Rising Medicare Part B premiums heighten cost pressures for retirees and workers

A 10% increase in Medicare Part B premiums for 2026 is amplifying out‑of‑pocket health expenses for retirees. Analysis of the 2018‑2022 Health and Retirement Study shows that after medical spending, the median retiree retains about 71% of Social Security benefits and 88% of total income, with little change over time. The added premium suggests that future out‑of‑pocket costs could erode those resources further, especially for those without Medicaid coverage.

Employers are being urged to help employees manage rising health costs by leveraging tax‑advantaged savings tools such as health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). Guidance includes educating workers on telehealth, generic drugs, cost‑transparent providers, preventive‑care programs, and negotiating better plan pricing. These measures aim to reduce the financial burden on the workforce while broader policy shifts remain uncertain.