Getting Financially Ready for 2026

Today, we'll be discussing Medicare price and benefit changes in 2026. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting here in Southeastern Michigan. If you'd like more info about what you hear during our show today, give us a call 586-226-2100 or visit us on our website summitfc.net. While you're at the website, be sure to check out that podcast page. You can subscribe on Apple Podcasts, Spotify, or Amazon Music. Check out those old shows, lots of quality content there. Um, Before we jump into this very exciting topic, Medicare premiums, let me introduce my co-host, Tony Shore. Tony, today we'll be talking a lot about COLA. I'll explain the acronym for COLA in a minute, but in Michigan, we call brown drinks like COLA, like Coke and Pepsi, we call them POP. Do you guys call those drinks POP in Minnesota, or do you call them COLA like most of the country? Yeah.

No, we we call them pop. Yes, we we also call them pop. I know you're expecting me to say something different, but I can. It's a trust me. I've been all over the Midwest. It's a Midwest thing.

See, I thought it was a UP thing of Michigan.

Well, it is. But Minnesota is like UP. We have some of the same accents and you. Oh, yeah, you betcha. I mean, that's Minnesota and that's the upper P. Now, some areas of like Wisconsin and Iowa, they say, you know, Cola or soda is a big one, but it is regional. And what I've noticed and I've lived in, you know, I'm from Minnesota and I'm my family's there now, but I lived in Southern California. I lived in Nashville, Tennessee. I've spent time in a lot of different states traveling for business and for my job. And what's funny is a lot of pockets in the Midwest call it pop in Minnesota. It's pop. Um, uh, in, uh, Michigan, uh, a lot of the Michiganers, uh, call it pop as you just pointed out. What's amazing is, is that in Atlanta and Georgia and areas of the deep South, but especially spreading out from Atlanta, you know what, when you, when you go to a restaurant, uh, and you listen to natives, they'll go, what kind of Coke do you have?

And they're not asking for brand.

It has nothing to do with brand. They just mean pop. In the South, they call pop Coke. They don't say soda. They don't say cola. They don't say pop. They say Coke. What kind of Coke do you have? And when I heard that, I'm like, oh, you mean diet, regular, Coke Zero, you know, Cherry Coke. No, they just mean that. And the waitress just goes, we have Sprite. We have orange root beer. And that's what kind of Coke we have. Coke is so ubiquitous down there and is so huge. And it's Coke was started in Atlanta. In fact, soda basically stems American sodas were. Atlanta is the home base. That's where the guy and I think the guy first invented Dr. Pepper at Soda Stands and created soda there. I think the birthplace of soda and pop is Atlanta, Georgia. But at any rate, our listeners and viewers will correct me on that if I'm wrong. But I have read that and learned that. But yeah, it's amazing. I was surprised. I mean, that doesn't make any sense to me. That's a brand, not a thing.

Yeah. But it's like saying what brand of Kleenex should I buy? I was just going to say that. I was like Kleenex is the other one that jumps out at me that it's just like Q-tip. That's how you describe it. Q-tip is a brand.

Oh, that's true. Kleenex is a brand. Coke is a brand. And they've turned Coke in the South into the it's just covers the whole gamut. But when you said we're going to talk about cola today, Ken, I thought, you know, are we talking about like the cola wars or RC? We're going to talk about RC Cola, Pepsi Coke. But no, cola stands for something else. What does cola stand for?

So cola stands for cost of living adjustment. And anyone that's on Social Security every fall, they sort of anxiously await to see what the COLA will be for the next year. Basically, it means a raise. So the federal government looks at inflation and determines how much of a bump people need to be able to keep up with the ever increasing costs of living. So yeah, my dad, Bob Wink is a, I wouldn't say he's a conspiracy theorist at all. He always brings this up to our clients, and that is that the government intentionally suppresses both inflation and COLA because every time these numbers are high, it just costs the government so much money. So the way that the federal government calculates this, they update the formula periodically.

Oh, yes. That formula is crazy. And your your dad, as always, Bob is spot on or Mr. Wink, as we say. But he is spot on. And it's not a conspiracy theory. I mean, this is fact. I mean, if you look at the formula they use, you just laugh. Like, I mean, I look at the COLA increase and then I look at the increase in health care costs for my mom and dad who are seniors. And I just laugh.

It's like, well, let's see, their health care costs went up 15 percent.

