Social Security’s 2027 COLA Is In — Here’s the Medicare Cost Outlook

Social Security beneficiaries are set to receive a 3.6% increase in 2027, which would amount to roughly $75 more each month for the average retiree. That is welcome news as everyday costs remain elevated, though higher Medicare premiums could reduce part of that gain.

The 2027 Medicare Part B premium has not been announced, so it is still uncertain how much of the raise will remain in retirees’ pockets. Here is what current estimates indicate about Medicare costs and how seniors may be able to get the most from their benefits in the coming year.

How your COLA differs from the deposit you actually receive

A COLA increases your gross benefit, meaning the amount before deductions are taken out. If you are enrolled in Medicare Part B, your monthly premium is typically deducted directly from that benefit, so the amount that lands in your bank account can be smaller than the full increase.

For instance, if your COLA adds $75 a month but your Medicare premium rises by $15, you would end up with only $60 more to spend each month. That still comes to $720 over a year, even though it is less than the $900 your full raise would provide.

Why a smaller Part B increase would help retirees

Part B premiums rose by $17.90 in 2026, pushing the standard monthly cost to $202.90. Retirees may get some relief the following year, however, as the Medicare Trustees project a much smaller increase of $6.60, which would put the premium at about $209.50 a month.

For someone receiving the average $75 Social Security raise, that higher premium would leave about $68.40 extra each month, or roughly $821 over the year. That would leave more than 90% of the COLA available for other expenses, assuming Medicare costs follow the projection.

How much of a raise Medicare has absorbed in recent years

Medicare has not always left retirees with so much of their annual increase. In 2026, Part B premiums consumed nearly one-third of a $56 Social Security raise. The two years before that also saw retirees lose part of their COLAs to higher premiums.

Here is a side-by-side look at the figures:

The projected 2027 increase would take less than 10%, so a larger COLA combined with a smaller premium jump would leave the typical retiree with more of the raise than in recent years. Individual results will vary depending on Social Security benefits and Medicare costs.

The Medicare protection that can limit a smaller check

Medicare has a safeguard that helps many retirees avoid getting a smaller Social Security payment when Part B premiums rise. Known as the hold-harmless rule, it limits how much your Part B premium can increase if the change would otherwise exceed your Social Security COLA.

For example, if your Social Security benefit rises by $10 a month but your Part B premium is scheduled to go up by $15, the rule generally caps the premium increase at $10.

That said, the rule does not mean you automatically keep every dollar of your raise. If your COLA adds $75 and your Part B premium rises by the projected $6.60 in 2027, you would still pay that extra amount because the increase would be covered by your larger benefit.

The Medicare Trustees estimate that about 70% of Part B enrollees qualify for this protection, although eligibility depends on how premiums are paid and whether the rule’s requirements are met.

Higher earners may face added Medicare charges

Retirees with higher incomes are subject to a different Medicare calculation because they may owe extra premiums that are not covered by the hold-harmless rule.

For 2026, the standard Part B premium applies to individuals with incomes of $109,000 or less and married couples filing jointly with incomes of $218,000 or less.

Above those thresholds, Medicare charges an added amount known as IRMAA, or the Income-Related Monthly Adjustment Amount. This surcharge can raise what you pay for both Part B and Part D, sometimes by hundreds of dollars each month.

Because Medicare generally uses tax returns from two years earlier, income from 2025 will usually determine whether these extra charges apply in 2027. The income brackets will also be adjusted, so checking where you fall can provide a better estimate of what Medicare may cost next year.

Bottom line

The 2027 Social Security raise may stretch a bit further than recent increases, with Medicare expected to take a smaller share. If the Trustees’ estimate proves accurate, the average retiree could have about $68 more per month, or more than $800 over the year.

Before deciding how to use that extra money, review your updated Social Security payment once Medicare premiums are finalized. A little planning can help you avoid surprises and make your raise go further.