Social Security Raise Arrives in January, but Medicare Costs Will Take a Bite

Older Americans will get a bigger Social Security check starting in January, but a rising Medicare cost will eat into part of the raise. The Social Security Administration announced on October 14 that benefits will go up 3.6 percent in 2027, the largest cost-of-living raise in several years.

The Motley Fool reported on October 31 that the 3.6 percent increase adds about $75 a month to the average retiree's benefit. The raise takes effect with January 2027 payments, and people do not need to do anything to receive it.

The catch is Medicare. Most retirees have their Part B premium pulled straight out of their Social Security checks. According to Medical Daily, the standard Part B premium is projected to rise $6.60 a month in 2027, to about $209.50, based on the latest Medicare trustees report. That increase would use up part of the average retiree's monthly raise, leaving roughly $68 more per month for a typical retiree.

There is some unusual good news this year. The Motley Fool reports that the projected Part B increase of about 3.25 percent is smaller than the 3.6 percent Social Security raise. If that holds, it would be the first time since 2023 that the cost-of-living raise climbs faster than the Part B premium, so retirees would keep more of their increase.

One important note: these Part B figures are still projections. The Centers for Medicare and Medicaid Services, which runs Medicare, is expected to announce the official 2027 premium and deductible amounts later in November. Until then, the exact numbers could change.

A rule called the hold harmless provision offers some protection. It generally prevents a Part B premium increase from pushing a person's net Social Security payment below what it was the year before. That means most beneficiaries will not see their checks shrink because of the premium. The rule does not apply to everyone, including people who are new to Medicare or who pay higher income-based premiums.

Retirees who want to plan ahead can watch for the official announcement from Medicare and review their benefit notice, which Social Security will post in late November.