On November 14, the Trump administration announced that Medicare’s Part B premium will increase by 9.7 percent—more than three times the 2.8 percent cost of living adjustment (COLA) for 2026 Social Security benefits. As a result, the percent of the COLA deducted for Medicare premiums will climb from 18 percent to 33 percent, leaving the 64 million Americans on Medicare with fewer resources to tackle other rising costs. This is the greatest erosion of the COLA in nearly a decade and the first time that the monthly Medicare premium has exceeded $200.
FIGURE 1.
Medicare enrollees are not alone. In 2026, nearly 250 million Americans will face out-of-pocket premium increases for health coverage that are multiple times greater than general inflation, projected private wage and salary growth, and the 2026 Social Security benefit increase, all of which average 3 percent. The Medicare premium increase is the highest in four years, the projected employer-sponsored insurance increase is the highest in fifteen years, and the health insurance marketplace premium increase for 2026 is the highest out-of-pocket cost increase for all types of coverage in history.
FIGURE 2.
While the causes for specific program and plan increases vary, a common denominator is the effect of policy changes from the Trump administration and Congress. These include tariffs, unpredictable policy changes, unchecked drug costs, over $1 trillion in ten-year federal health spending cuts, and the likely expiration of enhanced premium tax credits.
Health premium increases will make it harder for families and older Americans to make ends meet.
A Closer Look at Health Coverage Premium Increases
Medicare
In 2026, an estimated 64 million older, retired, and disabled people will have Medicare coverage. The Medicare Part B premium, which partly funds physician and outpatient services, will increase from $185.00 to $202.90 per month, while the Social Security COLA will increase from $1,919.84 (the January 2025 average for retirees and dependents) to $1,973.60 per month. The premium increase ($17.90 per month) will consume 33 percent of the change in Social Security benefits ($53.76 per month).
In other words, 2026 Medicare premium hikes amount to a net cut in Social Security benefits, bringing the COLA down from 2.8 percent to 2.1 percent. This is the largest erosion of the COLA by Medicare premium increases since 2017. The annual increase in Medicare premiums ($214.80) also exceeds the estimated increase in rent ($203) and food ($144).
Figure 3
In other words, 2026 Medicare premium hikes amount to a net cut in Social Security benefits, bringing the COLA down from 2.8 percent to 2.1 percent.
This will not only make it harder for older people to afford daily costs, but will harm states. State Medicaid programs pay for Part B premiums for low-income enrollees. This unexpectedly high increase in Medicare costs will add to state budget problems resulting from the budget reconciliation law. This could exacerbate the risks to Medicaid coverage and its support for the health system, including rural hospitals.
Employer-Sponsored Health Insurance
The cost of employer-sponsored insurance, the source of health coverage for an estimated 164 million next year, is projected to increase by 9 percent—the highest growth in fifteen years. The annual family share of premiums, $6,850 in 2025, could increase by $617 with this rate of increase. The high premium increase will also affect employers who typically pay 84 percent for single coverage and 74 percent for family coverage.
Affordable Care Act Private Marketplace Coverage
The largest premium increases will be for the Affordable Care Act (ACA) health insurance marketplace plans that cover 24 million people in 2025. Average total premiums for those purchasing insurance on their own are expected to skyrocket by 26 percent. At the same time, premium tax credits will be cut due to inaction by the Trump administration and Congress. Taken together, average out-of-pocket premiums will more than double for health insurance marketplace enrollees in 2026. There is no historical precedent to such a significant increase in health costs for this large a number of Americans. This premium price hike could wipe out the expected increase in family income next year, further eating into Americans’ already squeezed budgets.
Tags: cola, medicare, healthcare premiums, cost of living adjustment
It’s Official: Americans Will Pay Much More for All Types of Health Coverage in 2026—Including Medicare
On November 14, the Trump administration announced that Medicare’s Part B premium will increase by 9.7 percent—more than three times the 2.8 percent cost of living adjustment (COLA) for 2026 Social Security benefits. As a result, the percent of the COLA deducted for Medicare premiums will climb from 18 percent to 33 percent, leaving the 64 million Americans on Medicare with fewer resources to tackle other rising costs. This is the greatest erosion of the COLA in nearly a decade and the first time that the monthly Medicare premium has exceeded $200.
FIGURE 1.
Medicare enrollees are not alone. In 2026, nearly 250 million Americans will face out-of-pocket premium increases for health coverage that are multiple times greater than general inflation, projected private wage and salary growth, and the 2026 Social Security benefit increase, all of which average 3 percent. The Medicare premium increase is the highest in four years, the projected employer-sponsored insurance increase is the highest in fifteen years, and the health insurance marketplace premium increase for 2026 is the highest out-of-pocket cost increase for all types of coverage in history.
FIGURE 2.
While the causes for specific program and plan increases vary, a common denominator is the effect of policy changes from the Trump administration and Congress. These include tariffs, unpredictable policy changes, unchecked drug costs, over $1 trillion in ten-year federal health spending cuts, and the likely expiration of enhanced premium tax credits.
Health premium increases will make it harder for families and older Americans to make ends meet.
A Closer Look at Health Coverage Premium Increases
Medicare
In 2026, an estimated 64 million older, retired, and disabled people will have Medicare coverage. The Medicare Part B premium, which partly funds physician and outpatient services, will increase from $185.00 to $202.90 per month, while the Social Security COLA will increase from $1,919.84 (the January 2025 average for retirees and dependents) to $1,973.60 per month. The premium increase ($17.90 per month) will consume 33 percent of the change in Social Security benefits ($53.76 per month).
In other words, 2026 Medicare premium hikes amount to a net cut in Social Security benefits, bringing the COLA down from 2.8 percent to 2.1 percent. This is the largest erosion of the COLA by Medicare premium increases since 2017. The annual increase in Medicare premiums ($214.80) also exceeds the estimated increase in rent ($203) and food ($144).
Figure 3
This will not only make it harder for older people to afford daily costs, but will harm states. State Medicaid programs pay for Part B premiums for low-income enrollees. This unexpectedly high increase in Medicare costs will add to state budget problems resulting from the budget reconciliation law. This could exacerbate the risks to Medicaid coverage and its support for the health system, including rural hospitals.
Employer-Sponsored Health Insurance
The cost of employer-sponsored insurance, the source of health coverage for an estimated 164 million next year, is projected to increase by 9 percent—the highest growth in fifteen years. The annual family share of premiums, $6,850 in 2025, could increase by $617 with this rate of increase. The high premium increase will also affect employers who typically pay 84 percent for single coverage and 74 percent for family coverage.
Affordable Care Act Private Marketplace Coverage
The largest premium increases will be for the Affordable Care Act (ACA) health insurance marketplace plans that cover 24 million people in 2025. Average total premiums for those purchasing insurance on their own are expected to skyrocket by 26 percent. At the same time, premium tax credits will be cut due to inaction by the Trump administration and Congress. Taken together, average out-of-pocket premiums will more than double for health insurance marketplace enrollees in 2026. There is no historical precedent to such a significant increase in health costs for this large a number of Americans. This premium price hike could wipe out the expected increase in family income next year, further eating into Americans’ already squeezed budgets.
Tags: cola, medicare, healthcare premiums, cost of living adjustment