2026 Social Security COLA Set at 2.8%—But Medicare Premiums Could Eat It Up

Millions of retirees are closely watching how much their monthly Social Security checks will grow in 2026. Early forecasts suggest that the 2026 Social Security COLA estimate is 2.8%, which would add a modest boost to benefits. But at the same time, Medicare premiums are also set to rise, threatening to eat into that increase.

This balancing act between income adjustments and healthcare costs is a recurring challenge for older Americans, many of whom rely on Social Security as their primary source of income.

What the COLA Means for Retirees

The Cost-of-Living Adjustment (COLA) is calculated each year to help Social Security benefits keep pace with inflation. According to projections, retirees could see a 2.8% adjustment in 2026, slightly higher than the 2.7% estimate from earlier this summer.

For the average retired worker receiving about $1,955 a month in 2025, this would mean an increase of roughly $54 to $55 per month, bringing the benefit closer to $2,010.

While any increase is welcome, experts warn that it may not stretch far once rising Medicare costs are factored in.

For official details about how COLA is determined, retirees can review information directly from the Social Security Administration.

Medicare Costs on the Rise

The challenge comes from the healthcare side of the equation. Medicare Part B premiums are projected to rise from $185 in 2025 to around $206–$206.50 in 2026. That’s an increase of about $21–$22 per month.

This means that for many retirees, more than a third of their COLA increase could be consumed immediately by the higher premium. And that doesn’t include potential hikes in Medicare Part D drug plan premiums, which are also expected to edge higher in 2026.

Why This Matters

For retirees who live primarily on fixed incomes, even small changes can make a significant difference. If Social Security checks go up by $55 but Medicare premiums climb by $22, the net gain is reduced to only about $33 per month.

That additional money may cover some groceries or a utility bill, but it won’t necessarily ease the broader financial pressure from rising healthcare, housing, and food costs.

This is why many analysts say the 2026 Social Security COLA estimate at 2.8% but it may not cover expected Medicare increase should be viewed with caution rather than celebration.

The “Hold Harmless” Provision

One important safeguard exists: the “hold harmless” rule. This rule prevents a retiree’s Social Security benefit from going down if the Medicare Part B premium increase would otherwise reduce their monthly check.

However, this protection doesn’t apply to everyone. Those who do not have premiums deducted directly from their Social Security check, higher-income beneficiaries who pay income-related adjustments, and those enrolling in Medicare for the first time may not be covered.

Further explanation of this rule is available in the Medicare.gov guide to costs and protections.

Balancing Income and Healthcare

The gap between Social Security increases and Medicare costs has been a long-standing issue. Over the last two decades, medical costs have generally risen faster than the COLA adjustments. This has left many retirees with less real purchasing power over time.

According to consumer advocacy groups, older adults are increasingly forced to make trade-offs—such as cutting back on food, delaying prescriptions, or skipping medical appointments—because their income doesn’t stretch as far as it used to.

What Retirees Can Do

While individuals cannot control the size of the COLA or Medicare premium changes, there are steps they can take to prepare:

• Review Medicare options: Compare different Part D and Medicare Advantage plans each year during open enrollment to ensure the best coverage for the cost.
• Track official updates: COLA announcements are made by the Social Security Administration each October. Medicare premiums are usually finalized around the same time.
• Budget adjustments: Factor in expected healthcare costs early to avoid surprises in January when new benefits and premiums take effect.

conclusion

The final 2026 COLA will be announced in October 2025, based on inflation data from July, August, and September of that year. At the same time, the Centers for Medicare & Medicaid Services will confirm next year’s premiums.

Until then, retirees should treat the 2026 Social Security COLA estimate at 2.8% but it may not cover expected Medicare increase as a useful planning guide, but not a certainty.

What is clear, however, is that the tug-of-war between rising costs and modest benefit increases will continue to be a financial stress point for millions of Americans.