Medicare Part B Premiums Rise, Impacting Social Security Benefits

The upcoming increase in Medicare Part B premiums will significantly reduce the cost-of-living adjustment (COLA) for Social Security benefits in 2026. Starting in January, retirees receiving an average Social Security retirement benefit will see an inflation-adjusted increase of approximately $56 per month. However, a corresponding rise in Medicare Part B premiums will deduct $17.90 from that increase, resulting in a net gain of only about $38 for many beneficiaries.

The Centers for Medicare and Medicaid Services (CMS) announced that the standard monthly premium for Medicare Part B will rise to $202.90 in 2026, marking one of the highest dollar increases in the program’s history. While the increase is substantial, it is less than the forecasted amount of $206.50 earlier reported by the Medicare Trustees. The record premium hike occurred in 2022, when the cost rose by $21.60.

Impact on Beneficiaries

For many retirees, the automatic deduction of Medicare premiums from Social Security benefits means that the actual increase in take-home income could be lower than anticipated. The COLA for Social Security is calculated based on a percentage of the benefits received. In 2026, the COLA will be set at 2.8%, translating to an additional $56 for those receiving an average benefit of around $2,008 per month. However, individuals with lower monthly benefits may find that their COLA increase does not fully offset the premium hike.

For example, a retiree receiving $600 monthly in Social Security benefits would see only a $16.80 increase, which is less than the Medicare Part B hike. According to Mary Johnson, an independent Social Security and Medicare policy analyst, this increase may activate the hold harmless provision for those with benefits of $640 or less. This provision ensures that these beneficiaries will not see a reduction in their monthly Social Security checks due to the premium hike.

Further Financial Considerations

The hold harmless provision protects a small group of recipients by limiting their Medicare Part B premium increase to the amount of their COLA. However, those with additional automatic deductions, such as Medicare Advantage or Part D premiums, may still face further reductions in their Social Security payments. Additionally, beneficiaries with higher incomes will pay even more for Medicare Part B premiums. Since 2007, premiums have been determined based on income, with individuals earning more than $109,000 annually being subject to higher rates.

For couples filing jointly with an adjusted gross income exceeding $218,000, the monthly premium could rise significantly. For instance, a beneficiary with a modified adjusted gross income between $274,000 and $342,000 may pay as much as $405.80 per month for full Part B coverage.

As the 2026 changes approach, many retirees are urged to review their financial situations carefully. The adjustments to Medicare premiums and Social Security benefits highlight the ongoing challenges faced by seniors in managing their expenses amidst rising healthcare costs.

For more information, individuals can consult with financial advisors or reach out to organizations like the Senior Citizens League, which provides guidance on navigating these changes.