Each year, seniors on Social Security look forward to seeing their benefits go up. Social Security's cost-of-living adjustments, or COLAs, are automatic and pegged to inflation. So when there's a rise in inflation, benefits increase.
In January, Social Security benefits got a 2.8% COLA, which was a slightly larger raise than the 2.5% COLA that came through in 2025. But while a 2.8% COLA might seem like good news on paper, in practice, it's already falling short due to rising healthcare costs.
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Medicare premium hikes are hurting seniors
Many Social Security recipients are also enrolled in Medicare. While Medicare Part A, which covers hospital care, is free for most enrollees, Part B, which covers outpatient care, charges enrollees a monthly premium that changes from year to year.
Last year, the standard monthly Part B premium was $185. This year, however, it rose to $202.90.
When we do the math, we can see that Medicare Part B's standard premium rose by 9.7% year over year. That's a much steeper increase than the 2.8% raise Social Security beneficiaries got in January. And it helps explain why so many Social Security recipients keep falling behind financially in spite of seeing their benefits go up.
It's not just Medicare
Of course, it's not just the higher cost of Medicare Part B that's hurting seniors today. Many retirees are struggling with exorbitant healthcare costs on a whole.
The Senior Citizens League, an advocacy group, reports that over roughly the past 12 months, 57.6% of seniors have skipped at least one healthcare service due to the cost. The top services older Americans are forgoing are dental care, vision exams, and hearing aids. Incidentally, these are all services that original Medicare doesn't cover.
Why can't Social Security COLAs do better?
Part of the reason Social Security's COLA isn't holding up to inflation stems from a big flaw in how those annual raises are calculated. Social Security COLAs are based on third-quarter changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
However, healthcare isn't a heavily weighted factor in the CPI-W. And the spending patterns of workers tend to differ vastly from the spending patterns of seniors.
So the CPI-W is not a great benchmark for calculating COLAs. For this reason, seniors tend to lose out on buying power, even during periods when COLAs are more generous.
How to cope if you're struggling to cover your healthcare costs
If you're a retiree and get most of your income from Social Security, paying for healthcare may be a struggle. The good news is that there may be some steps you can take to lower your costs and enjoy a bit more financial breathing room.
For one thing, make sure to review your Medicare plan choices each year. Plan formularies and benefits change all the time, and shopping around could leave you with better coverage and lower costs.
It could also pay to look into Medicare Savings Programs, which are state-run programs designed to help low-income seniors. If you're eligible, you could save money on your premiums and deductibles, among other expenses.
Finally, don't hesitate to talk to your providers about ways to lower your costs. That could mean switching to generic medications or signing up for a pharmacy discount program.
Take matters into your own hands
As promising as this year's Social Security COLA may have sounded initially, the unfortunate reality is that it's likely to fail many seniors. And if lawmakers don't change the way Social Security COLAs are calculated, retirees may continue to see those raises disappear before they even feel the benefit due to rising healthcare costs.
So if you're struggling to get by financially even after a 2.8% COLA, know that you're not alone. And know that there may be steps you can take to at least lower your healthcare spending so you can free up money in your budget for other expenses.
