Many retirees are no doubt anxiously awaiting to find out how much their Social Security benefits will increase in 2024. The big announcement will come next week.
However, the Social Security cost-of-living adjustment (COLA) isn't the only factor that will impact retirees' pocketbooks. There's another question for which they still don't have an answer: How much will Medicare Part B premiums increase next year?
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Get ready to pay more
The Centers for Medicare and Medicaid Services (CMS) typically announces the Medicare Part B premiums for the next year sometime between mid-October and early November. The exact amount of the premium increase won't be known until that announcement comes.
But is it a safe assumption that Medicare Part B premiums will rise? After all, retirees enjoyed a reduction in their Part B premiums in 2023. This relatively rare scenario occurred because CMS had previously increased premiums in anticipation of higher Medicare costs with Biogen's Alzheimer's disease drug Aduhelm. However, Medicare ended up not covering Aduhelm, leading to the premium decrease this year.
It's not uncommon for Medicare Part B premiums to not increase, though. The average monthly cost didn't change at all from 2017 to 2018. It didn't go up between 2013 and 2016, either.
Unfortunately, a premium increase is almost certainly on the way next year. In March 2023, the Medicare Trustees released their annual report, where they projected that monthly Part B premiums would increase from $164.90 in 2023 to $174.80 in 2024 -- a 6% jump.
Probably an even bigger premium hike
This level of increase isn't all that bad, put into the context of the previous two decades or so. Since 2002, Medicare Part B premiums have risen more than 6% in nine years. However, don't be surprised if there's an even bigger premium hike.
The Medicare Trustees report that projected Part B premiums would rise around $10 per month came out before Medicare announced that it would cover another Alzheimer's disease drug, Leqembi. This coverage decision could be a huge factor in your Part B premiums next year.
Eisai and Biogen, the makers of Leqembi, have set a price tag for the drug at $26,500 per year of treatment. Nonprofit health policy researcher KFF thinks that Leqembi could become the third-most expensive drug covered by Medicare Part B.
The Senior Citizens League, a nonpartisan group that advocates for seniors, estimated earlier this year that Medicare's costs for Leqembi and related services for the therapy could add around $5 per month to Part B premiums. If this estimate is on target, your Medicare Part B premium could increase by close to $15 (or around 9%) in 2024.
Chipping away at your COLA
Your Social Security COLA will almost certainly more than offset the increased Medicare Part B premiums. It's likely that the 2024 COLA will be in the ballpark of 3.2%. The average Social Security retirement benefit in August 2023 was a little over $1,792. A 3.2% increase to this average would amount to more than $57.
However, the Medicare Part B premium increase could, in effect, chip away at your COLA, since Part B premiums are deducted from Social Security payments. If the Senior Citizens League's prediction that Part B premiums rise by $15 comes true, more than one-quarter of your annual Social Security benefits increase will go toward paying the higher Medicare Part B costs.
Again, the final numbers for the 2024 Social Security COLA and Medicare Part B premiums haven't been announced yet. But you should be prepared for the good news from Social Security to be dampened somewhat by the bad news from Medicare.
