Social Security COLA 2025: 5 Reasons Why Rising Medicare Premiums Could Wipe Out Your Raise Next Year

1.     Projected Medicare Part B Premium Increases for 2025

Even though the change hasn’t been announced yet, Medicare premiums are expected to increase in 2025. Earlier this year, the Medicare Trustees estimated that Part B premiums would be around $185 in 2025, a $10.30 increase from $174.70 in 2024. Since the Social Security COLA is expected to be around 2.5%, or $48, a portion of the COLA will seemingly be wiped out by this premium. Part B premiums are deducted directly from Social Security benefits, implying that a rise in these premiums can result in a negligible net increase in benefits for many retirees.

According to Mary Johnson, an independent Social Security and Medicare policy analyst, part B premiums and any voluntary withholdings from taxes are automatically deducted from Social Security checks. When these premiums grow at a faster rate than COLAs, the costs consume a larger portion of one’s monthly Social Security checks. Moreover, since Medicare costs are currently not included in the consumer price index used to calculate the COLA, it leads to a disparity.

“Ironically that index, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), does not survey retired adults aged 62 and older, the very people the Social Security COLA is supposed to protect”.

– Mary Johnson, independent Social Security and Medicare policy analyst.

To quote an example, if Social Security benefits increase by 2.5%, a retiree with a monthly benefit of $1,500 would see an increase of $37.50, making the new benefit $1,537.50. On the other hand, if Medicare premiums rise from $174.70 to $185, this increase is $10.30. If the premium increase is $10.30 and COLA is $37.50, the retiree’s net benefit increase is $27.20. The net gain is reduced because of the premium increase.

Check out our complete analysis here: Social Security COLA 2025: 7 Reasons Why Rising Medicare Premiums Could Wipe Out Your Raise Next Year

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