Why the 2027 Social Security COLA Could Be Eaten by Medicare Premiums Again

If there’s one announcement Social Security recipients eagerly await all year, it’s news of a cost-of-living adjustment, or COLA. The Social Security Administration typically announces COLAs in October, giving seniors a few months to plan for that raise to hit their bank accounts in January.

In 2026, Social Security benefits got a 2.8% COLA. And initial estimates from the Seniors Citizens League are calling for a 2.8% COLA in 2027 as well.

Based on today’s average monthly retirement benefit of $2,076, a 2.8% COLA should, in theory, boost the typical senior’s paycheck by about $58 next year. In reality, seniors may be looking at a much smaller raise. And it all boils down to rising Medicare costs.

Will Medicare premium hikes whittle down seniors’ 2027 COLA?

Just as Social Security COLAs change from year to year, so too do Medicare costs. Medicare Part B’s standard monthly premium tends to rise annually. In 2026, it jumped by $17.90 to $202.90.

The problem is that seniors who are enrolled in Medicare and Social Security at the same time pay their Part B premiums out of their monthly benefits automatically. So when there’s a large Part B hike and a not-so-large COLA, it can make for a tough situation.

That’s what happened in 2026. And 2027 is, unfortunately, shaping up to be a repeat.

Of course, this is nothing new. Medicare Part B premiums have a long history of rising at a faster pace than Social Security COLAs.

Between 2005 and 2024, Part B premiums rose an average of 5.5% per year, while Social Security COLAs averaged just 2.6%, according to independent analyst Mary Johnson. That $58 boost we talked about earlier for 2027, assuming a repeat 2.8% COLA? It doesn’t account for Medicare hikes.

Here’s an overview of how much extra money the average Social Security recipient might get in 2027 based on a 2.8% COLA and different Medicare scenarios:

What this means is that even if next year’s Part B increase is only half of this year’s, it still puts less than $50 extra per month in seniors’ pockets, assuming a 2.8% COLA.

How to offset higher Medicare costs

There’s no getting around the fact that Medicare increases could easily eat into 2027’s Social Security COLA. But if you’re worried about the impact of Part B hikes on your finances, know that there are steps you can take to offset that hit.

First, shop carefully for Medicare coverage. You’ll have an opportunity to do so this fall during open enrollment. Review your plan choices carefully and look out for cost-saving opportunities, whether you’re signing up for a Medicare Advantage plan or a Part D drug plan.

Also, find ways to boost your overall income and supplement your Social Security checks. That could mean working part-time or even renting out a portion of your home if you own it.

Medicare hikes hitting Social Security COLAs isn’t a new trend. It’s something that tends to happen most years. The best thing you can do is be prepared for that to happen, and to take steps to save money and boost your income elsewhere.