The Medicare Loyalty Tax: Why Auto-Renewing Costs You Money

Key Takeaways

69% of Medicare beneficiaries did not compare their coverage against other options during a recent Open Enrollment period (KFF, published Sept. 26, 2024, retrieved 2026-08-27).

Plans change every year. For 2026 the standard Part B premium rose to $202.90 (from $185.00), and stand-alone Part D plans were allowed to raise premiums by up to $50 per month year over year under a federal stabilization program.

Beneficiaries in a poorly matched Part D plan can overspend by roughly $370 to $800 or more per year (The Senior Citizens League; GoodRx Research, retrieved 2026-08-27).

The fix is a 30-minute review each fall during Open Enrollment, October 15 to December 7, built around your drug list and the official Medicare Plan Finder.

PlanAlert's view: plan monitoring should be continuous, not a once-a-year scramble.

If you have a Medicare Advantage or Part D drug plan and you did nothing last fall, your plan renewed itself on January 1. That sounds convenient. It usually isn't. Your premium, drug list, pharmacy network, and out-of-pocket costs can all change from one year to the next. The plan that fit you best in 2024 may be a mediocre fit in 2026. Staying put by default is the loyalty tax: money you lose because re-shopping felt like more trouble than it was worth.

This is the Medicare version of a problem we cover elsewhere, from phone and internet bills that quietly climb every year to wondering whether you are overpaying and not knowing where to check. Below: what actually changes in a Medicare plan annually, what the research says it costs, and how to run a proper re-shop. It is written for people on Medicare and for the adult children and caregivers who help them decide.

Not affiliated with the federal Medicare program. PlanAlert is an independent consumer tool. For official information, plan comparisons, and enrollment, use Medicare.gov, call 1-800-MEDICARE, or contact your free State Health Insurance Assistance Program (SHIP) at shiphelp.org.

What Is the Medicare "Loyalty Tax"?

The loyalty tax is the extra amount you pay by keeping a Medicare plan you never re-compared. It isn't a line item. It's the gap between what you pay now and what you'd pay on the best-matched plan available to you this year. It grows quietly because insurers redesign their plans annually while your enrollment carries over automatically.

Most beneficiaries pay it. KFF analyzed federal survey data from the 2022 Open Enrollment period and found that 69% of Medicare beneficiaries did not compare their current coverage with other options (KFF, published Sept. 26, 2024, retrieved 2026-08-27). People in traditional Medicare were a little worse at this (73%) than people in Medicare Advantage (65%). Reviewing your own plan's changes is also uncommon. Among Medicare Advantage enrollees, 43% did not check their plan for cost changes, and 44% did not check for changes to covered drugs and services.

What Actually Changes in a Medicare Plan Each Year?

Almost everything except the plan's name. Insurers file new plan designs with the Centers for Medicare & Medicaid Services (CMS) every year, and the changes take effect January 1.

Premiums and Deductibles

The table below shows the fixed 2026 figures that apply to everyone. Plan-specific costs (Medicare Advantage and Part D premiums, copays, and drug tiers) move on top of these.

Medicare cost	2025	2026
Part B standard premium (per month)	$185.00	$202.90
Part B deductible (per year)	$257	$283
Part A inpatient hospital deductible (per benefit period)	$1,676	$1,736
Part D standard deductible (maximum)	$590	$615
Part D out-of-pocket cap (per year)	$2,000	$2,100

Sources: CMS via the Railroad Retirement Board (Part B); Federal Register CY 2026 (Part A); KFF summarizing the CMS CY 2026 Part D redesign parameters. Retrieved 2026-08-27.

The standard Part B premium is $202.90 per month for 2026, up $17.90 from $185.00, and the Part B deductible is $283, up from $257. Higher earners pay more through the income surcharge known as IRMAA.

Stand-alone Part D premiums could rise by as much as $50 per month from 2025 to 2026 for plans in CMS's Part D Premium Stabilization Demonstration. The average stand-alone premium was still projected to fall a little, from about $38 to about $34, according to CMS projections (summary via medicareresources.org, retrieved 2026-08-27). But averages hide large plan-by-plan swings. Your specific plan can move the other way.