The two or three percent COLA isn't quite covered. And the government's what they come up with for inflation numbers to base COLA on is laughable because they keep. Well, we're not going to include this item in the formula. We're not going to volatile. which means it goes up too fast. Yeah, exactly. Yeah, that's classic. I mean, if cost of living adjustment was actually tied to actual inflation on what people are actually paying, especially seniors, so healthcare, dental, vision, medical equipment, groceries, things they actually need on a regular basis and spend all their money on, medications. If it went up based on those things, you're right, the government would probably be... Not not 40 trillion in debt, but 80 trillion.

Yes. Right. Yeah. There's a Web site. I know we've talked about it before, but shadow stats. And if you go to shadow stats, they can they will figure out what inflation would be if the government used the facts and figures that they used back in the 1980s versus the 1990s versus the 2000s. Like they just keep updating this formula to suppress it more and more.

Yeah, that that formula they use is like when I hear it or they make a change to it, I actually laugh out loud. Like I laugh out loud, like it's seeing a very funny meme or stand up. I'm like, I'm like, who at the government do they keep a straight face while they're doing this? Or do they sleep well at night knowing this in no way reflects the increase in what people are paying? I mean, in no way. But all that to say, you don't want to complain because they at least have a cost of living adjustment, which is huge, right?

Yeah, I mean, everybody wishes they had a pension nowadays, but most pensions don't have a COLA increase. So sometimes people will feel sort of... on top of the mountain when they retire. But then as time goes on, inflation does eat away. So you're right. Sure. Thankful for what we've got.

Right. The cost of bagels. And sometimes the calculation, well, we're not including groceries, food items. I'm like, well, yeah, that's what everybody buys every day. Yeah. Who needs to eat? Yeah. And I think I might've mentioned this in a previous show recently, but I actually, the price of English muffins. in the last 10 years has almost tripled, at least at our grocery store. I paid over $5 for a pack of six English muffins. And they put six in there rather than four because they know those two will sit there until they're too old to eat the last two. If your house is like mine, it's like, come on. But anyway, I digress. So what was the COLA for this year? As of January 1st this year, 2026, there was a COLA increase, right?

Yes, it was 2.8%. So it's better than nothing. I mean, there's been years in the past where it was zero or close to zero. So at least it was something. But the main topic of the show today is just Medicare and how that is increasing in cost and how benefits are changing. But it's important to start with COLA because when they're figuring out. Medicare, they do keep an eye on what's going on with Social Security because most of the people that are on Medicare are on Social Security. So they're sort of attached at the hip. So I guess that's a good thing that they sort of look at the numbers for the other program and make sure that things are sort of in alignment.

Yeah, so let's talk about Medicare then and the changes. And I think you brought up COLA to show the juxtaposition of how much Medicare Part B premiums increase in 2026. People are paying more versus how much more they get in their social security because they are tied together. So what's the deal with Medicare Part B premiums this year?

So Medicare Part B premiums for 2026 are increasing to $202.90. So it's a $17.90 increase. So, you know, creeping up on $20 increase every month. So that's a 9.7% increase in Medicare premiums.

And that'll eat up a lot of that 2.8% Social Security COLA, right?

It will, yeah. So the original estimate of how much Medicare was going to go up was actually much larger. So thank goodness it's a little bit smaller than what they initially projected. But it's the second largest increase in premium in history.

Wow. I didn't know that.

Yeah. Yeah. So it's going to reduce most retirees COLA gain to only about thirty eight dollars. So your average American is only getting an extra thirty eight dollars per month after that Medicare jump in their Social Security check. Yeah. Yeah.

Yeah. And it's really it has a huge impact, especially for seniors, though. Right. I mean, we're talking about Social Security, Medicare, which is 65 plus. But that group has gotten hit the hardest, hasn't it? As far as the economy and things like that.

Yeah, this is the kind of stuff that hits seniors the hardest because most of them aren't working anymore, right? So just dependent on this fixed income. So every dollar matters. And like you said, with prescription drug costs going up, the cost of healthcare going up, co-pays going up, deductibles, it's just a lot of extra expenses. So unfortunately, seniors were the only age group that saw poverty rise last year. So these, these cost increases are, they're impactful.

Yeah, that's huge. They really are. So how can people get more information about this? I mean, seniors are going to need help with this. I know you have Medicare specialists on your team, right?

