The new year is fast approaching, and with it, millions of Americans will endure shifts in both their Medicare Part B premiums and their Social Security benefits. Now, the Centers for Medicare & Medicaid Services announced that the standard monthly premium for Medicare Part B surged to $185 in 2025 from the $10.30 level in 2024. While that reflects the hike of healthcare costs, it was a big headache to retirees depending on Social Security benefits in paying for their living expenses.
How to understand Medicare Part B
Medicare Part B is an integral part of the Medicare package and pays for physician visits, preventative care, and limited medical supplies. Coverage is deducted directly from beneficiaries’ Social Security payments. With any increase in Medicare premiums, therefore, it effectively offsets the COLA for Social Security recipients.
For 2025, the COLA for beneficiaries was increased by 2.5%, as covered here, SSA announces 2025 COLA increase: How much is it, when does the Social Security rise take effect?, translating into an average increase in monthly benefits of about $50. However, factoring in the increased Medicare Part B premiums, many may find that their net gain from these increases could be considerably reduced. It would be the equivalent of the projected hike in the premium eating about 20% of the COLA increase and shrinking disposable income more than expected.
Financial implications
These changes have deep financial implications. For many seniors on fixed incomes, every dollar counts. Some of the numbers involved are presented below:
- Medicare Part B Premiums: This premium went from $174.70 in 2024 to $185 in 2025-an increase of $10.30 in premiums to be paid by beneficiaries each month.
- Social Security COLA: The 2.5% increase is going to add roughly $50 to monthly benefits.
- Net gain: Once the skyrocketing Medicare premium is deducted, seniors actually realize only about $39.70 more in income per month.
This is part of a disturbing trend in which snowballing health care costs are outracing Social Security cost-of-living adjustments, with net losses in purchasing power for most retirees.
Additional costs and changes
Starting in 2025, the annual deductible to Medicare Part B will increase from $240 in 2024 to $257 in 2025. That means spending out of pocket will increase before a person actually gets coverage. IRMAA, Income Related Monthly Adjustment Amount, increase the costs from the regular monthly premiums significantly for those of higher incomes. The increase would be as follows:
- Those earning between $106,000 and $394,000 would come to about $591.90 per month, accounting for IRMAA.
- Those earning more than $394,000 would surge to a payment of about $628.90 per month.
- It is these increases that have an impact on the individuals who can least afford them, and such medical emergencies can get all the more complicated as far as one’s paying ability is concerned.
The bigger picture: Inflation and healthcare costs
This linkage is a function of the broader inflationary pressures in the economy: whereas general inflation has seesawed to come in recently at approximately 2.4%, the costs for healthcare have risen even faster. That disconnect bodes ill for the stability of Social Security benefits against a backdrop of ever-rising healthcare costs.
While the hold harmless provision protects some individuals by keeping colas from reduction due to increases in Medicare premiums for most beneficiaries, it does not apply to everyone. The increases may still be applicable to new enrollees or those subjected to IRMAA.
Read more: Goodbye to Social Security payments – After the COLA, here are the big changes that could affect your paychecks next year
Read more: Goodbye to record Social Security check increase – Here’s why they’ll go up less next year after COLA adjustment, a figure not seen since…
