Upcoming Changes in Social Security and Medicare Premiums: What You Need to Know

All Social Security beneficiaries will see a 2.5% cost-of-living adjustment (COLA) next year. This increase will affect the monthly benefits for all recipients, including those receiving spousal Social Security. However, retirees should prepare for rising costs that could impact their spending ability.

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Medicare Part B Premiums Set to Increase

Seniors enrolled in Medicare will pay a $174.70 monthly premium for Part B coverage in 2024. This amount will increase to $185.00 next year, marking an increase of $10.30. For those not claiming Social Security, this premium is paid out of pocket, similar to a private health insurance plan.

Once beneficiaries start claiming Social Security, these premiums are typically deducted directly from monthly benefit checks. While opting out is an option, most find it easier to have the amount withheld instead of remembering to make separate payments each month.

As a result, the Social Security benefit amount received will be lower than the listed monthly benefit. For instance, while the average monthly Social Security benefit is expected to rise by $49 to $1,976 in 2025, those who have Medicare Part B premiums withheld will see an actual increase of only $38.70, leaving them with $1,791 for other expenses.

Higher-income seniors may face even larger deductions from their Social Security benefits since Medicare imposes elevated Part B premiums on those with incomes above specific thresholds, as shown in the table below.

Data source: Center for Medicare & Medicaid Services.

While higher earners are accustomed to larger Part B premiums, they may still need to adjust their budgets to accommodate escalating Medicare costs.

Prepare for Financial Changes in 2025

The increase in Medicare Part B premiums will directly affect the net Social Security benefit. However, this is not the only expense rising next year. Other Medicare components, such as Part A deductibles, copays, and the Part B deductible, will also see hikes.

Everyday costs—like food, housing, utilities, and transportation—are on the rise due to inflation. Though price increases are slower than a few years back, even modest rises can strain retirees, particularly those who lack sufficient savings. To navigate 2025 effectively, creating a budget will be crucial to understanding your expenses and determining how much income you may need from other sources.

Those receiving Social Security should anticipate a personalized COLA notice from the Social Security Administration this month, detailing their exact 2025 benefits. Alternatively, this information can be accessed via the my Social Security account’s Message Center.

Consider devising a plan to cover any shortfall in income. This may involve reducing spending or even seeking a part-time job to supplement earnings. If these options are not feasible, explore eligibility for additional benefits, such as Supplemental Security Income (SSI), to support your financial needs.

Maximizing Your Social Security Benefits

Many retirees are unaware of certain strategies that could enhance their Social Security income. For instance, one little-known approach could potentially provide you with as much as $22,924 more each year. By learning how to maximize your benefits, you can work towards a more secure retirement. Click here to discover these strategies.

View the “Social Security secrets” »

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