Medical insurance is bankrupt. How can I fix it?
The killing of UnitedHealthcare CEO Brian Thompson in broad daylight in midtown Manhattan last year opened the floodgates to an outpouring of anger and frustration at the health insurance industry.
It’s official. Medicare costs will eat up much of the Social Security cost-of-living increase for senior Americans next year.
The Centers for Medicare and Medicaid Services announced on November 14 that the standard monthly premium for Medicare Part B, which covers outpatient care, physician services, durable medical equipment, and preventive services, will be $202.90 in 2026. This is an increase of $17.90 (nearly 9.7%) from $185.00 in 2025.
While this is smaller than the $21.50 increase previously anticipated by the Medicare Administrative Board, it is still the second-largest dollar increase in program history behind the $21.60 increase in 2022 and nearly 3.5 times the 2.8% Social Security hike next year. This means the standard of living for older people is likely to decline again, experts say.
Poverty increased in 2024 only among the elderly. All other age groups decreased or remained the same.
“The public is likely to perceive this Part B increase to be a significant or large portion of their COLA,” said Mary Johnson, an independent Social Security and Medicare policy analyst. “In other words, further relentless increases in costs are hurting consumer finance.”
The 2.8% COLA will increase your monthly Social Security check by an average of $56 starting in January, according to the Social Security Administration. After the $17.90 increase in Medicare Part B, the average monthly COLA increase will be reduced to $38.10.
hold harmless provision
Johnson said such a large increase in Medicare Part B would likely trigger an injunction for Social Security recipients whose Social Security benefits are less than $640.
Medicare’s Hold Harmless Clause prevents Part B premium increases from being larger than the Social Security COLA. If the premium increase is higher than the COLA, this rule prevents the beneficiary from paying the full increase. Any increase not paid by the beneficiary will be distributed to others not protected by the rules.
For people with Social Security benefits of $640 or less, If your COLA is 2.8% next year, your Social Security check will increase by less than $18 per month. Without the Hold Harmless Rule, Part B premium increases would swallow up the entire COLA.
In 2022, only about 1.5% of Medicare beneficiaries had their Part B premiums limited by hold-and-harmless provisions, according to government data. Part B increased by $21.60 to $170.10 in 2022, increasing your Social Security check by $92 due to the average monthly COLA increase.
In 2017, when Medicare premiums rose 10% ($12.20) to $134.00, far exceeding the monthly COLA increase of 0.3% (average $5), 70% of Medicare Part B enrollees paid lower-than-standard Part B premiums due to hold-harmless provisions.
Hold harmless rule is not a panacea for all costs
Johnson said hold-harmless provisions can protect seniors from rising Part B premiums, but they can come with other costs.
“If an individual receives other automatic deductions, such as Medicare Advantage or Part D premiums, an increase in those premiums could result in a reduction in Social Security benefits,” Johnson said. Optional Part D covers prescription drugs.
Some Part D plans will increase premiums to $50 in 2026, the maximum allowed under the Part D Premium Stabilization Demonstration Program, according to KFF, a nonprofit, nonpartisan research organization.
“What complicates matters is that there are fewer independent Part D plans to choose from,” Johnson said. According to KFF, the total number of prescription drug plans has been cut in half since 2024.
Is everyone eligible for a harmless hold?
The following people are not covered by the Hold Harms Clause:
- New Medicare enrollees
- People who do not receive social security benefits
- high income earner
What about deductibles?
In addition to rising premiums, an increase in annual deductibles next year will make health insurance even more expensive for Medicare enrollees.
The annual deductible for all Medicare Part B beneficiaries before insurance covers the cost will be $283 in 2026, an increase of $26 from $257 in 2025, according to CMS.
Could it have been worse?
CMS says the Part B premium could have been higher.
“Had the Trump Administration not taken steps to address the unprecedented spending on skin substitutes, Part B premium increases would have increased by approximately $11 per month,” CMS said. “However, with the changes determined in the 2026 Physician Compensation Schedule Final Rule, spending on skin substitutes is expected to decrease by 90% without impacting patient care.”
Skin substitutes are materials such as biological, synthetic, or biosynthetic products that mimic human skin and are used to cover and treat chronic wounds such as diabetic foot ulcers. The Trump administration reclassified these bandages so that they would no longer be billed separately. CMS estimates that this change will reduce Medicare spending on these items by nearly 90% in calendar year 2026.
The Medicare Administrative Board also estimated earlier this year that standard monthly premiums for Part B would rise from $185 in 2025 to between $21.50 and $206.50 in 2026. This would exceed the increase from $17.90 to $202.90 in 2026.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
