Medicare Part B Premium Eating Your Social Security Raise?

By Robert Thompson, CPA, EA (Enrolled Agent)

Certified Public Accountant (CPA) • Updated May 29, 2026

The Phone Call That Changed How I Think About COLA Raises

Last February, a longtime client named Margaret — a 71-year-old retired schoolteacher in suburban Ohio — called my office practically in tears. She’d opened her January Social Security statement expecting to see her 2.8% cost-of-living adjustment reflected in a noticeably bigger check. Instead, the increase was barely enough to cover a tank of gas.

“Robert, where did my raise go?” she asked. The answer was painfully simple: her Medicare Part B premium had jumped from $174.70 to $185.00 per month, swallowing roughly a third of her COLA increase before she ever saw a dime. After 34 years of teaching and a decade of careful retirement planning, Margaret felt like the system was working against her.

She’s not alone. In my 20 years as a CPA and Enrolled Agent working primarily with retirees, I’ve watched this pattern repeat itself every single January. But 2026 has been particularly brutal, and what I’m hearing from clients tells me we need to have an honest conversation about what’s really happening to retirees’ income — and what you can actually do about it.

The Math Behind Your Disappearing COLA

Let’s lay this out with real numbers, because I think every retiree deserves to see exactly where their money is going. The Social Security Administration announced a 2.8% COLA for 2026, which took effect in January. For the average retired worker receiving about $1,976 per month in 2025, that translates to roughly $55 more per month.

Sounds reasonable — until Medicare takes its cut. The standard Medicare Part B premium rose to $185.00 per month in 2026, up $10.30 from 2025’s $174.70. That single increase consumed approximately 18.7% of the average retiree’s COLA. But for retirees with lower-than-average benefits — and roughly half of all beneficiaries receive less than the average — the bite is even more severe.

For someone receiving $1,400 per month in Social Security (which is common among women who took time out of the workforce to raise children), the 2.8% COLA adds just $39.20. That same $10.30 Part B increase now eats 26.3% of their raise. Add in the Part D premium increases many enrollees are seeing, and you can easily lose a third or more of your COLA to healthcare costs alone.

As I explain in more detail in my analysis of how Social Security’s 2.8% COLA is failing retirees in 2026, the fundamental problem is structural: healthcare inflation consistently outpaces the Consumer Price Index used to calculate COLA adjustments.

The pattern is unmistakable: the less you receive in Social Security, the harder Medicare premiums hit your raise. This is a regressive dynamic that disproportionately affects the retirees who can least afford it.

Why IRMAA Might Be Your Biggest Hidden Enemy

Here’s something I see catch clients off guard constantly: Income-Related Monthly Adjustment Amounts, or IRMAA. If your modified adjusted gross income (MAGI) exceeded $106,000 as a single filer or $212,000 as a married couple filing jointly in 2024, you’re paying significantly more than the standard $185.00 Part B premium in 2026.

What I see most often is retirees who trigger IRMAA surcharges without realizing it — often because of a one-time event like selling a rental property, taking a large IRA distribution, or even converting a traditional IRA to a Roth. I had a client last year who sold his late mother’s house, reported a $140,000 capital gain, and was shocked when his Medicare premium nearly tripled the following year.

The Two-Year Lookback That Trips People Up

Medicare uses your tax return from two years prior to determine your current premium. So your 2024 income determines your 2026 Part B premium. This lag creates a planning opportunity that too many retirees miss entirely.

If you know you’ll have a high-income year — say you’re planning a Roth conversion or expecting to sell an asset — you can sometimes time that event strategically. And if you’ve already been hit with an IRMAA surcharge due to a life-changing event (retirement, divorce, death of a spouse, loss of pension), you can file Medicare form SSA-44 to request a premium reduction based on your current, lower income.

I filed SSA-44 forms for three different clients in the first quarter of 2026 alone. Two of them received premium reductions within 60 days. The third is still pending, but I’m optimistic. This is money sitting on the table that many retirees simply don’t know to claim.

Seven Strategies to Fight Back Against Rising Medicare Costs

Margaret and I spent an afternoon going through her entire financial picture. What we found — and what I recommend to nearly all my retired clients — is a multi-pronged approach. No single tactic solves the problem, but together, they can meaningfully protect your income.

1. Review your Medicare plan annually during Open Enrollment (October 15 – December 7). I cannot stress this enough. The plan that was cheapest last year may not be cheapest this year. In 2026, several Medicare Advantage plans restructured their cost-sharing, and some Medigap plans adjusted premiums significantly. Compare plans at Medicare.gov or call 1-800-MEDICARE.
2. File SSA-44 if you’ve experienced a qualifying life-changing event. This includes retirement, reduction in work hours, death of a spouse, divorce, loss of income-producing property, or loss of pension. If your income has dropped since the tax year Medicare is using to calculate your premium, this form can save you hundreds or even thousands per year.
3. Manage your MAGI strategically to avoid IRMAA thresholds. Work with a CPA or financial planner to project your income. Even being $1 over the threshold can cost you an extra $800 or more annually in Part B premiums alone. Timing IRA withdrawals, Roth conversions, and capital gains realizations can keep you under the line.
4. Maximize your use of Health Savings Account (HSA) funds if you have them. If you contributed to an HSA before enrolling in Medicare, those funds can be used tax-free for qualified medical expenses, including some Medicare premiums (Parts A, B, C, and D — but not Medigap). This effectively reduces your out-of-pocket healthcare costs without increasing your taxable income.
5. Explore Medicare Savings Programs (MSPs). If your income and resources are limited, your state may pay some or all of your Medicare premiums. The Qualified Medicare Beneficiary (QMB) program, for example, covers Part A and Part B premiums, deductibles, coinsurance, and copayments. Income limits vary by state but are generally around 100% of the federal poverty level.
6. Consider the Extra Help / Low-Income Subsidy (LIS) program for Part D. If you qualify, this program can dramatically reduce your prescription drug costs. In 2026, with the new $2,000 annual out-of-pocket cap on Part D taking full effect, this program becomes even more valuable for those who qualify.
7. Coordinate benefits if you have access to employer or federal retiree coverage. FEHB enrollees, veterans with VA benefits, and retirees with employer-sponsored coverage should carefully analyze how their plans interact with Medicare. In some cases, delaying Part B enrollment (with proper documentation) or coordinating coverage can reduce total costs. Get this wrong, though, and you could face late-enrollment penalties for life — so consult a professional.

