Washington, D.C. – Health care costs for retirees are climbing at a pace that threatens to overshadow the expected Social Security cost-of-living adjustment (COLA) for 2026. Experts warn that rising Medicare Part B premiums may absorb much or even all of the benefits from the COLA increase, leaving older Americans struggling to keep up with essential expenses.
The Social Security Administration is projected to increase benefits by 2.7% next year. However, standard Medicare Part B premiums are expected to surge by an alarming 11.6%, which could significantly reduce the financial relief usually provided by COLA adjustments. This disparity highlights a growing challenge for retirees dependent on fixed incomes.
Health Care Costs Outpacing COLA Increases
For years, cost-of-living adjustments have lagged behind the true rise in expenses borne by seniors. Research from The Senior Citizens League shows that between 2010 and 2024, COLAs increased Social Security benefits by 58%, whereas inflation drove up seniors’ daily costs by a staggering 73% during the same period.
According to Nancy Ochieng, senior policy analyst at KFF’s Medicare policy program,
“Medicare Part B and D premiums and cost sharing alone account for nearly a quarter of average monthly Social Security benefits.”
She further notes that for many Medicare beneficiaries, out-of-pocket health care spending consumes a larger portion of income than any other expense.
- Over 7 million Medicare recipients spent more than 10% of their income on Part B premiums in 2024.
- Essential services such as dental care, eye exams, in-home care, and nursing home stays are often not covered by Medicare.
- Additional supplemental coverage premiums contribute further to retirees’ financial strain.
The Growing Financial Burden on Retirees
The difficulties posed by rising health care costs are compounded for retirees who typically live on fixed incomes. As Tina Ambrozy, head of strategic customer solutions at Nationwide, explains,
“Health care is one of the most unavoidable expenses in retirement, and rising costs only add to the pressure today’s retirees are already feeling.”
A recent Fidelity report from July 2025 estimates that a 65-year-old retiree can expect to spend about $172,500 on health care over the course of retirement, with nearly 44% of that cost allocated to Medicare Part B and Part D premiums alone.
This data underscores the crucial need for policymakers and stakeholders to consider ways to mitigate health care expenses for seniors, ensuring that Social Security benefits remain effective in maintaining retirees’ financial well-being.
What Does This Mean for Social Security Beneficiaries?
The anticipated 11.6% rise in Medicare Part B premiums threatens to absorb the entirety of the 2026 COLA increase, leaving many retirees without any real increase in disposable income. This challenge persists even as rising inflation continues to impact seniors’ cost of living.
Experts emphasize that without meaningful intervention or reforms, many older Americans will see little relief from Social Security adjustments given the upward pressure of healthcare costs.
Looking Ahead: The Need for Policy Solutions
Addressing the growing gap between rising retiree expenses and Social Security benefits will require comprehensive strategies, including measures to control Medicare premiums and expand coverage for essential services not currently included.
- Increasing awareness of the financial challenges faced by Medicare beneficiaries.
- Evaluating Medicare reforms to better align premiums with retirees’ income levels.
- Strengthening support systems to reduce out-of-pocket expenses for healthcare.
Without effective solutions, many retirees may find themselves financially vulnerable despite cost-of-living increases, as health care expenses continue to grow unabated.
