A retired worker collecting the average Social Security benefit will see roughly $55 more per month on paper in 2026. In practice, $17.90 of that raise vanishes before it ever hits a bank account, automatically withheld to cover a higher Medicare Part B premium. And federal projections show the same pattern repeating in 2027, with an even larger premium increase waiting on the other side of next fall’s cost-of-living adjustment.
The Centers for Medicare and Medicaid Services set the 2026 standard Part B premium at $202.90 per month, a $17.90 jump from the $185.00 charged in 2025. The annual deductible climbs to $283. According to the 2025 Medicare Trustees Report, the standard premium is projected under the Trustees’ intermediate assumptions to reach $218.60 in 2027. If that holds, retirees will have absorbed two consecutive years of double-digit premium increases, a stretch that steadily chips away at the buying power of Social Security raises for more than 60 million beneficiaries.
How the 2026 numbers actually land in retirees’ budgets
The Social Security Administration announced the 2.8 percent COLA in October 2025, calculated from third-quarter Consumer Price Index data for Urban Wage Earners and Clerical Workers (CPI-W). For someone collecting the average monthly benefit of roughly $1,976 in 2025, that adjustment works out to about $55 before deductions.
Because Part B premiums are withheld directly from Social Security payments, the $17.90 increase is subtracted automatically. The net gain: roughly $37 per month, or about $9.25 a week. To put that in grocery-aisle terms, it barely covers a carton of eggs and a gallon of milk in most of the country.
For retirees with smaller benefits, the arithmetic is harsher. Someone collecting $1,200 a month gets a COLA boost of about $34. The Part B increase alone swallows more than half of it, leaving less than $17 in new spending power.
CMS attributed the premium increase to projected growth in healthcare service prices and higher expected utilization across the Medicare population. The agency has not published a granular breakdown of which cost drivers carry the most weight in the 2026 calculation.
One safeguard worth understanding: the Social Security Act’s hold-harmless provision prevents a Part B premium increase from pushing a beneficiary’s net Social Security payment below what they received the previous year. If someone’s COLA is so small that the full premium hike would cut into their prior check amount, the increase is capped at the dollar value of the COLA. This protection matters most in years with very low or zero COLAs. It does not, however, apply to new enrollees, beneficiaries who pay income-related surcharges (IRMAA), or those whose premiums are not deducted from Social Security.
What the 2027 projection tells us
The Trustees’ $218.60 intermediate-assumption estimate for 2027 would mean another $15.70 monthly increase stacked on top of the 2026 premium. A retiree paying the standard rate would then be spending $33.60 more per month on Part B than they were in 2025, a jump of more than 18 percent in just two years.
That figure is not locked in. It rests on intermediate assumptions about drug spending, provider reimbursement rates, enrollment growth, and the broader economy. Any significant policy shift, whether it involves how Medicare negotiates drug prices under the Inflation Reduction Act or adjustments to the physician fee schedule, could push the actual 2027 premium higher or lower. CMS will not announce the official number until late 2026.
The 2027 COLA is equally uncertain. The SSA will not calculate it until third-quarter 2026 CPI-W data is available, likely in October 2026. If inflation cools further, the COLA could come in below 2.8 percent, which would make the projected premium increase consume an even larger share of the raise. If inflation picks up, the COLA would be bigger, but CMS could also revise the premium upward. Either way, the net impact on retirees’ wallets remains a moving target until both numbers are final.
For historical perspective, premium increases are not always this steep. The standard Part B premium actually dropped from $170.10 to $164.90 between 2023 and 2024, a rare reprieve driven partly by lower-than-expected spending on Alzheimer’s drug Leqembi. The current trajectory marks a sharp reversal from that brief dip.
Part D and the broader out-of-pocket picture
Part B is not the only Medicare cost eating into retirees’ income. Part D prescription drug premiums vary by plan, but the national base beneficiary premium for 2026 is $36.78 per month, according to CMS. Beginning in 2025, the Inflation Reduction Act introduced a $2,000 annual cap on out-of-pocket Part D drug spending, a provision that remains in effect for 2026. That cap offers real relief for beneficiaries with high prescription costs, but it does not eliminate monthly Part D premiums, which are paid on top of Part B.
Layer on supplemental (Medigap) policy costs, dental and vision expenses that traditional Medicare does not cover, and copays for services that fall between the cracks, and the total healthcare burden grows quickly. A 2022 analysis by the Kaiser Family Foundation found that Medicare beneficiaries spent a median of roughly 15 percent of their total income on healthcare premiums and services, a share that has trended upward over the past two decades.
More than half of all Medicare beneficiaries are now enrolled in Medicare Advantage plans, which bundle Part A, Part B, and often Part D into a single private plan. Those enrollees still pay the standard Part B premium (it is deducted from their Social Security checks just like everyone else), but their out-of-pocket costs for services can differ significantly depending on plan design, network restrictions, and annual changes to benefits. A rising Part B premium hits Advantage enrollees and traditional Medicare beneficiaries alike.
Higher-income retirees face steeper costs
The $202.90 standard premium applies to individuals with modified adjusted gross income at or below $106,000 (or $212,000 for joint filers). Above those thresholds, Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) adds surcharges that can more than triple the base premium. For 2026, the highest IRMAA bracket pushes the total Part B premium to $628.90 per month, according to the CMS fact sheet. Those surcharges are also deducted from Social Security checks, and the hold-harmless provision does not cover the IRMAA portion, meaning higher-income beneficiaries can see their net Social Security payment drop year over year.
IRMAA brackets are based on tax returns from two years prior, so 2026 surcharges reflect 2024 income. Retirees who experienced a qualifying life-changing event, such as retirement itself, a spouse’s death, or a divorce, can file Form SSA-44 to request that the SSA use more recent income data instead.
Why the gap between COLAs and premiums keeps widening
This is not a one-year problem. Over the past decade, Part B premiums have risen faster than Social Security COLAs in most years, gradually shrinking the real value of benefit increases. The COLA is pegged to the CPI-W, which tracks a broad basket of consumer goods and services. Medicare premiums, by contrast, are driven by healthcare spending, which has consistently outpaced overall inflation. CMS National Health Expenditure data shows national health spending growing at an average annual rate above 5 percent in recent projections, well above the pace of general consumer prices.
Some advocacy groups, including the Senior Citizens League, and a number of lawmakers have pushed for switching the COLA formula to the CPI-E, an experimental index the Bureau of Labor Statistics publishes that gives greater weight to healthcare and housing costs typically faced by older Americans. The CPI-E has not been adopted for Social Security calculations, and no legislation mandating the switch has advanced to a floor vote in recent sessions. Without a formula change or structural reforms to slow healthcare cost growth, the annual cycle of COLA announcements followed by premium increases that claw back much of the gain is likely to continue.
What retirees should watch for this fall
The confirmed 2026 numbers give retirees a clear baseline: a $55 average monthly raise, minus $17.90 for Part B, leaving about $37 in additional spending power. The 2027 Trustees’ projections suggest next year’s math could look similar or worse, though those figures remain intermediate-assumption estimates subject to revision.
Two announcements will determine the real picture for 2027. The SSA will release the COLA, typically in mid-October, based on summer CPI-W data. CMS will announce the final Part B premium and deductible shortly after, usually in November. Until both numbers are public, any projection of next year’s net Social Security increase is provisional. Retirees planning budgets for 2027 should treat the Trustees’ $218.60 premium estimate as a reasonable planning assumption, not a guarantee, and revisit the math once the official figures are released.