For Margaret, strategies 1, 3, and 4 made the biggest difference. We switched her Part D plan (saving $47/month), adjusted the timing of her small IRA withdrawals to stay below an IRMAA threshold, and tapped her late husband’s remaining HSA balance for dental expenses she’d been paying out of pocket.

The Bigger Picture: Inflation’s Compounding Effect on Retirement

What worries me most — and I say this as someone who reviews retirement budgets every single week — is the compounding effect of inflation on fixed incomes. Medicare premiums are just one piece. Grocery prices have risen approximately 25% since 2020, according to Bureau of Labor Statistics data. Property taxes, home insurance, and utility costs have climbed steadily in most states. Prescription drug prices, despite recent legislative efforts, remain stubbornly high for many brand-name medications.

The COLA adjustment is supposed to keep pace with inflation, but as I’ve documented in my discussion of 6 Social Security COLA myths costing retirees money in 2026, the CPI-W index used to calculate COLA doesn’t accurately reflect the spending patterns of people over 62. Seniors spend disproportionately more on healthcare and housing — two categories that have consistently outpaced general inflation.

Recent survey data shows that roughly 40% of retirees depend on Social Security for at least half of their income, and about 14% rely on it for 90% or more. For these Americans, a COLA that gets partially consumed by Medicare premiums isn’t just an inconvenience — it’s a genuine threat to financial stability.

Looking Ahead: The 2027 COLA Forecast and What It Means for You

Early projections for the 2027 COLA suggest an increase somewhere between 2.2% and 2.5%, depending on how inflation trends play out through the third quarter of 2026. If those numbers hold, and Medicare Part B premiums rise again (as they almost certainly will, based on medical cost trends reported by Investopedia and CMS actuarial data), retirees could face an even tighter squeeze next year.

I often tell my clients: hope for the best, but plan for the worst. If your retirement budget is already strained, waiting until January to discover how much of your COLA survived is a dangerous approach. Start planning now — in May and June — so you have time to make strategic adjustments before the October enrollment window opens.

Three Questions Every Retiree Should Ask This Month

Before I let Margaret go that afternoon, I gave her the same three questions I give every retired client during our mid-year check-in:

• “What’s my projected MAGI for 2026, and am I near an IRMAA threshold?” If you are, even small adjustments — delaying a capital gain, spreading out an IRA distribution — can save you real money on Medicare premiums in 2028.
• “Am I in the right Medicare plan for my actual usage?” Not last year’s usage. This year’s. If your prescriptions changed, your doctors changed, or your health changed, your plan should change too.
• “What’s my backup plan if my expenses rise faster than my income?” This might mean exploring part-time work, downsizing housing, or tapping savings differently. As I’ve shared before, there are creative ways retirees can turn hobbies into steady cash without overextending themselves.

Margaret’s Update — And Why I’m Sharing Her Story

I spoke with Margaret again last week. After implementing the changes we discussed, she’s netting about $62 more per month than she was in December 2025 — not a fortune, but enough to cover her rising grocery bill and put a small amount into her emergency fund. More importantly, she told me she feels like she understands the system now instead of being victimized by it.

“I spent my career teaching kids to think critically,” she said. “I just never applied it to my own Medicare statement.”

That’s why I’m sharing her story. Not because every retiree will save the same amount, but because the tools to fight back against rising Medicare Part B premiums exist — they’re just not advertised. You have to know to ask. You have to know where to look. And ideally, you need someone in your corner who understands both the tax code and the Medicare system well enough to connect the dots.

If you take one thing from this article, let it be this: your Social Security COLA raise is not a gift from the government. It’s your money, calculated to help you keep pace with rising costs. When Medicare premiums consume a disproportionate share of that raise, you have every right — and several legitimate tools — to push back.

Don’t wait until January to find out what’s left. Start planning today.

About Robert Thompson, CPA, EA (Enrolled Agent)

Certified Public Accountant (CPA)

Robert Thompson is a Certified Public Accountant and IRS Enrolled Agent with over 20 years of experience specializing in retirement tax planning. He has helped thousands of American retirees navigate the tax implications of Social Security benefits, required minimum distributions, 401(k) and IRA withdrawals, and estate planning. At Daily Trends Now, Robert breaks down complex tax rules into clear, actionable strategies that help seniors keep more of their hard-earned money.