How much retirees may save in 2026

The first 10 drugs subject to new Medicare price negotiations will go into effect on Jan. 1, prompting substantial out-of-pocket savings for certain older Americans who rely on those medications.

Enrollees in Medicare Part D prescription drug plans may see their out-of-pocket costs for the negotiated drugs fall by an average of more than 50% in 2026, according to new research from AARP, a nonprofit representing Americans ages 50 and over.

Moreover, enrollees may pay less than $100 per month for 7 of the 10 negotiated drugs next year, AARP’s research found.

The new Medicare Part D prescription drug price negotiations were enacted with the Inflation Reduction Act in 2022. About 9 million Medicare Part D enrollees use the first 10 prescription drugs selected for price negotiations in 2026, according to AARP. The treatments are used for a variety of conditions, including autoimmune diseases, cancer, diabetes and heart disease.

Another 15 drug names are set to see price cuts under Medicare in 2027.

In 2026, the Medicare drug price negotiations may save Medicare Part D enrollees $1.5 billion in out-of-pocket expenses, the Centers for Medicare & Medicaid Services has estimated.

The Inflation Reduction Act requires Medicare to identify high-cost drugs and negotiate lower prices on behalf of beneficiaries and taxpayers who help fund the program, Nancy LeaMond, chief advocacy and engagement officer at AARP, said during a Dec. 18 briefing on the research.

“We often talk about issues in terms of policy and data, but beyond the numbers, this is about the people in our lives, parents, grandparents, friends and neighbors, who will finally see relief from the high drug costs and the fear that the price of needed medications will spiral out of control,” LeaMond said.

The Inflation Reduction Act also raises the annual Medicare Part D out-of-pocket spending cap to $2,100 per beneficiary in 2026, up from $2,000, the first amount established under the law in 2025. Once out-of-pocket spending on covered medications reaches that limit, the plan pays 100% for the rest of the year. Other changes from the law include a $35 per month cap on insulin for Medicare beneficiaries, rebates to beneficiaries if drug prices rise faster than inflation and free vaccines to prevent certain conditions like shingles.

The Trump administration is separately working to lower prescription drug prices for Americans through negotiations with nine large pharmaceutical companies. However, the “big beautiful” tax package signed into law in July made it so that certain drugs will have either delayed eligibility for Medicare drug negotiations or be excluded entirely.

Enrollees in private Medicare Advantage insurance plans may shop around for new coverage during an open enrollment period from Jan. 1 through March 31. All Medicare beneficiaries can opt to switch coverage during annual open enrollment from Oct. 15 through Dec. 7. Other initial and special enrollment periods may apply, based on individual circumstances.