Medicare Part B Premium Expected to Top $200 a Month in 2026

No payroll taxes go toward Part B premiums

One of the two Medicare trust funds, the Supplementary Medical Insurance Trust Fund, finances Medicare’s Part B physician and outpatient services and Part D prescription drug benefits. Medicare taxes that were deducted from your paycheck don’t go into this fund.

The revenue and premiums needed to meet Part B and Part D costs for the coming year are calculated annually so that this trust fund doesn’t face a shortfall, according to KFF, a nonpartisan health policy nonprofit based in Washington, D.C. But higher anticipated Part B spending because of increased use of services, inflation or legislative changes can mean higher premiums.

Recent forecasts suggest the 2026 Social Security cost-of-living adjustment (COLA) will be 2.5 percent to 2.7 percent, says Rachel Schmidt, research professor at the Medicare Policy Initiative at Georgetown University’s Center on Health Insurance Reforms.

A key indicator for the COLA, the Consumer Price Index for Urban Wage Earners and Clerical Workers (known as the CPI-W), rose by 2.5 percent in July compared to the previous year. A 2.5 percent COLA would increase the $2,007 average monthly benefit for a retired worker in July by about $50.

Health care inflation often exceeds other inflation because of the introduction of new, high-priced drugs; technological advancements in medicine; the rising use of services since an aging population has more health care needs and chronic conditions; and expansions in insurance coverage. Medical care has its own subcategory in the Consumer Price Index, but it generally lags further behind other CPI data, according to the Peterson-KFF Health System Tracker.

The latest update from The Senior Citizens League predicts the COLA will be 2.7 percent. That would boost the average Social Security payment for retirees by $54.18.

Both projected payment bumps would easily cover the $21.50 Part B premium increase the Medicare trustees have projected. That means the hold-harmless rule wouldn’t apply to most Part B enrollees in 2026 if the projections hold up, Schmidt says.

How the hold-harmless provision works

If the Part B premium goes up $10 and the annual Social Security COLA increases a monthly benefit payment by $8, “then I would pay last year’s premium plus $8. I would be ‘held harmless’ from $2 of the $10 increase,” says Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center. The national nonprofit advocacy organization is based in New York.

In addition to covering doctor and outpatient bills, Medicare Part B also helps pay for certain home health services; durable medical equipment such as wheelchairs, walkers and braces; as well as some medical and health services that Medicare’s Part A hospital benefit doesn’t include.

If you’re retired and receiving Social Security, the monthly Part B premium is typically deducted from your monthly benefit. The hold-harmless rule protects only those who use this deduction.

If Medicare Part B premiums and the Social Security COLA increase as predicted, the hold-harmless rule would protect a small number of people whose Social Security check falls well below the average monthly benefit for retirees. The same is true for people who received far less than the July average monthly survivor benefit of $1,574 or the July average Social Security Disability Insurance payment of $1,445.

Only eligible recipients whose monthly Social Security benefit is $796.29 or less would be protected from the full premium increase by the hold-harmless rule if the trustees’ projected Part B premium increase of $21.50 and the 2.7 percent cost-of-living increase prove accurate. That’s because $21.50 is 2.7 percent of $796.29.

If the COLA is 2.5 percent and the premium increases by $21.50, eligible recipients with Social Security payments of $860 or less would fall under the provision because $21.50 is 2.5 percent of $860.

“Luckily, there’s that provision so that they don’t actually lose money,” Benton says. But these recipients’ entire COLA could go toward their Part B premium increase.

Hold-harmless rule doesn’t cover everyone

The hold-harmless provision will not protect you, Schwarz says, if you:

• Are new to Medicare in 2026
• Receive a quarterly bill for Part B
• Pay a higher Part B premium because your income is higher, or
• Are enrolled in a Medicare Savings Program (MSP), the eligibility groups through which state Medicaid programs pay Medicare premiums and cost-sharing for Medicare beneficiaries with limited incomes. But states end up feeling much of the pinch.

“Most of the time, the hold-harmless provision either applies to everybody or it applies to only those with very low Social Security” payments, Schwarz says.

In the past 10 years, the Medicare Board of Trustees’ annual Part B premium projections have been accurate three times. They were off by just 10 cents for 2024 and 30 cents for 2020.

But four times in the past decade, their projections were at least 3 percentage points higher than the actual Part B premium amounts. That includes 2016 when the trustees predicted Part B premiums would increase by 52 percent from 2015 because of high Part B spending in 2014, a need to boost the Part B trust fund reserves and the lack of a Social Security COLA for 2016, according to KFF.

In 2015, the Centers for Medicare & Medicaid Services said, “We’re going to have to really increase the Part B premium a lot” in 2016 for the 30 percent of enrollees who wouldn’t be protected by the hold-harmless rule, Schmidt says. That’s because they’re “going to have to cover the cost of the 70 percent” who would be protected by the rule.

“Then Congress stepped in and said, ‘Whoa, don’t do that. We want you to figure out what the premium increase would have looked like if there weren’t a hold-harmless’ ” rule, she says.

The Bipartisan Budget Act of 2015 provided money that led to a more reasonable 16 percent increase in Part B premiums in 2016 for the 30 percent of unprotected enrollees, according to KFF. The other 70 percent of enrollees, who came under the hold-harmless rule, paid the same monthly Part B premium as they did in 2015, $104.90.

“They made a change in law for that one year,” Schmidt says.