Around this time every year I start to get questions about what the Social Security Cost of Living (COLA) increase might be for next year. Let’s face it, this year has been rough and last year’s increase of 2.8% hasn’t come close to covering the inflation rate of 4.2% we have seen so far this year. So, naturally we seniors are hoping for a large COLA increase to relieve some of the pressure.
Since the actual COLA adjustment won’t be announced until October 14, 2026, we can only speculate based on current events and trends. COLA is determined by subtracting the 3rd quarter consumer price index (CPI) from last year’s 3rd quarter CPI to get the amount we receive. So, everything hinges on the next three months and what happens in the world around us.
Under normal circumstances we could come close to predicting the amount. But let’s face it, these are not normal circumstances. In May The Senior Citizen League (TSCL) predicted a 3.9% COLA increase. While one of their senior analysts, Mary Johnson, says it could go as high as 4.7%. Over the years, their predictions have been spot on. But this number may hold or it may be lower due to reduced tensions in the Strait of Hormuz or increase as, like this morning, worsen. Our ability to predict is solely based on the winds of war and which way they blow.
The average Social Security check is $2,071 and if the 3.9% holds we’ll see an increase of $80.77 a month to $2,151.75. If Johnson is right and we get the inflationary “Trump Bump” it might go to $2,168. But the fact of the matter is that even if we receive 3.9% or 4.7% it still won’t offset some of the additional increases we will see in Medicare costs.
The projected standard Medicare Part B monthly premium for 2027 is $209.50 which is an increase of 3.25% over the current $202.90 being deducted from your Social Security check today.
In addition to the Part B premium increase there will be significant increase to the Part A and Part B deductibles for Original Medicare as well as Part D prescription drug coverage. While the exact final rates for Part A and Part B are pending formal release, the expected projected amounts are:
• Medicare Part A (Hospital): The standard inpatient deductible is projected to be around $1,820 per benefit period up from $1,736 – a 4.84% increase.
• Medicare Part B (Medical): The annual Part B deductible is projected to be approximately $305 up from $283 – a 7.77% increase.
• Medicare Part D (Prescription): The Centers for Medicare & Medicaid Services has established the standard Part D deductible to be $700 up from $650 – a 7.69% increase.
In addition, you can be assured that there will be increases in our supplemental insurance coverage premiums which will further erode any increase we see in COLA. Medigap plans have already seen a significant premium increase over the last few months. Those on MAPD plans won’t find out until October what’s in store for us. But we know it’s coming.
It’s not just healthcare costs that are impacting our lives. This current inflationary trend has impacted the exact core necessities we rely on: energy, food, and housing.
Since January gas prices alone are up 42.2%, with overall energy cost rising 23.5% over the past year. Electricity costs are up 5.9% and natural gas increased by 3.0%. Housing costs continue to go up with a 3.4% year-over-year gain, driven by monthly jumps of 0.3% to 0.4% in rent and owners’ equivalent rent. Food prices are up an overall 3.1%, with fruits and vegetables up 6.1%.
Inflation impacts us all. But for those who live on a fixed income the uncertainty of the future is the hardest. Even if the COLA does end up being pretty big, it’s really important to remember this isn’t a good thing. Since the COLA calculation is directly based on inflation, by definition, it is big only if inflation has surged.
Over the next few months I will be updating the numbers as they become known. As always I will be holding a series of educational community meetings regarding Medicare 2027 starting in September. Watch for those dates.
For those 64 and going on Medicare join us for Medicare 101 on July 13 @ 6pm at our office. Call to reserve your seat.