There are millions of Americans who rely on Social Security as their primary source of income, and a lot of them are happy to hear about the 2.8% benefit increase in 2026. Indeed, it does make a difference especially in a time where the price of goods and services are constantly increasing.
However, there is a catch. Medicare Part B premiums are paid directly out of your Social Security checks and Medicare premiums are expected to increase next year.
So, while your benefit amount will technically be higher, a larger Medicare deduction could shrink or even cancel out your raise before you ever see the money. With that being said, make sure you plan ahead and budget accordingly.
The 2.8% Social Security Raise
Every year the Social Security Administration (SSA) makes adjustments to benefits to help beneficiaries keep up with the rising costs of the economy. This is referred to as the Cost-of-Living Adjustment (COLA).
If you receive Supplemental Security Income (SSI), your first boosted payment will come early, on December 31, 2025, because January 1 is a federal holiday.
The Medicare Part B Problem
The problem arises with Medicare Part B premiums because this is automatically deducted from Social Security benefits. Outpatient treatment and doctor visits are covered under Medicare Part B. According to official estimates, those rates are anticipated to increase once again in 2026, perhaps by $12 to $15 a month.
Even though this may not seem like much, every little bit counts especially for those living on fixed incomes.
In simple terms:
- If your current monthly Social Security benefit is $1,800, a 2.8% raise would add $50.40 to your payment.
- But if your Medicare premium goes up by $15, your real increase will go down to $35.40.
Rising Costs Everywhere
Regardless of COLA increase, there are millions of older Americans who are still struggling to keep up with everyday expenses. The cost of living is increasing faster than Social Security benefits are increasing.
There are many experts concerned that the COLA does not reflect the true spending pattern of retirees as they spend quite a bit on medical care.
What You Can Do
Here are a few simple steps to help prepare for 2026:
- Check your COLA notification in December. The SSA will send out letters showing your new payment amount. Additionally, you may check your online “my Social Security” account.
- Make sure you go through your Medicare plan see if you are paying any unnecessary fees. Perhaps consider changing plans to see if you can save money.
- Planning ahead is your best option. Make sure you budget accordingly and see whether you can cut down on unnecessary expenses.
- Make sure you are mindful of scams. Scammers will pretend to be government officials and demand payments from you and threaten to put your Social Security account on hold.
The Bottom Line
Even though the 2.8% COLA might not be much, it makes a major difference for those living on fixed incomes. However, as a result of the Medicare premiums, retirees might not be able to see much of this increase.
Medicare premiums are deducted directly from Social Security. For many, the increase may disappear completely once deductions are applied.
Even though your increase will come in next year, the full amount that you take home might not be the same. This becomes frustrating for millions of Americans as they rely on Social Security for essential expenses such as food, housing and utilities.
Beneficiaries are urged to keep themselves updated with verified information so that they can wise decisions to benefit their financial future. If you need to, consult with a financial advisor to help make decisions and plan for your future.