Medicare Drug Costs Cut in 2026 as ACA and Medicaid Face Higher Expenses

• Medicare drug prices negotiated under the Inflation Reduction Act will reduce out-of-pocket costs for 9 million beneficiaries in 2026.
• Affordable Care Act (ACA) and Medicaid enrollees may face rising healthcare costs due to expiring subsidies and reduced funding.
• Social Security benefits will see a 2.8% increase in 2026, and Medicare Part B premiums will rise to $202.90.
• Retirement account contribution limits are increasing, with additional "super catch-up" options for older savers.
• The Inflation Reduction Act and Trump administration drug deals are creating a healthcare cost divide between Medicare and ACA/Medicaid beneficiaries.

In 2026, Medicare beneficiaries will see the first negotiated drug prices go into effect under the Inflation Reduction Act, slashing out-of-pocket costs for some of the most expensive prescription medications. These changes are a major win for seniors and people with chronic diseases, who will see costs on 10 of the most costly drugs drop by more than 50%. For nearly 9 million Medicare enrollees, this means drugs like Eliquis, Xarelto, Jardiance, and Januvia will cost significantly less, offering much-needed financial relief for a population that’s long been burdened by high healthcare costs according to a report.

But for others—particularly those on the Affordable Care Act and Medicaid—the picture is less optimistic. Enhanced subsidies that kept ACA premiums affordable are expiring, and Medicaid funding has been slashed under recent legislation. This has created a sharp divide in healthcare affordability. Some ACA users are projected to see premium increases of up to 114% in 2026, while Medicaid coverage is becoming more uncertain in certain states. These changes will leave many low-income Americans in a coverage gap, where they earn too much for Medicaid but too little for ACA plans. Experts warn this could lead to increased medical debt and a rise in uncompensated care for hospitals and providers according to analysis.

At the same time, Social Security beneficiaries will see a 2.8% cost-of-living adjustment in 2026, adding an average of $56 per month to their benefits. This helps seniors keep pace with inflation, though it’s partially offset by rising Medicare premiums. Medicare Part B premiums are set to increase to $202.90 per month, and high-income earners will face surcharges that could push their total premiums to over $689.90 per month. Meanwhile, the IRS is raising retirement account contribution limits to $24,500 for 401(k)s and $7,500 for IRAs. Workers aged 60 to 63 now have access to "super catch-up" contributions of up to $11,250, boosting their ability to save as they near retirement according to IRS data.

The Inflation Reduction Act has also capped out-of-pocket prescription drug spending for Medicare beneficiaries at $2,100 in 2026, up from $2,000 in 2025. In addition, out-of-pocket insulin costs were capped at $35 a month in 2023. These changes offer a safety net for high users of prescription drugs, but they’re not a universal solution. For people on ACA plans, the expiration of subsidies means many will see significant premium increases, potentially making coverage unaffordable. And for Medicaid recipients, funding cuts mean coverage is becoming more uncertain, particularly in the 10 states that haven’t expanded Medicaid. This could lead to a new health care crisis, as more people fall into a coverage gap according to projections.

What You Need to Know About 2026 Medicare Drug Price Negotiations

Medicare beneficiaries will see the first negotiated drug prices go into effect in 2026 under the Inflation Reduction Act. These negotiations are expected to reduce the cost of the 10 most expensive drugs in the program, including Eliquis, Xarelto, Jardiance, and Januvia. Out-of-pocket costs for these drugs will fall by more than 50% on average, with seven of them costing less than $100 per month according to analysis. The Inflation Reduction Act also caps annual out-of-pocket prescription drug spending at $2,100, up from $2,000 in 2025 according to official data.

These changes are a major victory for seniors and people with chronic diseases who have long been burdened by high drug costs. The Inflation Reduction Act is the first time Medicare has had the authority to negotiate drug prices, and it’s expected to save beneficiaries approximately $1.5 billion in out-of-pocket costs in 2026. The savings are projected to grow as the program expands to more drugs in the coming years according to estimates.

Still, these savings are limited to Medicare beneficiaries. For people on ACA plans, the picture is less optimistic. Enhanced subsidies that kept premiums low are expiring, and Medicaid funding has been slashed. This has created a sharp divide in healthcare affordability, with some Americans benefiting from lower drug costs while others face rising premiums and uncertainty about their coverage according to reports.

How ACA Premium Increases and Medicaid Cuts Affect Healthcare Access

In 2026, ACA premiums are set to increase significantly due to the expiration of enhanced subsidies. Some people could see premium increases of up to 114% when combined with rate hikes from insurers. This is a major concern for middle-class Americans who rely on ACA plans, particularly women who often serve as the primary decision-makers for family health insurance according to a study.

Families like those of B. and Cynthia Freeman are struggling to afford coverage, especially as they navigate health issues and job uncertainty. The couple’s current ACA plan will increase by nearly 75% in 2026, and without subsidies, they could be looking at premiums exceeding $2,000 a month. Many families are opting for lower-tier plans with fewer benefits or delaying major life decisions like marriage or changing jobs to manage costs according to personal accounts.

At the same time, Medicaid funding has been slashed under recent legislation, leaving many low-income Americans in a coverage gap. These individuals make too little to qualify for ACA plans but too much for Medicaid in the 10 states that haven’t expanded the program. This means they won’t be eligible for subsidies and may not be able to afford coverage. Experts warn this could lead to increased medical debt and a rise in uncompensated care for hospitals and providers according to analysis.

Key Changes in Social Security, Medicare Premiums, and Retirement Contributions

Social Security beneficiaries will see a 2.8% cost-of-living adjustment in 2026, adding an average of $56 per month to their benefits. This helps seniors keep pace with inflation, but it’s partially offset by rising Medicare premiums. Medicare Part B premiums are set to increase to $202.90 per month, and high-income earners will face surcharges that could push their total premiums to over $689.90 per month according to official data.

Retirement account contribution limits are also increasing in 2026. The individual contribution limit for 401(k), 403(b), and 457 plans is rising to $24,500, up from $23,500. IRA limits are also increasing to $7,500, with catch-up contributions for those 50 and older set at $1,100. Workers aged 60 to 63 now have access to "super catch-up" contributions of up to $11,250, boosting their ability to save as they near retirement according to IRS data.

These changes are part of broader efforts to make healthcare more accessible and affordable for seniors and low-income individuals. The Inflation Reduction Act and recent legislation under the Trump administration are creating a significant divide in healthcare affordability, with some Americans benefiting from lower drug costs while others face rising premiums and uncertainty about their coverage according to reports.