Medicare Part B Premiums Rise in 2026, Reducing Social Security Benefit Gains

Medicare Part B premiums are set to increase by 9.7% in 2026, rising to $202.90 per month from $185 this year. This premium hike, which is automatically deducted from Social Security payments, could significantly reduce the net increase in benefits for many Social Security recipients despite the 2.8% cost-of-living adjustment (COLA) set for 2026. The annual deductible for Part B will also increase by 10%, from $257 to $283, further adding to beneficiaries' out-of-pocket expenses. Over the past decade, Part B premiums have surged 66%, highlighting a trend of healthcare costs increasing faster than Social Security adjustments. Part B coverage is critical as it pays for essential medical services including preventative care, ambulance services, medical equipment, and mental health care. The impact of rising premiums and deductibles is most noticeable among middle and lower-middle income retirees, many of whom receive monthly Social Security payments around $2,000. For these individuals, the increased Medicare expenses effectively reduce the benefit gains from COLA, leading to a net increase closer to 1.9% rather than the headline 2.8%. Additionally, higher-income retirees may feel a greater impact due to less protection from the hold-harmless rule and added surcharges based on income (IRMAA). Experts caution this trend represents a gradual erosion of retirees' purchasing power, as healthcare cost growth consistently outpaces Social Security COLA, effectively diverting more income to medical bills over time. This dynamic may act as an implicit means-testing mechanism for Social Security benefits, shifting funds away from general expenses to healthcare costs, impacting financial planning for insured retirees significantly.