Clients’ Medicare Costs Set to Soar in 2026
Out-of-pocket care expenses for a healthy couple are near $1 million, and federal policy proposals could soon make matters worse.
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There’s good reason health care expenses top the list of Americans’ retirement concerns.
Average projected lifetime premiums for traditional Medicare options are $688,996 for a healthy 65-year-old couple retiring in 2026, according to the health spending analytics company Health View Services. When deductibles, copays, hearing, vision and dental are added, total costs increase to $955,411 for Medicare Parts B, D, and supplemental insurance. In plans across many states, 2026 premiums are over 50% higher than they were just four years ago.
“There’s little reason to expect these figures will fall or even stabilize in coming years,” Ron Mastrogiovanni, Health View Services CEO, told Advisor Upside. “I am worried for older Americans. My primary response to this data is to encourage people to save more and prepare proactively for the cost of care in retirement.”
Big Policy Concerns
The Centers for Medicare and Medicaid Services released 2027 payment proposals last month that could hurt both hospitals and insurers. The plan would increase payments to insurers by just 0.09%, well below analyst expectations of around 5%. Should it take effect, Mastrogiovanni warned, insurers may pull back offerings, reduce benefits, or include more restrictions within their offered plans. Some hospitals may close outright. Current premiums are already hard to stomach for clients:
- Monthly Part B premiums soared 9.7% in 2026 to $202.90, while annual Part B deductibles climbed 10.1% to $283.
- Annual Part A deductibles increased 3.8% to $1,736.
- Part D monthly base premiums also rose 5.8% to $38.99.
“Even if we don’t see a big price hike in 2027, the quality of your plan could drop, especially in cases where prescription drugs for chronic conditions are no longer covered,” said Michael Daley, a policy expert with Health View Services.
Separately, the Inflation Reduction Act of 2022 set an annual out-of-pocket maximum on prescription drug spending of $2,000 for people on traditional Medicare or Medicare Advantage, while shifting more responsibility for covering excess costs onto plan providers. The intent of the legislation was to aid retirees who spend beyond these new limits on prescription drugs. “For these individuals, many with chronic health conditions, this may be financially helpful,” Mastrogiovanni said. “However, the ripple effect of the new rule has resulted in higher overall costs for the remainder, who do not benefit from a lower out-of-pocket maximum.”
The Hard Truth. There isn’t much any particular advisor can do to change the course of health care cost inflation in the United States. What they can do, Mastrogiovanni and Daley said, is account for factors such as a client’s health status, coverage preferences and state of residence to help them prepare for retirement healthcare expenses with greater clarity and confidence.
