Seniors waiting for an increase in their Social Security checks next year may be upset to discover that some of that extra money has already been set aside.
The Centers for Medicare and Medicaid Services (CMS) announced that monthly premiums for Part B will increase to $185 in 2025, an increase of $10.30 from $174.70 in 2024. And the annual Part B deductible, that most people must pay before their Medicare coverage kicks in will increase by $17, or 7%, from $240 to $257.
That news follows the Social Security Administration’s announcement of a 2.5% cost-of-living adjustment (COLA) for 2025, which the SSA says will add about $50 to the average monthly benefit of about $1,900.
Ideally, this increase in benefits would provide some breathing room for the more than 72 million retired seniors and disabled workers who have struggled with higher prices in recent years.
Maybe not next year.
“This is the second year in a row where the Part B premium has increased by almost 6%,” Mark Miller, a retirement expert and author of “Retirement Reboot,” told Yahoo Finance.
“The high dollar amount of the increase will put pressure on the Social Security COLA for seniors,” he said. “The pressure will be most painful for people with lower benefit amounts.”
For example, Miller said, someone with a $1,200 monthly benefit will see their COLA drop to 1.6% once the Medicare increases are factored in. But for someone with a high benefit of $3,500, their COLA still increases by 2.2 percent.
In addition, the Medicare Part A deductible amount beneficiaries pay upon hospital admission will be $1,676 in 2025, an increase of $44 from $1,632 in 2024. Coinsurance amounts for hospital and skilled nursing care will also increase by 2.7 percent increase.
Not everyone will feel the pinch. Under Social Security hold harmless rules, an individual’s Part B premium increase cannot be greater than their COLA. People who receive less than about $415 in monthly Social Security benefits won’t be charged the full Part B premium increase, according to Phil Moeller, a Medicare and Social Security expert author of the book “Get What’s Yours for Medicare.”
Generally, people receiving Social Security benefits are notified by mail of their new benefit amount in early December. Most beneficiaries can also view their COLA notice online through their personal Social Security account at ssa.gov/myaccount/.
Read more: How to find out your Social Security COLA increase for 2025
Since 2007, a beneficiary’s monthly Part B premium has been based on his or her income. About 8% of Medicare recipients earn too much to qualify for the standard Part B and Part D premiums and must pay the surcharges, known as Income Related Monthly Adjustment Amounts (IRMAA). Details can be found on the CMS fact sheet.
This year, Medicare beneficiaries with incomes over $106,000 (for individual tax filers), $212,000 for joint filers and $106,000 (for married people filing separately) will pay the surcharge. For these beneficiaries, total monthly Part B premiums will range from $259 to $628.90.
Eligibility is determined by the Social Security Administration. The allowance is calculated on a sliding scale, with five income brackets coming in at $500,000 and $750,000 for individual and joint filing, respectively. These figures change annually with inflation.
Calculations have a lag time of two years. Whether you pay a surcharge in 2025 depends on the income you see on your 2023 tax return.
“Unfortunately, it’s easy to activate IRMAA when you first retire due to the two-year look back feature,” Miller said. “You can also easily get hit with the benefits if you are enrolled in Medicare but still work full-time. It’s a feature of Medicare that really makes retirees angry — and for good reason. You pay more for health insurance, but you don’t get anything extra in return.”
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If you haven’t yet reviewed your Medicare coverage for next year, perhaps the urgency of a deadline will help. There’s still time to shop around and save on your Medicare coverage. Open registration for 2025 has started and ends on December 7. If you qualify for Medicare, you can compare 2025 coverage options with Original Medicare, Medicare Advantage and Part D prescription drug plans.
Medicare’s online searchable Plan Finder on the Medicare.gov site allows you to view plan options. If you have a limited income, you may qualify for Medicare’s Extra Help, which covers Part D premiums and deductibles and limits drug costs. Free one-on-one counseling is available through the State Health Insurance Assistance Programs (SHIP).
“It is particularly important to review your plan this year,” Juliette Cubanski, deputy director of the Medicare Policy Program at KFF, previously told Yahoo Finance.
“We’re seeing a number of changes, not just in premiums, but also in cost sharing, deductibles and aspects of coverage that can impact what people pay, but also their ability to access the medications they need,” she says. said.
Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and author of fourteen books, including ‘In control at 50+: how to succeed in the new world of work” and “Never too old to get rich.” Follow her on X @kerryhannon.
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