Medicare Premium Growth Often Exceeds Inflation

Medicare is the federal health insurance program for retirees, but it’s not entirely free for most people. While the majority get Medicare Part A (hospital insurance) for free, there are monthly premiums for Part B (doctor’s visits and outpatient services) and Part D (prescriptions). And those who opt for Medicare Advantage (Part C) also pay premiums. These are bundled plans that usually include Parts A, B and D.

Like almost everything, Medicare premiums only go up each year. Unfortunately these rising costs often outpace inflation — taking a bigger chunk of retirees’ income. Let’s take a look at current costs and historical trends to understand how these premiums impact your wallet.

What Medicare Costs in 2026

Part A covers hospital stays, nursing homes and hospice

• Monthly premium: $0 for the vast majority
• Deductible: $1,736 per inpatient hospital stay
• Coinsurance: Varies from $0 to $868 per day depending on the type and duration of service

Part B covers doctor’s visits, outpatient services and medical equipment 

• Monthly premium: $202.90 for most (those with higher incomes pay more)
• Deductible: $283
• Coinsurance: Varies from $0 to 20% of the cost, depending on service

Part C (Medicare Advantage) is bundled insurance usually covering hospitals, doctor’s visits and medications

• Monthly premium: Averages $14 (varies from $0 to over $200)
• Deductible: Varies by plan
• Coinsurance: Varies by plan

Part D covers prescription drugs and vaccines

• Monthly premium: Averages $34.50
• Deductible: Varies but can’t be more than $615
• Coinsurance: Varies by plan

Because of the many variables at play, it’s wise to carefully research your options when choosing Medicare coverage. AARP offers a guide for the process.

Premium Costs on the Rise

Medicare and insurance companies set new premiums for each calendar year. The 2026 Part B premium of $202.90 is 10% higher than the 2025 cost. That’s much higher than inflation, which was 2.7% in 2025. Remember that higher income persons will pay more than $202.90.

Many retirees rely on Social Security to pay all or part of their Medicare premiums. Social Security recipients get an annual cost-of-living adjustment (COLA) to help cover inflation. In 2026, the COLA was 2.8% — higher than inflation but well below the Medicare premium increases. 

“An analysis by Mary Johnson, an independent Social Security and Medicare policy analyst, found that from 2005 to 2024, Part B premiums increased an average of 5.5% each year, while COLAs averaged 2.6%,” according to the Advisory Board, which conducts research on the healthcare industry. “This disparity is caused in part because Medicare costs are not included in the consumer price index that’s currently used to calculate the COLA.”

“The increase in Medicare premiums, deductibles and other expenses could be especially burdensome on low- and middle-income Medicare beneficiaries, particularly people who do not qualify for financial help from the Medicare Savings Programs,” reports KFF, a policy research group.

The “hold harmless provision” offers some protection for retirees who have their Medicare premiums automatically deducted from their Social Security checks. Premium increases are limited to the year’s COLA, so the net payment does not fall. This provision doesn’t apply to those who pay their Part B premiums directly or to those in higher income brackets.

Income-Related Adjustments

If you make above a certain amount, you must also pay an income related monthly adjustment amount (IRMAA). For 2026, the IRMAA is set at $109,000 for singles and $218,000 for couples. If your income is higher than these brackets, you must pay the IRMAA, which starts at $14.50 per month, going up to $91 for the highest earners. IRMAA applies to Part B and D.

“The Social Security Administration (SSA) determines who pays an IRMAA based on the income reported two years prior,” according to Humana. “So, for 2026, the SSA looks at your 2024 tax returns to see if you must pay an IRMAA.”

Good News on Part D Premiums

A bit of good news: Part D premiums are actually decreasing for many stand-alone drug plans this year. “Only a few national prescription drug plans are increasing monthly premiums by $50, the maximum allowed under the premium stabilization demonstration,” according to KFF.