The 2026 Social Security COLA Gave Retirees $56 a Month, and Medicare Took Most of It Back

Social Security is a much-needed source of income for millions, but its purchasing power erodes if benefits remain the same while prices keep rising. That's why, in most years, Social Security applies a cost-of-living adjustment (COLA) that kicks in on Jan. 1.

The amount of the COLA is determined by changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a metric that tracks the price changes of common goods and services. This year, the COLA was 2.8%.

At an average benefit of $2,000, the 2.8% boost would mean $56 more monthly. While retirees surely appreciate any increase in their monthly benefits, many will find that changes in Medicare costs offset much of that increase.

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What Medicare changes happened in 2026?

Although Medicare is a helpful medical program, it doesn't come free. It has deductibles and premiums like any standard health insurance plan. Unfortunately, those have gone up this year.

The deductible for Part A (hospital insurance) is increasing by $60 to $1,736; the deductible for Part B (medical insurance) is increasing by $26 to $283.

Premium-wise, Part B is increasing by $17.90 to $202.90. Part A is premium-free for people who worked at least 10 years (40 quarters) or whose spouse did. People with 30 to 39 quarters of work will have a $311 premium, up $26 from 2025. People with fewer than 30 quarters of work will have a $565 premium, up $47.

A note on Part B's and Part D's premiums: If you're single and earn over $109,000, or married and filing jointly and earn over $218,000, you could be subjected to the Income-Related Monthly Adjustment Amount (IRMAA) surcharge. It could be up to $487 for Part B and $91 for Part D.

The correlation between Social Security's COLA and Medicare's increased costs

Since most people enroll in Medicare around their 65th birthday, many also receive Social Security benefits. These Medicare deductions and premium increases will directly affect how much of their benefits they can actually spend.

To see how this could play out, let's take someone whose monthly Social Security benefit before this year's COLA was $1,976 (the average benefit after 2025's COLA). After this year's 2.8% COLA was applied, their monthly benefit would increase by $55 to $2,031.

If that same person were enrolled in Medicare B, the $17.90 premium increase would wipe out nearly a third of the extra benefit from the COLA. If that same person also had a Part D plan, they would have to kiss even more of the COLA goodbye.

The one silver lining is that because of a special rule called the "hold harmless provision," your Part B premium will never increase more than you receive from the annual COLA. If the COLA increases your benefit by $15 but the premium increases by $18, your premium increase would be capped at $15.

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