How Big a Bite Will Medicare Take Out of Your Social Security Raise?

If you are collecting Social Security, there's good news and bad news about what your benefits are going to look like next year.

The good news is that you're getting a Social Security cost-of-living adjustment (COLA), and it is most likely going to be bigger than the one you received in 2025. The bad news is that you're probably going to lose a lot of the extra money to cover higher Medicare premiums.

Here's what's happening with your Social Security increase in 2026, including some details about what Medicare premium increases are going to do to the size of your benefits bump.

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Seniors are in line for a raise, but Medicare will take up most of it

The first thing to know is that the official size of the Social Security raise is being announced on Oct. 24. Right now, we have only estimates for how big the raise will be. Experts are currently projecting that benefits will increase by 2.7% next year. This is a bigger COLA than this year's, when benefits in 2025 went up by 2.5%.

However, in most cases, Social Security retirees have Medicare premiums taken out of their benefit checks. And unfortunately, those premiums are expected to soar next year. Early projections say they will jump $21.50 per month, as Part B costs go from $185 this year to $206.50 next year, according to estimates from the Medicare Trustees (these numbers also are not final).

That big projected premium increase would eat up a good portion of the Social Security COLA for most retirees. If, for example, you are collecting the average benefit of $2,008.31, a 2.7% raise would give you around $54.22 extra per month. This means nearly half of the total extra money coming into your check for the COLA would disappear to cover the added Medicare costs.

Unfortunately, this increase in insurance premiums is significantly higher than the one in 2025, when premiums went up $10.30 from the $174.70 in 2024. This relatively huge increase in Medicare could put a big strain on retirees who may already have too little money in their retirement plans to supplement Social Security and who may be struggling to make ends meet.

COLAs won't increase retirees' buying power

The impact of Medicare premiums on Social Security benefits helps to illustrate why COLAs are not really providing the protection from inflation that they are theoretically supposed to offer. COLAs are expected to help ensure that Social Security benefits maintain buying power as the costs of goods and services go up over time. But in practice, they aren't really doing that.

A big part of the problem is that Social Security's COLAs are calculated based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But urban wage earners and clerical workers don't have the same spending habits and health issues as seniors. The CPI-W demographic tends to spend much less on healthcare, while seniors spend a lot in this area.

Healthcare costs have been increasing faster than the rate of inflation, and this isn't properly factored in when the COLA is calculated, since healthcare isn't weighted as heavily in the CPI-W as it would be if the price index were tailored to match senior spending. The COLA formula thus ends up underestimating how much more of each retiree's Social Security and 401(k) distributions end up going to cover their basic care needs.

With the flaws in the CPI-W formula coupled with big Medicare increases, retirees are almost definitely not going to see any increase in buying power in 2026, despite their checks becoming around 2.7% bigger. In fact, they'll be lucky if they don't lose ground and see the real value of their benefits fall even further.

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