A rising Medicare cost could cut deeper into your 2026 Social Security increase

Many retirees were counting on next year’s Social Security COLA to create a little more ease in their monthly budgets, but a major update from Medicare is reshaping that outlook.

Part of the expected benefit increase will be deducted before payments are even made. The adjustment is tied to a jump in a key healthcare cost that millions rely on every month.

For many older Americans, this shift could turn what felt like a boost into another reminder of how quickly essential expenses continue to rise.

Medicare Part B premiums rise again in 2026​

Starting in 2026, the standard monthly premium for Medicare Part B (that’s the part that covers outpatient care, doctor visits, preventive services, and more) will jump to $202.90. That’s a $17.90 increase from 2025’s $185.00 premium—a nearly 10% hike. While it’s a bit less than the $21.50 increase the Medicare Trustees had predicted, it’s still the second-largest dollar increase in the program’s history, only outdone by 2022’s $21.60 leap.

Let’s put that in perspective with your Social Security COLA. The average monthly Social Security check will rise by about $56 in 2026, due to a 2.8% COLA. But after the Medicare Part B premium increase, that boost shrinks to just $38.10. This means close to one-third of the boost disappears automatically, leaving retirees with far less than they anticipated.

Why is healthcare consuming more of every raise​

Older Americans have been experiencing a pattern in which their Social Security benefits struggle to keep pace with rising medical expenses. Recent data indicate that seniors were the only group whose poverty rate increased in 2024, despite other age groups showing improvement or stability. Experts attribute the escalating Medicare costs to one of the primary drivers behind this troubling trend.

How the hold-harmless rule offers partial protection​

There is some good news, especially for those with lower Social Security benefits. The “hold-harmless” provision is a rule that prevents your Medicare Part B premium increase from being larger than your Social Security COLA. If your benefit is $640 or less, the 2.8% COLA would mean less than an $18 monthly increase. Without this rule, some of the lowest-income beneficiaries would lose their entire raise.

But here’s the catch: not everyone qualifies for this protection. Those who are new to Medicare, people who do not receive Social Security benefits, and higher-income individuals are excluded. Even those who are protected will only see limits applied to their Part B premium—not to other medical expenses. Rising costs in multiple parts of coverage can still reduce overall take-home benefits.

Also read: Seven Medicare adjustments you should know about for 2026

Additional 2026 cost increases: deductibles and drug plans​

Medicare Part B isn’t the only thing getting more expensive. The annual deductible for Part B will rise to $283 in 2026, up $26 from 2025. And if you have a Medicare Part D prescription drug plan, brace yourself: some plans are increasing premiums by as much as $50 a month, the maximum allowed under a new stabilization program. To make matters trickier, there are now fewer stand-alone Part D plans to choose from—half as many as there were in 2024.

If you have automatic deductions for Medicare Advantage or Part D premiums, those increases could further reduce your Social Security benefit, even if you’re protected by the hold-harmless rule for Part B.

Also read: The hidden Medicare gaps that could drain your retirement savings

A scenario that could have been even more costly​

CMS says that if the government hadn’t taken action to rein in spending on certain expensive medical products (specifically, skin substitutes used for chronic wounds), the Part B premium increase would have been about $11 higher per month. Thanks to a new rule, spending on these products is expected to drop by 90% in 2026, saving both Medicare and beneficiaries some serious cash.

What you can do right now

Don't let these changes catch you off guard. Here are practical steps to take:

Review your Medicare coverage during open enrollment:

• Check if your current Part D plan still covers your medications
  
  
• Compare premiums and deductibles across available plans
  
  
• Look for plans that include your preferred pharmacies

Also read: Missing these Medicare deadlines could drain your wallet—here’s how to stay on track

Budget for the reality:

• Plan for the net $38 monthly increase in spending power (or less, depending on your benefit level)
  
  
• Factor in the higher Part B deductible when planning healthcare expenses
  
  
• Consider the impact of any Part D changes on your prescription costs

Get help if you need it:

• Contact your State Health Insurance Assistance Program (SHIP) for free one-on-one counseling
• Use Medicare.gov's plan finder tool to compare options
• Don't hesitate to ask questions—these decisions affect your finances for the entire year

Read next:

• The USDA head is proposing a plan that could require all SNAP recipients to reapply—here’s what it means for millions
• Social Security taxes: what could change in 2026 for retirees
• Mark your calendar: December 2025 Social Security payments are on the way—check your exact deposit date

Key Takeaways

• The standard Medicare Part B monthly premium will rise to $202.90 in 2026, an increase of $17.90 (nearly 9.7%) from 2025, which will eat up most of the 2.8% Social Security cost-of-living increase for retirees
• Many seniors will experience a decline in their standard of living, as the average Social Security payment will increase by only $38.10 per month after factoring in the Medicare premium hike.
• The “hold-harmless” provision will protect those with a lower Social Security benefit (under $640/month) from having the Part B premium increase exceed their COLA, but it won't shield against rising costs for other deductions like Medicare Advantage or Part D (prescription drug) plans.
• The annual Medicare Part B deductible will also increase to $283 in 2026 (up from $257 in 2025), and there will be fewer stand-alone Part D plans to choose from, making health cover more expensive and limiting options for older Americans.

These changes can feel overwhelming, especially when you’re trying to make every dollar count. Have you found creative ways to stretch your Social Security check? Are you considering switching Medicare plans, or have you already made changes to your coverage? What questions do you have about Medicare, Social Security, or budgeting for healthcare?