Your Drug List (Formulary)

Part D and Medicare Advantage drug plans revise their formularies annually. A medication that was on a low copay tier can move to a higher tier, land behind a prior-authorization requirement, or drop off the list. If you take a brand-name drug, this is the single most valuable thing to re-check each year.

The Part D Benefit Structure Itself

2026 is the second year of the redesigned Part D benefit created by the Inflation Reduction Act. The old "donut hole" coverage gap is gone, and the benefit now has three phases instead of four. The standard deductible is capped at $615, and there is an annual out-of-pocket cap of $2,100 (up from $2,000 in 2025). After you hit that cap, covered drugs cost you $0 for the rest of the year (KFF summarizing CMS CY 2026 parameters, retrieved 2026-08-27).

Provider and Pharmacy Networks

Medicare Advantage plans renegotiate their doctor, hospital, and pharmacy networks yearly. A physician or health system that was in-network can be dropped. That quietly turns a "good" plan into an expensive one if it means your primary care doctor is now out-of-network.

Whether the Plan Still Exists

For 2026, plan exits were unusually large. Close to 3 million Medicare Advantage enrollees were affected by plan terminations. KFF estimates that 99% still had at least one other Medicare Advantage plan available, and about 69% could move to another plan from the same insurer (KFF, retrieved 2026-08-27). If your plan is ending and you do nothing, you can be dropped back into Original Medicare with no drug coverage.

What Does the Loyalty Tax Cost in Real Dollars?

For drug coverage specifically, the research consistently points to a few hundred dollars a year in avoidable spending, and more for people with complex prescriptions.

The Senior Citizens League has reported that seniors spent an average of $368 per year more than necessary on Part D. Only about 5% were in the lowest-cost plan for their drugs, and more than 20% were overspending by over $500 a year (The Senior Citizens League, retrieved 2026-08-27). GoodRx Research put the figure higher, estimating that the wrong Part D plan can cost over $800 per year (GoodRx Research, retrieved 2026-08-27). Both analyses predate the 2025 Part D redesign, and the exact dollars shift year to year. The core finding has held, though: most beneficiaries are not in their lowest-cost plan, and few re-check.

The reason the tax persists is behavioral, not financial. In a 2024 study in Health Affairs Scholar, people who did not compare plans said switching felt too hard. People who compared but did not switch blamed the flood of marketing mail and a frustrating Medicare Plan Finder (Health Affairs Scholar, retrieved 2026-08-27). Among people who did not compare in that sample, 98% stayed put.

The pattern: switching is rare, and non-comparison is the cause. When beneficiaries get help comparing, most find savings. One pharmacist-led review cited in the same research found that about 90% of participants stood to save money, yet fewer than half switched (Health Affairs Scholar, retrieved 2026-08-27).

When Can You Actually Change Your Medicare Plan?

Medicare Open Enrollment is the October 15 to December 7 window each year when anyone on Medicare can change plans, with changes taking effect January 1. During that window you can:

Switch from Original Medicare to a Medicare Advantage plan, or the reverse.
Switch from one Medicare Advantage plan to another.
Join, drop, or change a Part D drug plan.

There is a second, narrower window: Medicare Advantage Open Enrollment, January 1 to March 31. If you are already in a Medicare Advantage plan, you can make one switch then, either to another Advantage plan or back to Original Medicare with a drug plan. You cannot use it to move from Original Medicare into Advantage.

Outside those windows, changes generally require a Special Enrollment Period triggered by a life event, such as moving out of your plan's service area, losing other coverage, or your plan leaving Medicare.

One caveat on Medigap (Medicare Supplement) policies: switching a Medigap plan is not tied to Open Enrollment. Outside your one-time six-month Medigap Open Enrollment window, insurers in most states can medically underwrite you. See our plain-language Medicare guide for how that works.

How to Re-Shop Your Medicare Plan in About 30 Minutes

You do not need to become an expert. You need to run the same short checklist every October.

