2026 Social Security COLA Projected at 2.8% Amid Rising Medicare Costs

Social Security recipients in the U.S. are projected to receive a 2.8% cost-of-living adjustment (COLA) in 2026, based on the latest inflation data. This estimated increase represents a slight rise from the previous forecast of 2.7% and corresponds to an average monthly benefit increase of just over $52. However, the increase in Social Security payments is expected to be largely offset by anticipated rises in Medicare costs, specifically Part B and Part D premiums.

The Medicare Trustees have estimated a significant increase in the Part B premium by $21.50, which is close to the record premium jump set in 2022. Part D prescription drug plan premiums are also expected to increase due to changes in a demonstration program, potentially allowing premium hikes up to $50 per month. This adjustment is notable as more than 33 million beneficiaries currently use standalone Part D plans. Recent Census data indicate an increase in poverty rates among seniors aged 65 and older, rising to 15% in 2024 from 14.2% the previous year, highlighting financial challenges faced by this demographic. Analysts note that despite the COLA adjustment, many seniors will experience limited real financial relief due to rising healthcare costs.

The Social Security Administration calculates COLA based on inflation indices for urban wage earners and clerical workers, with the latest inflation rise in August contributing to the updated COLA estimate. Approximately 74.5 million people received Social Security benefits in August 2024, including retired and disabled workers, survivors, and Supplemental Security Income recipients. This ongoing trend underscores the complex balance between inflation adjustments and healthcare-related expenses impacting senior beneficiaries.