Congressional Committee: Medicare Part B Premiums Could Double Over the Next Decade
The “NCTR FYI” for March 11, 2026, contained a story that focused on the burden of out-of-pocket (OOP) healthcare spending relative to retirement income as a key measure of retirement well-being. The point of the piece was that manageable healthcare OOP spending is critical to meaningful retirement security, helping to shape retirement adequacy, and that public pension plans should not ignore health‑care economics, even if they do not administer a retiree health plan. As a coda to that item, a new MarketWatch story underscores that Medicare Part B premiums could double over the next decade, “wrecking retirement budgets.” The subject of “Retiree Healthcare Costs and Retirement Security” – and how health‑cost risk can be a driver of political and fiscal pressure on ALL pension systems — is just one of the proposed topics for NCTR’s 39th Annual System Directors’ Meeting, co-hosted with the Chicago Teachers’ Pension Fund, June 24-24, 2026. Registration is now open for this premier NCTR event, open to system directors and their deputies only. Don’t miss it!
According to MarketWatch, Medicare Part B premiums “will rise to about $5,000 a year by 2035, up from about $2,440, according to a recent report by the Senate Joint Economic Committee.” The referenced report is an Issue Brief entitled “The Part B Premium Pass Through: Medicare Advantage Overpayments Inflate Premiums for All,” and was released March 10, 2026. [The Joint Economic Committee (JEC) is a bicameral committee of Congress with members from both the Senate and the House. It is sometimes referred to as either the Senate or House JEC by the news media as its chairmanship alternates between the House and Senate every Congress, and it is currently the Senate’s turn to chair it.]
The Medicare Part B premium covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. It is $202.90 for 2026, a 9.6 percent increase from 2025, and more than three times the 2.8 percent increase in Social Security’s cost-of-living adjustment (COLA) for 2026. As pointed out by Rhian Horgan, the CEO of Silvur Technology Services, a retirement platform dedicated to helping people over the age of 50 and the parent company of Silvur Insurance, this means “32 percent of the average American’s annual cost of living adjustment for Social Security will be eaten up by an increase in health care costs.”
Put another way, the average retired worker saw their monthly Social Security benefit rise from $2,015 to $2,071 starting in January of 2026, an increase of $56 per month. But given the $17.90 monthly increase in Part B premiums, which are automatically deducted from a beneficiary’s Social Security check, the net increase in a Social Security beneficiary’s monthly check was $38.10. As the Center for Retirement Research at Boston College (CRR) recently explained this impact, the typical retiree will therefore have only 71 percent of their Social Security monthly benefit (and 88 percent of total income) left over after subtracting their OOP healthcare spending, which also includes copays and the costs of services that are uncovered by Medicare.
“Seniors face a dramatic reduction in the affordability of Medicare Part B,” the report said. “It is therefore imperative for policymakers to act to prevent premiums from gradually eating away at seniors’ social security checks.”
“The top factor eating into retirement checks and causing a loss of buying power is premiums. Checks don’t go as far,” Mary Johnson, an independent Social Security and Medicare analyst, told MarketWatch. The prospect of Medicare Part B premiums doubling “comes as many older adults already struggle to make ends meet,” the publication stressed. “Nearly half of adults 60 and older can’t cover their basic needs of housing, food, transportation and healthcare, according to an analysis by the National Council on Aging and the LeadingAge LTSS Center at UMass Boston,” MarketWatchunderscores
According to the new JEC brief, part of the expected increase in Medicare Part B premiums — or about $450 a year of the projected $5,000 a year premium — would be due to “overpayments” made by the government to Medicare Advantage (MA) plans. “Currently, the government spends more for Medicare Advantage than traditional Medicare beneficiaries,” MarketWatch emphasizes, and this “overall overspending increases costs for all beneficiaries.” According to the JEC, these “overpayments” for Medicare Advantage are due to the fact that, on average, covering a beneficiary in MA costs an estimated 120 percent of what it would cost in traditional Medicare.
The JEC report therefore concludes that “[o]ne concrete, fiscally sustainable approach is to align Medicare Advantage payment levels with Traditional Medicare.” The new JEC brief explains that this “would directly address what may appear to be a modest per-beneficiary amount, $212 per year, but which has already amounted to $82 billion in excess Part B premiums over the past decade.”
Furthermore, as the JEC points out, “looking ahead, the per-beneficiary amount may no longer be so modest” because, if Medicare Advantage continues to be paid at 120 percent of Traditional Medicare as Part B spending doubles, “the additional premium burden would rise to roughly $450 per beneficiary per year in 2035.”
But what would happen to MA participants if this step was taken? Medicare Advantage was originally intended to save money by letting private insurers manage care more efficiently. They use the “overpayments,” in part, as rebates to offer members $0 premiums; dental, vision, and hearing benefits; gym memberships; grocery cards; and lower cost‑sharing. If overpayments shrink, rebates shrink, and plans would have to reduce or eliminate extra benefits; increase premiums; increase copays and deductibles; and/or narrow provider networks.
This is the most immediate and likely effect. And given that MA now covers slightly more than half of all Medicare beneficiaries, the numbers of people affected would be significant. In short, while the move might save Medicare money, and potentially reduce the percentage increase in the Part B premium, it would have significant negative implications for many seniors.
And what about prescription drug affordability?
Healthcare costs are extremely complicated, and health‑cost burdens in retirement affect retirement timing, member behavior, demand for COLAs, and long‑term adequacy of benefits, to name a few impacts. As retirees lose an increasingly significant share of their retirement income to Medicare premiums, cost sharing, and uncovered services, this erosion affects net replacement rates, member financial stress, longevity risk and spending patterns, not to mention potential political pressure on retirement plans.
So be sure to register to attend NCTR’s upcoming System Directors’ meeting and join your fellow system directors in this discussion of how these issues are affecting retirement security for your members. After all, and regardless of who administers their healthcare benefits, health costs are increasingly a retirement‑security variable, not a health‑plan variable.