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Big Bite Out of Your Raise: Medicare Part B Premium Spikes to $202.90, Cutting Into Social Security’s COLA
Retirees hoping their annual Social Security cost-of-living adjustment would fully cover rising expenses are about to get a painful reality check. The Centers for Medicare & Medicaid Services has announced a substantial jump in the standard monthly premium for Medicare Part B, which will absorb a significant portion of the newly announced Social Security raise for millions of beneficiaries.
The Numbers Game
The standard Part B premium is set to climb to **$202.90** for the coming year, marking an increase of **$17.90** from the current $185.00 monthly cost. That’s a nearly 10 percent hike for a core component of health coverage that includes doctors’ services, outpatient care, and certain other medical and health services.
This premium spike is running significantly ahead of the new Social Security Cost-of-Living Adjustment. The Social Security Administration recently announced a **2.8 percent COLA** for the same period. For the average retiree, whose monthly benefit is estimated to be around $2,015, the COLA would translate to a monthly boost of about $56.
Here’s where the numbers get tough: Since the Medicare Part B premium is typically deducted directly from Social Security payments, the nearly $18 increase immediately reduces the net gain. For the average retiree, that $56 raise will be trimmed by the $17.90 premium increase, leaving a net monthly benefit increase of only about $39.10. This effective rate of increase is far below the overall rise in costs many seniors are experiencing.
Why the Big Jump?
The Centers for Medicare & Medicaid Services attributes the premium’s notable increase to projected price changes and assumed increases in the utilization of medical services, which they say are consistent with historical trends. This reflects the continuous and accelerated inflation that is specific to the healthcare sector, often outpacing the general rate of inflation that determines the Social Security COLA.
However, the premium increase could have been even steeper. The agency noted that recent regulatory action to reduce what Medicare pays for certain skin substitutes, which had seen dramatically increasing costs in recent years, helped to reduce the monthly premium increase by approximately $11 per beneficiary.
The ‘Hold Harmless’ Protection
While the news is disappointing for most, an important safeguard remains for beneficiaries with lower incomes. The Social Security Act contains a “hold harmless” provision that protects the vast majority of current Social Security recipients.
The law states that a current Medicare enrollee’s Part B premium cannot increase by an amount that would reduce their net Social Security benefit below the previous year’s level. This means that for individuals with smaller Social Security checks, where the $17.90 premium increase would be greater than their 2.8 percent COLA, their Part B premium will be capped. Their net check will not shrink, but they will not see the full COLA benefit either.
It is also important to remember that high-income beneficiaries, representing about 8 percent of all Part B enrollees, will pay an even higher Income Related Monthly Adjustment Amount, or IRMAA, which can range up to $689.90 per month.
As seniors plan their budgets for the year ahead, this Part B premium hike serves as a powerful reminder that healthcare costs remain one of the most significant pressures on fixed incomes, continually eroding the gains from the annual cost-of-living adjustments.
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