When retirees hear that a Cost-of-Living Adjustment (COLA) is coming, the first thought that comes to mind is – “Wow, I’ll get a little more money!” Anyway, the main purpose of COLA is to match Social Security checks with inflation. The estimate for 2026 is that there will be a raise of about 2.7%. Sounds pretty good.
But the twist is that Medicare Part B premiums are also going to increase significantly at the same time. The premium which is currently approx. $185/month could reach approx. $206 in 2026. That means an extra $21 per month spent just on Medicare. So whatever little COLA you got, you got it back from Medicare.
Medicare Costs vs. COLA 2026
So, the real question is – will the 2026 COLA make you financially better off, or will it just get lost in the Medicare premium? You think that the check will be a little bigger in January and you will use it to cover extra groceries, utilities or family outings. But when the check actually arrives, you see that Medicare has already cut a chunk from it. This is the reason why for many retirees COLA seems less like a “raise” and more like a “damage control”.
Social Security's cost-of-living adjustments, from 0% in 2016 to a peak of 8.7% in 2023, these annual COLA changes reflect the economic reality millions of retirees experience. The current forecast shows 2.7% for 2026, but we'll know for certain in October. #InflationImpact pic.twitter.com/xc4XbY8xO5
— IWM Partners (@IWMPartners) September 16, 2025
The 2026 cost-of-living adjustment (COLA) is currently projected at 2.8%, according to independent analysts. That would mean an average increase of just over $52 a month for beneficiaries, based on August’s average Social Security payment of $1,864. But experts warn that Medicare…
— LORDDARKSEID (@DARKSEID146) September 16, 2025
Overview Table
| Article | Medicare Costs vs. COLA 2026: Will Your Raise Disappear into Premiums? |
| Nation | United States |
| Category | Social Security & Medicare |
| Authority | Social Security Administration (SSA), Centres for Medicare & Medicaid Services (CMS) |
| Benefit accessors | Social Security retirees, Medicare beneficiaries |
| Amount | Projected COLA- approx. 2.7% for 2026 |
| Projected Medicare Part B Premium- Increase from approx. $185/month (2025) to about $206/month in 2026 | |
| Official Website | ssa.gov, cms.gov |
How COLA Works and Why It Matters?
- COLA is calculated using an inflation measure called CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers). It is based on data for July, August, and September.
- If CPI-W goes up compared to the previous year, the Social Security benefits also increase by that much percent.
- For 2026, experts say there will be a raise of around 2.7%. It is not a bumper raise of 8.7% like in 2023, but still a decent adjustment.
And why does it matter? Simple – more Social Security check means a little relief in covering groceries, rent, light bill, and medicines. One more thing – COLA is based on a flat formula, individual spending habits are not counted in it.
If a retiree has major healthcare expenses, he feels less benefit of COLA. But seniors who are relatively healthy and whose major expenses are limited to basic utilities and groceries get a little more relief. Meaning the same % raise does not create the same impact for everyone.
Medicare Premiums: The Hidden Deduction
Here the game turns upside down. Medicare Part B premiums are automatically deducted from your Social Security check. Meaning you don’t even know and the money is already gone.
- As per the estimate, Part B premium will increase from approx. $185 to approx. $206 in 2026.
- Meaning almost $21 extra per month.
- If you got an average approx. $55 raise from COLA, then approx. $21 of that went to Medicare. Only approx. $34 was saved.
It is something to think about, isn’t it? On paper it seems you got a 2.7% raise, but in actual pocket that much doesn’t come.
Who Wins and Who Loses?
- Winners: Those retirees who do not have much health-care needs or who have extra coverage/subsidy. They will feel less dent of Medicare premium.
- Losers: Older retirees who have higher health expenses. Their COLA will be largely spent on Medicare and medicines.
- Middle ground: Most people will get a little extra, but even that will not seem enough against inflation (food, rent, utilities).
That is, the best way to understand COLA is this – a little relief in the short term, a survival tool in the long term. If your healthcare expenses are already high, you will feel the “losing side”. But if you have selected supplemental insurance or Medicare Advantage wisely, a little raise can give you extra breathing space in your monthly budget.
COLA = 2.7%. Approx $54
Medicare 12.6% Approx$206
How does this put extra money in the Social Security recipients?
Most won’t qualify for the $6000 tax deduction because they are way under the limit.
We are back to swapping medicines for food?? pic.twitter.com/7efwTED1lk— coffeelady (the one and only since 2017) (@CoffeeladyOne) September 14, 2025
The Bigger Picture: Inflation vs. Retirement Income
It is fine if you get COLA, but inflation is also not stopping.
- Food, electricity, water and rent are getting expensive everywhere.
- Healthcare inflation is increasing even faster, which is more than the formula (CPI-W) used to calculate COLA.
That is why retirees often feel that they are stuck at one place – the check has increased a bit, but the bills have increased even faster than that.
What Retirees Can Do?
- Plan for Medicare hike in the budget. Assume premium will increase for 2026 and adjust accordingly.
- Check subsidies. If income is low, options like Medicare Savings Programs can reduce or eliminate premiums.
- Review Medicare plans. Choose the right Part D or Advantage plan at the time of open enrolment to reduce out-of-pocket.
- Reduce extra expenses. If COLA does not cover inflation, cutting some non-essential expenses will help.
Final Thoughts
The 2026 COLA is definitely a positive thing – but the bulk of the raise will go to those on Medicare Part B. Younger and healthier retirees may feel a little more benefit, but the net gain for older seniors could be much less.
Bottom line: The COLA percentage looks big in the headline, but the real thing is how much is left in your pocket after the Medicare cut.
FAQs
What will the Social Security COLA be for 2026?
Around 2.7%, which is a approx. $55/month raise for the average retiree.
How much will the Medicare Part B premium increase?
From approx. $185 to approx. $206/month – meaning an extra approx. $21.
Will the COLA raise cover the full premium hike?
No. Medicare will take roughly 40% of the COLA, leaving the rest in your pocket.
When will these changes take effect?
Both will take effect in January 2026 – the COLA and the premium hike.
Is there a way to retain more COLA?
Yes – apply for subsidies, optimise Medicare plans, and adjust the budget smartly.
