Rising Medicare Costs Can Eat Into Social Security COLA, Here's How to Protect Your Check

Millions of retirees await the Social Security Administration's annual COLA each fall. The projected 2027 COLA is 3.5% or 3.6%, but according to TheStreet, much of the raise is often swallowed by Medicare before retirees see it.
Social Security's COLA is based on the CPI-W, while Medicare premiums are driven by national healthcare spending, which is rising faster. For most retirees enrolled in both programs, Part B premiums are withheld directly from Social Security benefits. Even when the "Hold Harmless" provision applies, it only prevents the net check from shrinking and does not guarantee retirees keep their raise.
Four strategies to protect your benefit:
- Audit coverage during Medicare Open Enrollment (Oct. 15 to Dec. 7): Compare Part D drug plans and weigh Medicare Advantage against Original Medicare, making sure your doctors and hospitals stay in-network.
- Watch for IRMAA surcharges: If your modified adjusted gross income crosses certain thresholds, extra charges stack on top of Part B and Part D premiums. IRMAA looks at your tax return from two years prior, and retirees whose income dropped due to retirement, divorce, reduced work, or a spouse's death can appeal using Form SSA-44.
- Optimize income sequencing: Large withdrawals from traditional 401(k)s or IRAs can spike taxable income and trigger higher Medicare withholdings. Qualified Roth IRA distributions do not count toward MAGI for Medicare pricing.
- Explore savings programs: Medicare Savings Programs can cover Part B premiums for eligible moderate-income retirees, and Extra Help (Low-Income Subsidy) reduces Part D drug costs.