Millions of Medicare beneficiaries are on the brink of an unwelcome surprise regarding their prescription drug costs.

After the Medicare Trustees’ 2025 report declared Part D prescription drug coverage to be in “satisfactory financial condition,” the Centers for Medicare & Medicaid Services (CMS) is now taking emergency action to contain skyrocketing premiums for 2026.

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The crisis underscores how fragile the program has become — and why beneficiaries will need to be more proactive than ever this fall.

The hidden crisis behind your rising drug costs

Image source: bernard buyse on Unsplash

The sudden surge: Why your 2026 Part D premiums are skyrocketing

Despite the Trustees’ rosy projections, insurers submitted 2026 Part D bids with dramatic premium increases. The National Average Monthly Bid Amount (NAMBA) soared from $179.45 in 2025 to $239.27, threatening base premiums well beyond what beneficiaries might tolerate.

If 2025 is any guide, however, the 2026 base beneficiary premium will be far less than the eye-popping $239.27 NAMBA. In 2025, the NAMBA was $179.45 — yet the base premium was just $36.78.

Understanding the national average monthly bid amount 

NAMBA is a figure used by the CMS to help determine the costs and subsidies for Medicare Part D prescription drug plans. In simple terms, it’s the average cost that all participating insurance plans estimate it will take to provide basic prescription drug coverage for one person for one month. The “average” is weighted by the number of people enrolled in each plan.

Related: Millions of Medicare beneficiaries could see major price shock

For the first time in the program’s history, CMS rejected some standalone Part D plan bids, citing “unacceptable, significant increases in cost sharing or reductions in benefits.” The agency also extended its emergency Premium Stabilization Demonstration, which caps how much monthly premiums can rise, though the cap will increase to $50 in 2026 from $35 in 2025.

The Inflation Reduction Act’s unintended consequences: How policy shifts are driving up your costs

So, what went wrong? Much of the turbulence stems from the Inflation Reduction Act (IRA), which was designed to help seniors by capping out-of-pocket drug spending. The law’s 2025 benefit redesign introduced:

• A $2,000 annual out-of-pocket cap (rising to $2,100 in 2026).
• Increased government liability for catastrophic coverage.
• New pricing pressures on insurers.

While the cap benefits the roughly 5% of beneficiaries with the highest annual drug costs, the vast majority — about 95% — now face higher deductibles, increased coinsurance, and volatile premiums. According to KFF, 85% of PDP enrollees face deductibles in 2025, up from 67% a year earlier.

Coinsurance: The hidden cost that could skyrocket your drug bills

The result is a market under stress. Some Medicare Part D enrollees face coinsurance instead of flat copays, meaning they pay a percentage of a drug’s retail price – often 25% to 33% – rather than a fixed dollar amount. Coinsurance is most common for non-preferred and specialty drugs, not for standard preferred brands.

Take Eliquis as an illustration of the math: Its retail cost can exceed $700 a month. If a plan required 25% coinsurance, that would be about $178 per month, and 33% would run $235 — far higher than the typical $47 flat copay charged when Eliquis is classified as a preferred brand. While most plans currently use copays for this drug, retirees need to understand that coinsurance on higher-cost medications can create significant out-of-pocket exposure.

As costs shift to consumers, federal interventions are doing the heavy lifting to prevent widespread premium shock. “Automatic financing” — the Trustees’ faith that Treasury transfers would always smooth things out — isn’t enough to stabilize the market under the IRA’s redesign.

Beneath the surface: Why ‘stable’ premiums hide a troubling reality for beneficiaries

The average 2025 standalone Part D premium actually fell to $39 a month, but that stability is artificial — propped up by temporary subsidies and bid caps. Behind the scenes, plan choices are shrinking, and market concentration is increasing. The top five firms now control nearly three-quarters of enrollment.

Low-income subsidy decline: A shrinking safety net for vulnerable seniors

Low-income beneficiaries are also feeling the squeeze. Enrollment in the Low-Income Subsidy (LIS) program dropped from 13.7 million to 13.1 million in 2025, partly due to Medicaid “unwinding.” Fewer people are shielded from the volatility.

Related: Retired workers to see frustrating change to Medicare in 2026

This is the new Part D reality — volatile premiums, higher deductibles, and a market reliant on emergency federal action.

Your action plan: How to protect your Part D costs during open enrollment

With open enrollment for 2026 coverage beginning Oct. 15, inaction could cost you thousands. Historically, most beneficiaries stick with the same drug plan year after year, but that complacency is now dangerous.

The reshop imperative: Why annual review is non-negotiable

“It will be more important than ever for Medicare beneficiaries to ‘reshop’ their Part D drug plans during open enrollment this fall,” said Mary Beth Franklin, a certified financial planner and Medicare expert. “Base your decision on your specific drugs and dosages — not last year’s premium.”

Practical steps for beneficiaries

1. Review your Annual Notice of Change (ANOC): Plans will mail these in September. They spell out changes to premiums, deductibles, formularies, and pharmacy networks. Even small shifts can have big financial impacts.

2. Use the Medicare Plan Finder tool: Available at Medicare.gov starting Oct. 1, the tool lets you enter your prescriptions, dosage, ZIP code, and preferred pharmacy to compare total annual costs across plans. Focus on total out-of-pocket cost, not just the monthly premium.

Navigating fewer choices: The impact of market consolidation

Fewer plan options mean less room for error. According to Melinda Caughill, co-founder of 65 Incorporated, “We had an average of 22 plan options at the end of 2024. In 2025, there are just 14.”

Real savings: What you could save by comparing plans

Caughill reports some clients have saved an average of $8,000 by switching plans — with extreme cases topping $100,000 over time. “Assuming that, because the coverage worked for you this year, it will work next year is utter nonsense,” she said.

Seeking professional guidance: When to get help

Professional guidance may be harder to find. Several major carriers have cut agent commissions for Part D plans, reducing the availability of free expert assistance. If you need help, schedule it early or consider paying a professional for an independent review.

Consider buying your prescriptions off-plan

While you are generally better off having a Part D plan, and you’ll avoid future penalties, you do not have to use it to pay for your drugs, said Marcia Mantell, president of Mantell Retirement Consulting. “If you see there’s a big increase in a prescription you must take, check out any of the off-plan options available to you at no cost: GoodRx, Singlecare, AARP’s discount drug card, Amazon, Mark Cuban’s Cost Plus Drug Company, and many more. It takes more time, but there could be big savings.”

Don’t forget Part B premiums: Another cost to consider

In addition to Part D changes, standard Part B premiums are projected to rise sharply in 2026. Make sure to factor the combined cost of Medicare into your budget.

Why this matters to you

Medicare Part D is entering a period of unprecedented volatility. Federal interventions are temporarily softening the blow, but the underlying market is fragile.

For most beneficiaries, the best defense is active shopping during open enrollment — comparing plans, understanding coinsurance exposure, and making sure your plan still works for your prescriptions and your budget.

Failure to act could turn 2026 into the most expensive year yet for your prescription drugs.