Medicare Just Announced Its 2026 Premiums, and It’s Bad News for Social Security’s Dual Enrollees
It’s been a busy few weeks for retirees, with Social Security announcing its 2026 cost-of-living adjustment (COLA) and Medicare announcing its monthly premiums for next year.
Social Security’s 2026 COLA will do something not observed since the late 20th century.
The Part B premium is rising rapidly and is poised to partially or completely offset Social Security’s 2026 COLA for traditional Medicare enrollees.
Social Security income is essential for most retirees. Annual surveys by Gallup since 2002 have shown that 80% to 90% of retired employee beneficiaries rely on the payout they receive to cover some of their expenses.
For older beneficiaries, there are few announcements more anticipated than the annual cost of living adjustment (COLA). While this reveal usually occurs between October 10 and 15, it was delayed this year due to the record-long federal government shutdown.
But the Social Security COLA isn’t the only major announcement some retirees are waiting for. For dual enrollees – Social Security beneficiaries who are traditionally enrolled Medicare — The Medicare announcement outlining next year’s premiums is of great importance.
The legendary COLA you’ve always heard and read about is a tool the Social Security Administration uses to help beneficiaries prevent loss of purchasing power over time.
For example, if the collective cost of a large basket of goods and services increases by 2% from one year to the next, Social Security benefits will need to increase by the same amount. Otherwise, beneficiaries would not be able to purchase the same amount of goods and services. Social Security’s COLA is the “increase” carried forward on an almost annual basis, which attempts to reflect the effects of inflation (rising prices).
The final piece of the puzzle needed to calculate the 2026 cost of living adjustment (the September inflation report) was released on October 24, revealing that a 2.8% increase will be coming the way of beneficiaries next year.
On a nominal basis, the 2.8% COLA is modest compared to the 5.9%, 8.7% and 3.2% payment increases Social Security beneficiaries experienced from 2022 to 2024. But in relative terms, a 2.8% increase is higher than the average COLA of 2.3% since 2010.
Social Security’s 2026 COLA also represents the first moment of this century for the program. Including the increases from 2022 through 2024 mentioned above, as well as the 2.5% COLA beneficiaries received this year, it will be the first time in 29 years that COLAs have increased to 2.5% or above for five consecutive years. This was last observed between 1988 and 1997, when COLAs ranged from 2.6% to 5.4% annually.
While Social Security’s 2026 COLA continues a string of above-average increases since 2010, Medicare’s latest announcement likely knocked the wind out of the sails of many dual-enrolled individuals.
Image source: Getty Images.
Social Security and Medicare work hand in hand to support our nation’s retirees. The former is responsible for providing financial footing for eligible recipients, while the latter is a federal health insurance program that is primarily for Americans ages 65 and older and makes healthcare more affordable and accessible.
While Medicare Part A (inpatient services) has no monthly premiums for approximately 99% of individuals enrolled in this traditional program, Medicare Part B, which covers outpatient services such as doctor visits, to do There is a monthly base premium. Dual enrollees’ monthly Part B premiums are almost always automatically deducted from their Social Security benefits.
In mid-June, the Medicare Board of Trustees Report predicted that Part B premiums would rise a whopping 11.5% in the new year to $206.20 a month. If true, it would be the eighth time since 2002 that there has been a double-digit increase from the previous year.
On November 14, the Centers for Medicare and Medicaid Services officially announced 2026 premiums for Parts A and B. One small sliver of good news is that the actual Part B premium for next year ($202.90 per month) is slightly lower than the initial estimate in the Medicare Board of Trustees Report. The bad news is that it still represents an eye-popping 9.7% increase year-over-year, driven by higher costs of doctor-administered medications and more expensive outpatient costs.
Dual enrollees experience rare event with Part B premium in 2023 decreasing increased by approximately 3% compared to the previous year. This is one of only two years in the last quarter century where the Part B premium has fallen. Higher-than-expected program costs for a newly introduced Alzheimer’s disease drug did not materialize, allowing dual enrollees to keep more of their Social Security COLA that year.
But that glimmer of hope remained decidedly absent over the next three years. Social Security increased 3.2%, 2.5%, and 2.8% from 2024 to 2026, compared to Medicare Part B premium increases of 5.9%, 5.9%, and 9.7%, respectively. The 9.7% increase in 2026 could be particularly challenging for those with lifetime low incomes and could partially or fully offset adjustments in the cost of living.
This nearly double-digit percentage increase in the Part B premium reflects a decades-long trend in which Social Security’s nearly annual COLAs have failed to adequately keep up with the inflationary pressures facing program recipients. As long as top costs for retirees rise faster than Social Security income, it creates a scenario in which the purchasing power of the Social Security dollar could continue to decline.
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