What to Expect from Medicare Changes Under H.R. 1: Important Updates for 2026

Medicare in 2026: Key Changes from Trump's "Big Beautiful Bill" 

As we approach 2026, significant updates to Medicare are expected, following the passage of recent legislation known as H.R. 1, often referred to as the “Big Beautiful Bill.” While no immediate action is required, it’s crucial to stay informed about these changes and how they may impact your health coverage in the coming years.

Medicare Funding Reductions Starting in 2026

One of the most notable changes expected to affect Medicare beneficiaries is a potential reduction in Medicare funding, beginning in 2026. The bill’s structure includes automatic federal budget rules that could lead to a 4% cut in Medicare funding. While this does not affect eligibility for Medicare, there are several potential consequences to be aware of.

The funding cuts could lead to:

• Reduced access to providers: Some healthcare providers may choose not to accept Medicare due to the lowered reimbursement rates, which could affect options for care.
• Increased out-of-pocket costs: While the exact impact is still uncertain, the cuts could lead to higher out-of-pocket expenses over time. This may include increased co-pays, plan premiums, or other costs that could impact a beneficiary's healthcare budget.
• Limitations on certain services: Some services previously covered by Medicare may be reduced or restricted due to these funding reductions, affecting overall access to healthcare.

Changes for Dual Eligible Beneficiaries (Medicare and Medicaid)

For those who are “dual eligible” (covered by both Medicare and Medicaid), additional changes may be implemented. The proposed cuts and restructuring under H.R. 1 could alter how Medicaid assists with certain benefits, including:

• Medicare premium assistance: Medicaid helps some beneficiaries with the cost of their Medicare premiums. Changes to Medicaid may affect this assistance, which could result in higher out-of-pocket costs for those relying on this support.
• Long-term care coverage: Medicaid often provides coverage for long-term care services, including nursing homes and home healthcare. Proposed changes to Medicaid could reduce access to these services.
• Dental, vision, and transportation services: Many dual-eligible beneficiaries rely on Medicaid for additional services like dental care, vision services, and transportation for medical visits. These services may be affected by upcoming changes, but specific details are still being reviewed at the state level.

It’s essential to stay informed about these changes, especially if you rely on Medicaid for supplementary coverage alongside Medicare. Sackett Insurance will continue to monitor these developments and keep you updated if these changes apply to you.

Drug Coverage Improvements Are Staying

While there are several changes on the horizon, some recent improvements to drug coverage will remain intact. These include:

• A $2,000 annual cap on prescription drug costs: Starting in 2025, Medicare will implement a $2,000 cap on annual prescription drug expenses for beneficiaries, providing relief from high medication costs.
• $35 insulin co-pay cap: For Medicare beneficiaries, insulin co-pays will be capped at $35 per month, significantly lowering the cost of this essential medication.
• Free vaccines: Medicare beneficiaries will continue to receive certain vaccines at no cost, helping to ensure that beneficiaries stay protected against preventable diseases without the added financial burden.

These improvements are critical for Medicare beneficiaries, and it’s reassuring that they are not being affected by the budget reductions outlined in H.R. 1.

What You Can Do Now

While no immediate action is required, there are steps you can take to stay prepared for the upcoming changes:

• Keep all notices from Medicare: It’s essential to stay on top of any communication from Medicare or your current plan provider. These notices will contain important updates about your coverage and any changes that might occur.
• Notify us of any changes in your health or financial situation: If you experience any significant changes, such as a change in income or health needs, let us know. This could impact your eligibility for certain benefits or coverage options.
• Reach out with any questions: Sackett Insurance is here to help you navigate these changes. Don’t hesitate to reach out if you have any questions or concerns.

Looking Ahead

2026 will bring a mix of changes to Medicare, including potential budget reductions, changes for dual-eligible beneficiaries, and the continuation of positive improvements like drug cost caps. As your Medicare advisor, Sackett Insurance will be closely monitoring these changes and will assist you during Open Enrollment in 2025 to ensure you have the right coverage for your needs.

Staying informed is key to making confident decisions about your healthcare, and we’ll continue to update you as more details about these changes become available.