Social Security recipients are looking forward to a small raise in 2026, but before getting too excited, there’s a significant catch that could impact your final benefit.
While inflation data suggests a 2.7% cost-of-living adjustment (COLA) is on the horizon, rising Medicare costs may cancel out this increase for many people, especially those with lower monthly benefits.
What’s Driving the COLA Increase?
According to the latest estimates, the 2026 COLA is expected to be 2.7%. This is slightly higher than the previous 2.5% forecast, driven by persistent inflation that is still above the Federal Reserve’s 2% target. While this sounds like a positive adjustment, many retirees feel these increases have not kept pace with the rising cost of living.
The COLA increase is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which reflects the spending patterns of working adults. However, this index doesn’t fully account for the higher expenses seniors face, especially on healthcare, housing, and food.
The Impact of Rising Medicare Costs
While the COLA increase may sound promising, the real issue lies in the rising costs of Medicare, particularly Medicare Part B premiums. The 2025 Medicare Trustees Report projects that the standard monthly Part B premium will increase by 11.6%, from $185 in 2025 to $206.50 in 2026. This is the largest premium hike since 2022.
For most Social Security recipients, Medicare Part B premiums are deducted directly from their Social Security payments. When these premiums rise faster than the COLA, the result is that the benefit increase is largely eaten up by higher healthcare costs.
Who Will Be Affected the Most?
The situation is especially hard for people with lower Social Security benefits. If you’re receiving $800 a month or less, the $21.50 increase in Medicare premiums could wipe out your entire COLA raise. This is most impactful for retirees who have small benefits, such as widows, disabled workers, and people receiving spousal benefits.
Additionally, some individuals may lose Medicaid coverage, which previously helped pay for their Medicare premiums. This could make the financial strain even worse for many seniors, leaving them with little or no gain from the COLA adjustment.
Why the COLA Formula Doesn’t Work for Seniors
One of the main frustrations seniors have with COLA increases is the way it is calculated. As mentioned earlier, the COLA is based on the CPI-W, which tracks spending patterns of working adults, not retirees. Healthcare, housing, and groceries – all major expenses for seniors – are not weighted heavily in this index.
Advocacy groups like The Senior Citizens League have long argued for using the Consumer Price Index for the Elderly (CPI-E), which better reflects the spending habits of older adults. However, no changes have been made yet.
What Does This Mean for 2026?
While the official COLA for 2026 won’t be announced until October, many Social Security recipients are left uncertain about what they can actually expect. With inflation and rising healthcare costs, even a small increase could be negated by higher premiums and medical expenses.
For those who are already living on tight budgets, every dollar counts. However, with rising healthcare costs outpacing the COLA, many recipients might not see any meaningful increase in their monthly benefits next year.
While Social Security recipients can expect a 2.7% COLA increase in 2026, this may be offset by rising Medicare Part B premiums. The financial strain will be particularly hard on those with lower benefits, including retirees, widows, and disabled workers.
With healthcare costs continuing to rise, it’s likely that many Social Security recipients will see little or no increase in their actual benefits in 2026, despite the COLA. Until the official announcement in October, millions are left wondering how much, if anything, they’ll really benefit from this adjustment.
