There are a lot of political footballs being thrown around these days, and it seems like Medicare might be one of the most popular. It’s unfortunate to see it used that way, considering how important it is to the healthcare of so many people (more than 66 million). Unfortunately, that’s what makes it such a popular football to toss around.
Between the OBBBA, President Trump naming Dr. Oz as the new Medicare Administrator, and other changes, it’s easy to feel a little uncertain about the future if you’re counting on Medicare to help pay for your healthcare costs.
We sent out a newsletter on Medicare a couple weeks ago and struggled to find a single source that compiled all the coming changes, so that’s our goal with this article. We’ll keep this updated with any other changes coming down the pipeline through the end of this year.
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First Up: The OBBBA Doesn’t Do Much to Medicare
Before we discuss what will change, let’s examine a few proposed changes that have since been dropped. Despite all the noise from the media and politicians while it was in process, many of the proposed Medicare changes were removed from the OBBBA before they were signed into law.
For instance, the following items were removed and thus will NOT become law:
- The proposal to allow people entitled to Medicare Part A to contribute to HSAs (Health Savings Accounts).
- The proposal to allow more hospitals to register as “rural emergency hospitals,” thus allowing hospitals in sparsely populated areas to enroll in Medicare and receive additional funding.
- The proposal to expand Medicare coverage to include vision, dental and hearing.
- The proposal to use AI to identify Medicare fraud and recoup payments.
Change #1: Temporary increase in physician reimbursement for Medicare-related services beginning January 1, 2026
When reimbursing physicians, Medicare uses something called the Medicare Physician Fee Schedule conversion factor. You can read more on the conversion factor here if you want.
The OBBBA introduced a temporary increase of 2.5%, which is good for physicians. Since reaching a high of $38.0870 in 2008, the conversion factor has mostly decreased, and the 2025 conversion factor sits at $32.3465.
The 2026 increase of 2.5% will be the largest in over a decade.
What impact will this have on retirees?
Medicare reimbursement can play a major role in which services physicians offer. If they deem the reimbursement to be too low, they may cut certain services or even consider not taking Medicare at all anymore.
For example, here in Corvallis, Samaritan Health has pointed to declining Medicare reimbursements as one of the primary causes of their own financial troubles. Or you could look at UnitedHealthcare, the nation’s largest provider of Medicare Advantage plans, which recently announced they would be dropping certain Medicare Advantage plans due to rising care use and rate cuts.
In short, increased Medicare reimbursements are good for doctors, which in turn is good for patients in the form of better access to certain services.
Change #2: Medicare Prescription Payment Plan participants will be automatically re-enrolled in 2026
This year, the Medicare Prescription Payment Plan (MPPP) allowed those who opted in to spread out payments on their prescription drugs via monthly installments for the first time rather than paying the whole thing upfront at the pharmacy.
What impact will this have on retirees?
If you are already enrolled in this plan, you will be automatically enrolled in it next year – no need to re-enroll. If you enrolled this year and do not wish to participate next year, you will need to opt out.
If you want to learn more about the MPPP, click here.
Change #3: Out-of-pocket prescription drug cap will increase to $2,100 in 2026
The out-of-pocket prescription drug cap for 2025 is $2,000. The cap will be indexed for inflation next year, resulting in an increase of $100.
How will this impact retirees?
You will be responsible for an additional $100 in total cost on your prescriptions in 2026.
Change #4: It’s official: Medicare won’t cover cannabis products (and other items)
Medicare Advantage plans can include something called “Special Supplemental Benefits for the Chronically Ill” (SSBCI). In April, the Centers for Medicare & Medicaid Services created a list of non-allowable examples of supplemental benefits (i.e., things Medicare will not cover).
The list includes:
- Alcohol
- Tobacco
- Cannabis products
- Non-healthy food
- Life insurance
- Hospital indemnity insurance
- Funeral planning and expenses
- Procedures that are solely cosmetic in nature and do not extend upon Traditional Medicare coverage
- Broad membership programs inclusive of multiple unrelated services and discounts
How will this impact retirees?
Despite cannabis being legal for recreational and medical purposes in many states (including Oregon), don’t expect Medicare to cover the cost, even if your doctor recommends it. The same is true for all of the items on the list above.
Change #5: The cap for insulin costs is dropping to $35 per year
The cap for insulin costs has been $35 per month (or $420 per year) for the last few years. Starting in 2026, the cap will drop to $35 per year.
How will this impact retirees?
Diabetic retirees stand to save nearly $400 on insulin costs next year.
Change #6: Certain vaccines are now permanently free as part of Medicare Part D
Free vaccines are now a permanent part of Medicare Part D. This only applies to the CDC’s list of recommended vaccines for adults, updated yearly.
How will this impact retirees?
No more out-of-pocket cost for the flu shot, COVID vaccine, and others. Here is a list of the covered vaccines, which is updated annually.
Change #7: Medicare eligibility for lawfully present immigrants
Among other more behind-the-scenes changes, the primary way the OBBBA will change Medicare is through new eligibility standards for immigrants.
Beginning 18 months after the OBBBA was signed into law (i.e., January 2027), in order to be eligible to receive Medicare, you must be:
- A U.S. citizen
- A green card holder
- An immigrant who was granted the status of Cuban and Haitian entrant; or
- A lawful resident of the U.S. in accordance with a Compact of Free Association referred to in accordance with section 402(b)(2)(G) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
You can learn more about changes regarding eligibility here.
How will this impact retirees?
If you fall into one of the four categories above, it will have zero impact for you. If you do not, then you will want to look into other healthcare coverage options.
Possible change? Medicare may start covering weight-loss drugs
In early August 2025, the Trump administration announced that the Centers for Medicare and Medicaid Services was experimenting with covering weight-loss drugs including Wegovy and Ozempic, which cost roughly $1,000 a month.
How could this impact retirees?
Obesity-related drugs have never been covered by Medicare before, rendering them largely unaffordable for many retirees. If it is covered, weight-loss drugs could become a big hit for retirees.
Have questions? Reach out to SHIBA
If you’re an Oregon resident, we highly recommend reaching out to the Medicare specialists at SHIBA if you need help. It’s free and can be really helpful in navigating the confusing world of Medicare.
For those that live outside of the state of Oregon, most states have a similar program, though you may have to do a little digging to find them.
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