Read the Annual Notice of Change (ANOC). The ANOC is your plan's required yearly notice of what will be different next year: premium, deductible, copays, drug tiers, and extra benefits. Your plan mails or emails it by late September. Flag anything that moved against you.
Update your drug list. Write down every prescription, dose, and preferred pharmacy. This is the input that matters most.
Run the Medicare Plan Finder. Go to Medicare.gov/plan-compare, enter your drugs and pharmacy, and let it estimate your total annual cost (premium plus deductible plus drug costs) for each plan, not just the premium.
Check the network. For a Medicare Advantage plan, confirm your doctors and preferred hospital are in-network for next year. Call the provider's office if the plan directory is ambiguous.
Get free human help if you want it. Your State Health Insurance Assistance Program (SHIP) gives free, unbiased counseling and does not sell plans. Find yours at shiphelp.org.
Enroll by December 7. If a better-matched plan exists, switching is done online or by phone. Your old plan ends December 31 automatically; you do not need to cancel it.

Caregiver tip: do this on a screen share. Have the parent read their pill bottles aloud while you drive the Plan Finder. It turns a stressful solo task into a 30-minute call.

Why Annual Re-Shopping Isn't Enough

Open Enrollment fixes the problem once a year, if you remember. But the conditions that make your plan a bad fit do not wait for October. A new prescription, a doctor leaving the network, or a mid-year formulary change can all land in the spring. The rest of your household bills behave the same way: the price creeps, a better option appears, and nobody tells you.

That is why PlanAlert exists. We monitor the plans a household already has and send one alert when something genuinely better shows up, rather than asking you to run a comparison from scratch every year. We are not paid by carriers to steer you anywhere, which is also how PlanAlert differs from bill-negotiation apps like Rocket Money.

Want Medicare on your PlanAlert watchlist? We plan to extend plan monitoring to Medicare Advantage and Part D. Join the early-access list to be notified when it is available.

Frequently Asked Questions

If I do nothing during Open Enrollment, what happens?

Your current Medicare Advantage or Part D plan renews automatically on January 1 with next year's pricing and rules, unless the plan is being discontinued. If it is discontinued and you take no action, you generally return to Original Medicare with no drug coverage, which can create a coverage gap and a future late-enrollment penalty.

Is switching plans risky or complicated?

Enrolling in a new Medicare Advantage or Part D plan automatically disenrolls you from the old one, so there is no coverage gap and nothing to cancel. The main risk is choosing a new plan without checking that your drugs and doctors are covered, which the Plan Finder and a network check prevent.

Does comparing plans cost anything?

No. The Medicare Plan Finder at Medicare.gov is free, and SHIP counseling is free and does not sell insurance. Be cautious with sites or callers that pressure you toward a specific plan.

How much can re-shopping actually save?

For drug coverage, published estimates of avoidable overspending run from about $368 a year on average to $800 or more for people in a poorly matched plan (The Senior Citizens League; GoodRx Research, retrieved 2026-08-27). Medicare Advantage savings vary more because they depend on your expected medical use and network.

Does this still matter if my parent gets Extra Help?

It matters less, but it still matters. Extra Help (the Part D Low-Income Subsidy) caps drug costs and gives a continuous Special Enrollment Period, so the deadline pressure is off. The plan can still change its formulary or pharmacy network, so a quick yearly check is still worth it.

I'm helping my parent. Can I compare plans for them?

Yes. You can run the Plan Finder with their information and join a call with SHIP or 1-800-MEDICARE. To enroll for them or speak with Medicare without them present, you need to be an authorized representative on file with Medicare.

The Bottom Line

Medicare plans redesign themselves every year; your enrollment does not.
Most beneficiaries do not compare, and those in a poorly matched drug plan tend to overspend by several hundred dollars a year.
Open Enrollment runs October 15 to December 7. A 30-minute review built around your drug list and the official Plan Finder is enough to catch the loyalty tax.
Better yet, do not wait for October. Watch the plan year-round.