AARP Hearing Center

Key takeaways
- Trustees’ premium estimate for 2025 was correct.
- Social Security COLA will cover the increase for most.
- Some who receive small Social Security payments will pay less.
- But hold harmless rule doesn’t cover every beneficiary.
The Medicare trustees who oversee the program’s long-term finances expect a more than $20-a-month increase in the standard Part B premium next year.
But the anticipated rate hike probably won’t be large enough for most beneficiaries to sidestep at least part of the rise through the Social Security Act’s hold harmless provision. The rule prevents Medicare Part B premium increases from reducing some recipients’ monthly benefits to less than what they received the previous year.
This year, Part B enrollees pay a standard monthly premium of $185, the exact amount that the trustees estimated last year. That’s up $10.30, nearly 5.9 percent, from $174.70 in 2024. The 2025 Part B annual deductible is $257, up 7 percent from $240 in 2024.
But next year the Part B premium is projected to jump 11.6 percent, $21.50, to $206.50, the Medicare trustees reported in July. That would raise the Part B annual deductible by 12 percent, $31, to $288 in 2026.
In comparison, 312 insurers who offer policies in the Affordable Care Act marketplaces nationwide are proposing an average premium increase of 20 percent, the largest rate change insurers have requested since 2018, according to the Peterson-KFF Health System Tracker. ACA enrollees who have relied on enhanced premium tax credits to make health insurance more affordable may see what they pay rise by more than 75 percent because of expiring tax credits.
One of the two Medicare trust funds, the Supplementary Medical Insurance Trust Fund, finances Medicare’s Part B physician and outpatient services and Part D prescription drug benefits. Medicare taxes that were deducted from your paycheck don’t go into this fund.
The revenue and premiums needed to meet Part B and Part D costs for the coming year are calculated annually so that this trust fund doesn’t face a shortfall, according to KFF, a nonpartisan health policy nonprofit based in Washington, D.C. But higher anticipated Part B spending because of increased use of services, inflation or legislative changes can mean higher premiums.
Both the trustees’ projected 2026 Part B premium and deductible are about double their rise from 2024 to 2025. If the predictions hold true, the increases could further squeeze the finances of older Americans who struggle with food, housing and energy costs amid stubborn inflation. “It’s the persistent high costs that [are] presenting a significant challenge,” says Executive Director Shannon Benton of The Senior Citizens League, a nonpartisan, nonprofit advocacy group based in Alexandria, Virginia. That’s true “especially for those who are on fixed incomes, like so many senior citizens who rely on their Social Security check for 100 percent of their income.”
Recent forecasts suggest the 2026 Social Security cost-of-living adjustment (COLA) will be 2.5 percent to 2.7 percent, says Rachel Schmidt, research professor at the Medicare Policy Initiative at Georgetown University’s Center on Health Insurance Reforms.
A key indicator for the COLA, the Consumer Price Index for Urban Wage Earners and Clerical Workers (known as the CPI-W), rose by 2.5 percent in July compared to the previous year. A 2.5 percent COLA would increase the $2,007 average monthly benefit for a retired worker in July by about $50.
Health care inflation often exceeds other inflation because of the introduction of new, high-priced drugs; technological advancements in medicine; the rising use of services since an aging population has more health care needs and chronic conditions; and expansions in insurance coverage. Medical care has its own subcategory in the Consumer Price Index, but it generally lags further behind other CPI data, according to the Peterson-KFF Health System Tracker.
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