Bigger benefits, smaller payoff? Medicare costs may cut into your next Social Security raise
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If you’re collecting Social Security, you’ve likely caught wind of discussions about a possible increase in benefits next year, which at first sounds like a financial step in the right direction.
While it’s easy to feel optimistic about having a bit more breathing room, that sense of relief can be short-lived once other rising costs are taken into account and begin to offset the gain.
Medicare premiums, in particular, are expected to climb, which could quietly absorb much of the additional income before it ever reaches your wallet.
For many retirees, the net result may feel less like a raise and more like staying exactly where they already are—juggling the same expenses with little noticeable change.
Every year, Social Security benefits are adjusted to keep pace with inflation. This annual COLA is designed to help recipients maintain their purchasing power as the cost of living rises.
The adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the prices of everyday goods and services.
For 2026, the latest estimate pegs the COLA at 2.7%, a slight bump from last month’s 2.5% projection. This is in line with the average increase over the past two decades.
The CPI-W rose 2.6% in June, and overall inflation ticked up to 2.7%—still above the Federal Reserve’s 2% target, but not by much.
Here’s where things get tricky. While Social Security benefits are set to rise by 2.7%, Medicare Part B premiums are expected to jump by a whopping 11.6% in 2026.
According to the latest Medicare Trustees report, the standard Part B premium will climb from $185.00 in 2025 to $206.50 in 2026—a $21.50 monthly increase.
That’s the steepest hike since 2022, when premiums surged by 14.5%. For most Medicare recipients, the Part B premium is automatically deducted from their
Social Security checks. So, while your gross benefit may go up, your net payment—the amount you actually receive—could stay the same or even shrink, especially if you’re on the lower end of the benefit scale.
Also read: Changes to Social Security payments are coming—here’s what to expect
Not all Social Security recipients are affected equally. Those with the lowest monthly benefits—think $800 or less—are hit hardest.
For these individuals, the $21.50 increase in Part B premiums could swallow their entire COLA, leaving nothing extra to cover rising costs for groceries, housing, or other essentials.
This is especially tough for retirees who rely solely on Social Security, as well as widows, widowers, and those receiving spousal or disability benefits.
For them, the annual raise can feel more like a mirage than a meaningful boost. The Social Security Administration calculates the COLA based on the average CPI-W from July through September each year.
That means the inflation numbers released over the next few months will be crucial in determining the final adjustment for 2026.
It’s worth noting that the CPI-W doesn’t always reflect the spending patterns of older Americans, who often face higher costs for healthcare and housing.
Some advocates have called for a new index—the Consumer Price Index for the Elderly (CPI-E)—to better capture the real-world expenses of retirees. But for now, the CPI-W remains the standard.
As of May, more than 74 million Americans received Social Security benefits, including retirees, disabled workers, survivors, and those on Supplemental Security Income (SSI).
Also read: Boost your Social Security income in retirement with these three smart strategies
The average monthly benefit was $1,860.64—a lifeline for many, but not always enough to cover rising expenses.
Medicare Part B covers doctor visits, outpatient care, and preventive services. Its costs are driven by a combination of factors: rising healthcare prices, increased use of services, and the introduction of new (often expensive) treatments and drugs.
As the population ages and more people enroll in Medicare, the program’s expenses continue to climb.
The 2026 premium hike is particularly steep, reflecting both higher projected healthcare costs and the need to shore up Medicare’s finances for the long haul.
Read next: The $5,108 Social Security check: who qualifies and how?
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While it’s easy to feel optimistic about having a bit more breathing room, that sense of relief can be short-lived once other rising costs are taken into account and begin to offset the gain.
Medicare premiums, in particular, are expected to climb, which could quietly absorb much of the additional income before it ever reaches your wallet.
For many retirees, the net result may feel less like a raise and more like staying exactly where they already are—juggling the same expenses with little noticeable change.
Every year, Social Security benefits are adjusted to keep pace with inflation. This annual COLA is designed to help recipients maintain their purchasing power as the cost of living rises.
The adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the prices of everyday goods and services.
For 2026, the latest estimate pegs the COLA at 2.7%, a slight bump from last month’s 2.5% projection. This is in line with the average increase over the past two decades.
The CPI-W rose 2.6% in June, and overall inflation ticked up to 2.7%—still above the Federal Reserve’s 2% target, but not by much.
Medicare costs may cut into your next Social Security raise. Image source: Alexander Grey / Unsplash
Here’s where things get tricky. While Social Security benefits are set to rise by 2.7%, Medicare Part B premiums are expected to jump by a whopping 11.6% in 2026.
According to the latest Medicare Trustees report, the standard Part B premium will climb from $185.00 in 2025 to $206.50 in 2026—a $21.50 monthly increase.
That’s the steepest hike since 2022, when premiums surged by 14.5%. For most Medicare recipients, the Part B premium is automatically deducted from their
Social Security checks. So, while your gross benefit may go up, your net payment—the amount you actually receive—could stay the same or even shrink, especially if you’re on the lower end of the benefit scale.
Also read: Changes to Social Security payments are coming—here’s what to expect
Not all Social Security recipients are affected equally. Those with the lowest monthly benefits—think $800 or less—are hit hardest.
For these individuals, the $21.50 increase in Part B premiums could swallow their entire COLA, leaving nothing extra to cover rising costs for groceries, housing, or other essentials.
This is especially tough for retirees who rely solely on Social Security, as well as widows, widowers, and those receiving spousal or disability benefits.
For them, the annual raise can feel more like a mirage than a meaningful boost. The Social Security Administration calculates the COLA based on the average CPI-W from July through September each year.
That means the inflation numbers released over the next few months will be crucial in determining the final adjustment for 2026.
It’s worth noting that the CPI-W doesn’t always reflect the spending patterns of older Americans, who often face higher costs for healthcare and housing.
Some advocates have called for a new index—the Consumer Price Index for the Elderly (CPI-E)—to better capture the real-world expenses of retirees. But for now, the CPI-W remains the standard.
As of May, more than 74 million Americans received Social Security benefits, including retirees, disabled workers, survivors, and those on Supplemental Security Income (SSI).
Also read: Boost your Social Security income in retirement with these three smart strategies
The average monthly benefit was $1,860.64—a lifeline for many, but not always enough to cover rising expenses.
Medicare Part B covers doctor visits, outpatient care, and preventive services. Its costs are driven by a combination of factors: rising healthcare prices, increased use of services, and the introduction of new (often expensive) treatments and drugs.
As the population ages and more people enroll in Medicare, the program’s expenses continue to climb.
The 2026 premium hike is particularly steep, reflecting both higher projected healthcare costs and the need to shore up Medicare’s finances for the long haul.
Read next: The $5,108 Social Security check: who qualifies and how?