Yeah. Yes, absolutely. Our team at Summit Health Services is happy to meet with any of our listeners or viewers. Take a look at what they have going on right now, whether they're in their 40s and they have a temporary layoff or maybe they're owning their own business and they need health insurance. Or if somebody's in their 60s or 70s, even 80s or 90s, we'd be happy to have a look at everything that you have going on. Look at your prescription drugs that you're on, what hospitals and doctors you like to go to and try to calculate what plan will keep the most money in your pocket.

Yeah. Yeah. And I think that's really important. So there are tools out there that Medicare Plan Finder is a good tool that people can use. I like that. And, you know, people need to look at their plans. And a lot of people have been switching plans because plans have been dropping off and there's been a lot of changes made, a lot of increase in costs for some plans. So you really have to be careful navigating this, don't you, if you're a senior out there?

Yeah, yeah, absolutely. And yeah, I appreciate you bringing up that Medicare plan finder. You know, you just want to look at what networks different doctors are in. These sorts of things change all the time. We've had lots of clients where we go to the beginning of the year and all their doctors are in a particular network. And then maybe one or two doctors just decide, you know what, I don't want to be in that network anymore. And now all of a sudden their doctor is not covered. You know, you can only change this stuff typically in open enrollment in the fall. So if your doctor decides to change in the middle of the year, it's not the person who signed you up for Medicare's fault. It's just the doctor changed the network. So it's a moving target, unfortunately. So you got to keep your eye on the ball.

Sure, sure. But it's not all bad news regarding Medicare in 2026. I mean, premiums did go up, but there is that tool now and they're constantly adding to it and making that more useful for everyone. But I know prescription drugs, this is the first year where it kicks in that those negotiated drug prices for 10 of the most used and necessary drugs, right?

Yeah. Yeah. So that's great. That's something that has been negotiated. Drug costs typically have just been going up and up and up. But they did take the 10 most often used drugs and basically set set the cost quite a bit lower. They're estimating that this is going to save Americans one point five billion dollars in the first year. Yeah.

Just this year, which is the first year that that change is being made. And so what else about the Medicare prescription drug program? Is there any other changes there?

Yeah. So one of the thing is that there's something called the Medicare prescription payment plan. So sometimes people run into a situation where they've got a really expensive drug and they don't have all the money up front to pay for that at the beginning of the year before they hit their deductible or before they hit their out-of-pocket limit. So they've got a plan now where you can enroll and you can make monthly payments on that. So rather than having to pay it all at once at the beginning of the year, chip away at it every single month might make it a little bit easier pill to swallow. So that's been renewed. And if you already signed up for it, you'll automatically be re-enrolled in it for this next year, 2026. So if you're in it, probably don't rock the boat. Just keep rocking along with that. Yeah.

Yeah, that sounds good. Now, what else do we need to know about Medicare this year? Is there anything else you want to talk about?

Yeah, so I'd like to jump into hold harmless. So hold harmless is a provision that's built into Social Security, and it basically is set up to protect people so that their Social Security doesn't go down from year to year because of Medicare. cost increases. So earlier we quoted the average number for the United States, but there's a lot of people that have very, very low Social Security. So this jump in Medicare could potentially put them in a situation where they actually get a pay cut from Social Security after taking Medicare into consideration. So anyone who is receiving Social Security and gets $640 or less will have the entire COLA wiped out. So, you know, we want to do everything that we can to to help those people. So hold harmless prevents Part B premiums from increasing to exceed the COLA. So basically, the people who have higher income are sort of picking up the tab for it. But the goal with hold harmless all in all is just we don't want people's. Social Security to decrease because of Medicare expenses.

So Hold Harmless will make sure their Social Security amount doesn't go down. Right. Because of the Medicare Part B premium increase. You know, this year it's almost 10%. So some people who had lower Social Security monthly payments, if they just let it go as it's set, their Social Security amount could actually go down.

But withhold harmless, it prevents their Social Security from ever going below what they're already getting.

You got it. So so and but that applies for everyone. I mean, it says those with 640 or less. But the thing is, is that evens out. In other words, if you make more than that, the 10 percent increase wouldn't cause your Social Security to go down anyway, is their thought process. So that's good. I'm glad they have hold harmless. I think people need that. You don't want to ever get Social Security should be a guaranteed monthly amount. It should not be allowed to go down. at any point. I think that's important for people living on a fixed income, obviously. And you know that looking at the situation, no matter how much or little you have, it's good to know your social security amount. Isn't going to change that. We need the, I mean, at least go down, right. Might stay at zero. It might stay even, you might not get that increase, but at least it won't go down. So obviously, you're not eligible if you're, if you don't get, um, Social Security benefits, uh, right.

