - from 464 in 2025 to 360 in 2026

• The number of Medicare Advantage plans with drug coverage (MA-PDs, not including Special Needs Plans) will also fall by 9%, from 3,246 to 2,967 over the same period

That means fewer choices for people shopping for drug coverage this fall. Some insurance companies are pulling out of the market, while others are cutting back on the types of plans they offer.

Interestingly, one area that’s still growing is Special Needs Plans (SNPs) - these are designed for people with certain health conditions or lower incomes, and they’ll increase by 20% next year. That’s good news for people living with specific needs, including serious chronic conditions, for which SNPs are available.

Why All the Changes?

The Inflation Reduction Act made significant changes to Medicare Part D. Some of these changes will help beneficiaries manage out-of-pocket costs, including the new annual out-of-pocket cap ($2,100 in 2026) and the Medicare Prescription Payment Plan. Launched in January 2025, the Medicare Prescription Payment Plan offers seniors with any Medicare Part D plan (including PDPs or MA-PDs) the option to break their out-of-pocket prescription drug expenses into monthly installments to avoid having to make large payments earlier in the year.

However, other aspects of the IRA, like the drug pricing provisions, risk undermining the Part D program. In 2026, the Medicare Prescription Drug Price Negotiation program kicks in for the first ten prescription medicines selected for price-setting. How the program affects beneficiary costs at the pharmacy counter and the impact on access restrictions will be closely watched.

Expect Higher Premiums

Even though Medicare is trying to limit premium increases, many people will still see their monthly drug plan costs go up in 2026.

For those not receiving low-income help, average premiums for standalone drug plans are expected to rise by about a third. According to a new analysis by Avalere:

• About 1 in 4 people will see their drug plan premium go up by $30 or more per month

• Around 17% will see little to no change

• Most people with Medicare Advantage drug plans (MA-PDs) will still have a $0 drug premium, but about 16% will see an increase of $10 or more

Fewer Choices for Low-Income Beneficiaries

If you get help paying for your drug plan through the Low-Income Subsidy (LIS), your options are also narrowing. The number of benchmark plans - the ones available at no extra cost - will dip slightly from 90 in 2025 to 88 in 2026. This erosion of choices continues an alarming decline in the options of LIS plans for low-income beneficiaries. In 2023, before passage of the IRA, there were 191 LIS plan options.

In some states, that means people will have only one or two of these no-cost plans to choose or face picking a plan for which they must pay premiums.

What This Means for You

Bottom line? The 2026 Medicare open enrollment will involve fewer plans and higher premiums.

If you’re on Medicare, it’s going to be more important than ever to review your plan during open enrollment this fall. Even if you’re happy with your current plan, take a few minutes to compare your options - you might find that your plan’s price or drug coverage is changing.