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Social Security’s annual cost-of-living adjustment (COLA) raises your monthly benefit, but a higher Medicare Part B premium can leave you with less of that increase to spend. Most retirees enrolled in Part B have the cost deducted from their Social Security payment. How much extra you get in 2027 will depend on the next COLA, which Social Security will announce October 14 1 , and the new Part B premium.
Where the Raise Goes Before It Reaches You
For 2026, Social Security benefits increased 2.8%. At the same time, the standard Medicare Part B premium rose from $185 per month in 2025 to $202.90 in 2026, an increase of $17.90. 2 That means part of the COLA was effectively offset before retirees ever saw the higher payment.
Two formulas show how much of the raise you keep and how much the premium absorbs:
- Net raise = (monthly benefit × COLA) − Part B premium increase.
- Share of raise lost = Part B premium increase ÷ gross raise.
Someone receiving $1,200 a month before the COLA would get a $33.60 raise ($1,200 × 2.8%), but the $17.90 increase in the standard Part B premium would leave just $15.70 more to spend each month. For a greater comparison, the table below applies the same calculation to three benefit levels:
| Monthly Benefit Before COLA | Monthly Raise | Part B Premium Increase | Extra Money Each Month | Share of Raise Used for Higher Premium |
|---|---|---|---|---|
| $1,200 | $33.60 ($1,200 × 2.8%) | $17.90 | $15.70 | 53.3% |
| $2,000 | $56.00 ($2,000 × 2.8%) | $17.90 | $38.10 | 32.0% |
| $3,000 | $84.00 ($3,000 × 2.8%) | $17.90 | $66.10 | 21.3% |
The same percentage COLA leaves more money to spend when your benefit is larger. At $3,000 a month, the $17.90 premium increase takes about one-fifth of your $84 raise, while at $1,200 it takes more than half. The break-even point is a benefit of $1,280, where the premium increase takes exactly half of the raise ($17.90 ÷ 1.4%). Anyone receiving less lost most of their 2026 raise to the higher premium.
Lower-benefit retirees may also receive protection from Medicare’s “hold harmless” provision, which can limit a Part B premium increase when it would otherwise reduce the net Social Security payment. 3 The rule only keeps your check from shrinking, so a premium increase can still absorb most of your raise. income-related monthly adjustment amount (IRMAA) payers generally are not protected by that rule.
A financial advisor can help you budget around your Social Security payment after Medicare premiums.
Why Higher Earners Can Lose More
If your income is high enough, Medicare can take more than the entire COLA. Higher-income retirees can face an IRMAA on both Medicare Part B and Part D. For 2026, Social Security generally determines IRMAA using 2024 modified adjusted gross income (MAGI) reported on the federal tax return filed in 2025: 4
| 2024 MAGI, Single | 2024 MAGI, Joint | 2026 Part B Premium |
|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 |
| $109,001–$137,000 | $218,001–$274,000 | $284.10 |
| $137,001–$171,000 | $274,001–$342,000 | $405.80 |
| $171,001–$205,000 | $342,001–$410,000 | $527.50 |
| $205,001–$499,999 | $410,001–$749,999 | $649.20 |
| $500,000+ | $750,000+ | $689.90 |
Crossing into the first IRMAA bracket adds $81.20 a month ($284.10 − $202.90), which is more than the entire 2.8% raise on a $2,000 benefit. Since hold harmless doesn’t apply, an IRMAA increase can leave your check smaller than the year before, even after a COLA.
The surcharge is also easy to miss because it looks back two years. A Roth conversion, large IRA withdrawal or taxable gain in 2026 could raise your Part B premium in 2028, long after the transaction is done.
What the 2027 COLA Could Mean for Your Raise
Social Security calculates the COLA by comparing the July through September average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) with the same three months a year earlier. The 2027 formula is [(2026 average ÷ 2025 average) − 1] × 100.
The 2025 average was 317.265. 5 July 2026 came in at 327.104 and August at 328.481. 6 If September matches August, that would bring the three-month average to 328.022. The calculation would then be [(328.022 ÷ 317.265) − 1] × 100 = 3.39%, rounded to a 3.4% COLA. A slightly higher final reading could bring the adjustment to 3.5%.
The 2027 Part B premium has not been announced. The table below shows a raise at 3.4% and 3.5%, with the premium increase that would take half of the larger raise:
| Monthly Benefit Before COLA | Monthly Raise at 3.4% | Monthly Raise at 3.5% | Premium Increase That Would Take Half of the 3.5% Raise |
|---|---|---|---|
| $1,200 | $40.80 | $42.00 | $21.00 |
| $2,000 | $68.00 | $70.00 | $35.00 |
| $3,000 | $102.00 | $105.00 | $52.50 |
If your income has dropped because of retirement, reduced work or a spouse’s death, you can ask Social Security to recalculate IRMAA using more recent income by filing Form SSA-44.
A financial advisor can help you plan withdrawals and Roth conversions based on Medicare premiums.
Photo credit: ©iStock.com/fizkes, ©iStock.com/shapecharge.
Article Sources
All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.
- “U.S. Bureau of Labor Statistics.” Consumer Price Index News Release, https://www.bls.gov/news.release/cpi.htm.
- “2026 Medicare Parts A & B Premiums and Deductibles.” CMS, Oct. 9, 2026, https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles.
- “Social Security Blog.” How the Hold Harmless Provision Protects Your Benefits, https://www.ssa.gov/blog/en/posts/2020-11-30.html.
- “Social Security.” Program Operations Manual System (POMS), https://secure.ssa.gov/apps10/POMS.NSF/lnx/0601101020.
- “Social Security.” Average CPI by Quarter and Year, https://www.ssa.gov/OACT/STATS/avgcpi.html.
- “Social Security.” CPI for Urban Wage Earners and Clerical Workers, https://www.ssa.gov/OACT/STATS/cpiw.html.