Right. Yeah. So this is mainly set up to protect people who are on social security. So if you are not receiving social security benefits, if you are a super high income earner, um, if you're a brand new Medicare enrollee, then, then hold harmless isn't there to help you out. Um, But one more thing about hold harmless is just that the Medicare Part B premiums are one factor, but there's more to it. It depends on which plan you're in. So are you in a Medicare Advantage plan? Do you have a Part D prescription drug plan? So there is a chance, depending upon how you're playing your cards here, that you could actually have the COLA absorbed. And your social security net could go down if you take into consideration what you're paying for the Part D or if you have a Medicare Advantage plan. So it's just really important that you meet with a specialist to discuss Medicare. What type of plan does a Medicare supplemental or a Medicare Advantage plan make more sense? You know, sit down with someone. The nice thing about all these plans, Tony, is that the cost is exactly the same whether you work with an insurance agent or if you do it all on your own. Right. Exact same cost. Why not just get somebody's opinion, even if you decide not to work with them?

Work with a Medicare specialist who understands all the advantage plans and the supplemental because it's not going to cost you anymore.

No, no. No, and the number of Part D plans, so Part D is for prescription drugs. The number of plans that are available in America, it has been cut in half since 2024. So it's cut a lot of affordable plan options. I mean, there's less options out there. You better make sure that you're going into the right one. That's my opinion.

Especially this year. And that just happened end of last year when the annual enrollment period began. I know because I tried to help my mom and dad with theirs. And one of their advantage funds just went away. One of their Part D drug plans just went away. So we had to figure that out. And I would have never been able to do it on my own. And they definitely wouldn't have been able to do it on their own at their state. They're in long term care. So had to work with a Medicare specialist and had to. It was great because they know. And if you work with one in your local area, that's important. Right.

Yeah, yeah, absolutely. And, you know, there are other things that are also going up. So even if the premium is not going up, the out of pocket cap and the deductibles are also going up a little bit. So an out of pocket cap is how much money you could have to spend if you have a lot of medical expenses that accumulate throughout the year. Deductible is what you pay before the insurance company starts helping you to pay for stuff. So when people are budgeting for what they might need this year from their investments or just to live off of, should we plan this family trip or not? Just in the back of your mind, remember that the spending cap for out-of-pocket for Medicare Part D, it increased to $2,100. And then the maximum deductible rises to $615. So we normally tell our clients- You should always have at least a $5,000, if not $10,000 emergency fund just for medical expenses. Healthcare. Healthcare, man.

Yeah. And maybe during your working years, if you're still working, put money away in an HSA and don't use it because that goes in tax-free, grows tax-free, and comes out tax-free. It's the only... IRS designation that allows that as an HSA and you, that'll last as long and it will sit in there and grow and you can use it in retirement. You can use it after you leave your job. It doesn't disappear. It goes with you. So that healthcare costs in retirement are going to be high for a lot of people. And it's too bad this year, you know, you were alluding there that the The deductibles and premiums have gone up for Part B and the Medicare Part B deductible increased this year, too. And so premiums could, you know, premiums go up, the deductibles go up, the out of pocket max goes up. has increased to 2,100, and you gotta watch out for these things. And like you said, the key here though, the answer to all these changes where you're paying more is to plan ahead for them if at all possible. And that's where you come in, right?

Yes, yeah. So my team here at Summit Financial, we do financial planning. We'd be happy to put together a comprehensive plan for you right now. We'd be happy to put together a plan for how your retirement looks, at what age you can retire at. You can meet with our team at Summit Health Services to figure out which plan is the best fit for you and your health and your expected surgeries and your prescription drugs and everything that you have going on. We also have a tax team and auto and homeowners insurance team. And we've got a team of estate planning attorneys that we work with that can help advise you on wills and trusts. So we've got a deep bench here. We would be happy to meet with you. Give us a call at 586- 226-2100 or visit our website, summitfc.net. We'd love to go over all this important information with you and come up with a comprehensive plan.

All right. Well, Ken, great show. Hey, listeners and viewers, we appreciate you watching, listening, and would love to get your feedback, hear your questions. Like Ken said, pick up the phone, give Ken and the team at Summit Financial a call 586-226-2100. 2100. And that does it for today's episode of Money Talks with Summit Financial Consulting, LLC, and our host, the man with the plan, Ken Wink. Thank you for joining us for Money Talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit SummitFC.net. Join us again soon for another episode of Money Talks.