How Medicare Premiums Can Reduce Your Social Security Payment

Social Security benefits are set to rise by 3.6% because of the cost-of-living adjustment, but Medicare premiums can still chip away at those payments.

Most recipients are protected by the hold harmless rule, which limits how much a premium increase can cut into a Social Security check. Even so, higher earners can face exceptions. Here is what to know.

How the deduction works

Part B premiums are deducted directly from Social Security payments, and the standard monthly premium for 2026 was $202.90.

Although a rule helps shield many beneficiaries from seeing their Social Security payments fall because of Medicare premium increases, the higher cost can still come as a surprise. People who have not started collecting Social Security yet receive a quarterly Medicare bill instead, which must be paid online or by mail.

The projected numbers

With the cost-of-living increase, the average benefit is expected to rise by about $75, from $2,095 to $2,170. If Part B premiums increase to the projected $209.50, about $6.60 more of each benefit payment would go toward Medicare. The intent is for retirees to come out ahead, but because the COLA is tied to inflation, it is still worth watching whether benefit increases keep pace with rising costs.

The difference is even more noticeable for people with larger Social Security checks. The standard Part B premium is the same for most beneficiaries, but those with higher incomes pay extra income-based amounts. For example, someone receiving $4,000 a month in Social Security would see a $144 monthly benefit increase, while the Part B premium would still rise by only $6.60.

What the hold harmless rule does

The hold harmless rule says eligible beneficiaries cannot have their Medicare Part B premium rise by more than the dollar amount of their annual Social Security COLA. If a benefit increases by $50, for instance, Part B premiums cannot increase by more than $50. That protects most people from having Medicare costs erase part of their government check.

However, people paying higher premiums because of income are often not covered by this protection. New enrollees are also generally not protected during their first year.

Part D and Medicare Advantage

Part B is the largest premium, but Part D and Medicare Advantage premiums can also be taken from Social Security benefits. Part D premiums are not withheld automatically by default, so beneficiaries can choose to pay the plan provider directly instead.

Medicare Advantage premium deductions must also be requested from Social Security; they do not happen automatically. If you do not arrange that, you will need to pay the Medicare Advantage bills when they arrive.

Part D premiums also rise for higher earners, though the extra charge tops out at $91 per month for the highest income bracket.

Review your Social Security benefits letter when it arrives in December. It will show the exact net monthly payment after Medicare deductions and provide a clear picture of your cash flow. Comparing that amount with your monthly expenses can help you decide whether your budget needs to change.