2. Medicare Part B Premium Hikes

For the vast majority of retirees, Medicare Part B premiums are deducted directly from their Social Security checks. Because of this automatic deduction, your net Social Security payment is heavily dependent on Medicare costs. If Medicare premiums rise faster than your COLA, your effective raise could be entirely wiped out.

In 2026, the standard Medicare Part B premium increased to $202.90 per month. Historically, healthcare costs rise at a faster pace than general inflation. This means Medicare premiums often take a disproportionate bite out of annual Social Security increases. When you view your 2027 Social Security statement, you must factor in the updated Part B premiums to understand your actual cash flow.

There is a protective measure in place called the hold harmless provision. This rule ensures that your Medicare Part B premium increase cannot be larger than the dollar amount of your Social Security COLA. It prevents your actual check amount from dropping from one year to the next strictly due to standard Medicare hikes. However, the hold harmless rule does not protect everyone. If you are subject to high-income surcharges or if you are newly enrolling in Medicare, you will bear the full brunt of 2027 premium increases.