Recipients of Social Security in 2025 will see a change in the Cost of Living Adjustments (COLA) that will impact everyone who benefits from Social Security. It is speculated that Medicare premiums will offset this to help you cope with COLA’s impact on social security benefits.
The Impact of Medicare Premium on Social Security COLA in 2025
While there will be changes in how Medicare Premium will be in 2025, these changes will not be a limiting factor to how the Social Security COLA will be affected by Medicare Premium. Hence, this is what you can expect in 2025.
- The first impact will be an increase in Medicare premiums in 2025. This will guarantee an increase that will allow the Part B Premium to move from the $174.70 it was in 2024, to $185 in 2025.
With the new COLA for 2025 expected to be around 2.5%, this will mean that a significant portion of the social security benefits will be wiped off by the increase in the Part By Premium.
- The “hold harmless” rule implemented in 2024 might have little or no impact in 2025. This is because the rule only applies when the COLA increase is less than the Medicare premium increase. Since this will likely not be the case in 2025, the hold harmless rule will not be able to protect your social security benefits in 2025.
- If your social security is high as a result of being a higher-income retiree, you will be expected to perhaps be most impacted by the rise in Medicare premiums in 2025.
This will mean that by having a higher income as a retiree, you might be a part of the 8% that will pay a higher premium for B and D as a result of the Income-Related Monthly Adjustment Amounts (IRMAA).
- More than these, the introduction of the new Medicare coverage will have a significant impact on the well-being of retirees. The costs will include the premiums for Medicare Advantage and its Part D plans, deductibles, as well as coinsurance.
How much will COLA increase in 2025?
Every year, the Cost of Living Adjustments (COLA) is set in line with the projected increase or decrease of inflation. The COLA is instrumental in determining how much social security benefits will be worth across various categories of recipients. The COLA for 2025 is projected to be a 2.5% increase that will translate to you receiving up to $48 more in social security.
The COLA, which is usually set up in line with the inflation rate data gathered from the third quarter of every year, helps you determine how your expenses will be managed in the coming year.
With the information on Medicare Premium also available, it comes as valuable information that can help you plan your spending in the coming year while also preparing for the expected impact of Medicare Premium on your social security benefits.
