Why a Medicare Premium Increase May Not Reduce Some Retirees’ Social Security Payments

When the Social Security Administration said benefits would get a 3.6% cost-of-living adjustment in 2027, many retirees welcomed the news and started thinking about what that boost would mean for their checks.

But if you’re enrolled in Medicare, there’s an important wrinkle: Part B premiums are usually deducted automatically from Social Security benefits, and those premiums have a habit of rising over time.

That creates a concern for people with smaller Social Security benefits. If Medicare Part B costs climb sharply, the increase could potentially cancel out the entire COLA. Still, a long-standing safeguard helps prevent one thing from happening: your Social Security benefit cannot go down from one year to the next because of a Part B premium increase.

How the hold-harmless rule works

There have been years when Social Security COLAs were much smaller than 3.6%, and in those years even a modest jump in Part B premiums could erase the raise completely.

Most retirees, though, are unlikely to face that problem in 2027. The average monthly benefit is a little under $2,100, and the typical retirement check is expected to rise by about $75 when the 3.6% COLA takes effect in January.

An increase anywhere near that size in Medicare Part B premiums would be highly unusual. But for someone receiving a smaller Social Security payment, it is possible for a premium hike to wipe out the COLA entirely.

For example, if a monthly benefit is $300, a 3.6% increase would add roughly $11. If Part B premiums then rose by $13 a month, the premium increase would exceed the COLA.

Even then, the hold-harmless rule would keep the person’s Social Security check from shrinking by $2. In other words, benefits cannot fall from one year to the next solely because Medicare Part B got more expensive.

A premium announcement is still pending

Anyone waiting for Medicare’s official Part B premium for 2027 will likely not have to wait much longer. The agency typically releases that information later in November.

Once the premium is announced, beneficiaries can estimate how much of their Social Security increase they will actually keep in January. Those worried about costs should also pay attention to Medicare’s annual open enrollment period, which is underway now.

Through Dec. 7, current enrollees can adjust their coverage, including switching Part D or Medicare Advantage plans. If expenses are getting harder to manage, reviewing plan options could help uncover savings.