Medicare: Disruption!

Medicare plans for 2026 have had the greatest disruption in 15 years. Many carriers (insurance companies) have dropped plans, requiring scores of enrollees to search for new options offering fewer benefits and coverage.

Cause: As is often the case with government fixes, they put a band aid over the wound without addressing the underlying injury. In this case, the Inflation Reduction Act, passed in 2022, put in place a provision that lowered the catastrophic coverage limit for Medicare prescription coverage from $8000 to $2000. This provision went into effect in 2025. The intention was to make necessary, costly medications more affordable to seniors. It was an unfunded mandate, meaning that the government did not take on any responsibility for the $6000 loss leaving it to the carriers to absorb. It did nothing to rein in the retail costs of medications or profits by pharmaceutical companies, although some medications have had their retail price negotiated for 2026 as a result of this Act.

Effect: This year the carriers have adjusted their plan designs to balance their margin of loss. Many plans were eliminated; many added premiums, added or increased deductibles, increased copayments, and reduced “extra” benefits not covered by Medicare. That, coupled with changes in the availability of tax credits toward ACA plan premiums for individuals and families under 65, resulted in a flurry of anxiety and confusion during the 7-week Medicare Open Enrollment Period (October 15th through December 7th). To make matters worse, the government shutdown delayed the release and approval of Medicare info for 2026, such as the Part B premium cost, the Part A and Part B deductibles, and the deductible for certain MediGap plans.

The good news: If you had a plan that ended or if you did not take advantage of the opportunity to make a change during the OEP, Open Enrollment Period, you can make a change during the 1st 3 months of the year to your Advantage Plan or disenroll from your Advantage Plan and go back to Original Medicare. There is also an SEP, Special Election Period, for those who were automatically enrolled in a new PDP, Prescription Drug Plan, because their plan ended, that runs through February 28th.

I am hopeful that the huge shift which occurred this year will level out and that next year will not be such a frenzy for all involved! As always, we are here to guide you through all of your options.