The Social Security Administration (SSA) announces a Cost-of-Living Adjustment (COLA) every year as inflation rates soar affecting millions of beneficiaries across the united states, including retirees, people with disabilities, and those receiving Supplemental Security Income (SSI). For 2024, these beneficiaries expect the COLA increase to provide a boost to Social Security payments. But as a beneficiary you need to understand how this boost can affect your medicare and your total health cost.
How does Social Security COLA affects medicare premiums
COLA directly affects Medicare Part B premiums, covering your visits to the doctor, outpatient care, and other preventive services. The Part B premium is removed from social security benefits, so when COLA increases, there will be a corresponding increase in these premiums. The medicare premium is adjusted annually based on healthcare costs but is ultimately influenced by changes in social security benefits.
Medicare Part B Premium Changes for 2025
The exact figures for the 2025 medicare part B premium changes is not known as COLA for next year, 2025 is yet to be announced. COLA adjustment for 2024 which increased social security benefits by 3.2 percent for more than 71 million Americans caused a positive change in medicare benefits. For 2025, social security beneficiaries expect COLA increase which will, to an extent increase their social security benefits. As we anticipate COLA increase by 2025, Americans should expect a corresponding increase in Medicare Part B Premiums consistent with the rising cost of health care.
Increase in Medicare Part B will not reduce your social security benefits as a result of provisions like the “hold harmless”, which prevents beneficiaries from facing such a reduction.
Impact on Medicare Part D and advantage plans
Besides Medicare Part B, the COLA increase can also affect your costs for Medicare Part D (prescription drug coverage) and Medicare Advantage plans. Premiums for these plans are set by private insurers and are affected by different factors, including current healthcare costs and the COLA. Beneficiaries may see slight adjustments in their Part D and Medicare Advantage premiums by 2025, as insurers factor in the higher income levels resulting from the COLA.
Additionally, while the COLA aims to keep pace with inflation, healthcare costs can rise more rapidly than the general inflation rate. This can result in spending more money from your pocket to cover medical expenses such as medications and other services under Medicare Part D and Advantage plans.
Strategies to manage your Medicare costs by 2025
To make the most of the Social Security COLA by 2025, it is advisable to analyze your Medicare coverage options and consider any potential adjustments you can make. Here are a few tips on how to manage your medical cost effectively:
- Review your medicare advantage or Part D Plan: Premiums and coverage vary every year. Therefore, evaluate your current plan during the Medicare Open Enrollment period to make sure that it meets your needs and is cost effective.
- Consider supplemental coverage: You can explore options that can provide you with a certain level of financial protection especially if you expect to spend more on your medicals. These options include medigap policies or other supplemental insurance.
Utilize preventive services: You can take advantage of the range of preventive services offered by medicare to help manage your health proactively and reduce your chances of spending exorbitantly on medical bills later.
