The Trump administration has announced a 9.7% increase in Medicare’s Part B premium, which will rise from $185.00 to $202.90 per month. This increase is more than three times the 2.8% 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% to 33%, leaving the 64 million Americans on Medicare with fewer resources to tackle other rising costs.
This increase is not limited to Medicare, as 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. The Medicare premium increase is the highest in four 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.
The causes for these increases vary, but a common denominator is the effect of policy changes from the Trump administration and Congress, including tariffs, unpredictable policy changes, unchecked drug costs, and federal health spending cuts. These increases will make it harder for families and older Americans to make ends meet, with the Medicare premium increase consuming 33% of the change in Social Security benefits.
The 2026 Medicare premium hikes will also have a significant impact on state budgets, as state Medicaid programs pay for Part B premiums for low-income enrollees. The unexpectedly high increase in Medicare costs will add to state budget problems, exacerbating the risks to Medicaid coverage and its support for the health system.
In addition to Medicare, employer-sponsored health insurance is projected to increase by 9%, the highest growth in fifteen years, affecting an estimated 164 million people. The Affordable Care Act (ACA) health insurance marketplace plans will see the largest premium increases, with average total premiums expected to skyrocket by 26%. This will result in average out-of-pocket premiums more than doubling for health insurance marketplace enrollees in 2026, with no historical precedent for such a significant increase in health costs for this large a number of Americans.