Medicare premiums rise for 2025, nicking retirees' Social Security checks

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Seniors awaiting an increase in their Social Security checks next year may be upset to discover that a chunk of that extra money is already spoken for.

The Centers for Medicare and Medicaid Services (CMS) announced that 2025 monthly Part B premiums will climb to $185, an increase of $10.30 from $174.70 in 2024. And the annual Part B deductible, which most people must pay before their Medicare coverage begins, will rise by $17, or 7%, to $257 from $240.

That news follows the Social Security Administration’s announcement of a 2.5% cost-of-living adjustment (COLA) for 2025, which will add about $50 to the average monthly benefit of roughly $1,900, according to the SSA.

Ideally, that bump in benefits would provide some breathing room to the more than 72 million retired senior citizens and disabled workers who have grappled with higher prices in recent years.

Next year, maybe not.

“This marks the second year in a row where the Part B premium has risen by nearly 6%,” Mark Miller, a retirement expert and author of “Retirement Reboot,” told Yahoo Finance.

“The high dollar amount of the increase will squeeze the Social Security COLA for seniors,” he said. “The squeeze will be most painful for people with lower benefit amounts.”

For example, Miller said, someone with a $1,200 monthly benefit will see their COLA reduced to 1.6% once the Medicare increases are factored in. But for someone with a high benefit of $3,500, their COLA still increases by 2.2 percent.

In addition, the Medicare Part A deductible that beneficiaries pay if admitted to the hospital will be $1,676 in 2025, an increase of $44 from $1,632 in 2024. Coinsurance amounts for hospital and skilled nursing care will also rise by 2.7 percent.

Not everyone will feel the pinch. Under Social Security “hold harmless” rules, a person’s Part B premium increase cannot be larger than their COLA. People receiving less than about $415 in monthly Social Security benefits will not be charged the full Part B premium increase, per Phil Moeller, a Medicare and Social Security expert author of the book, “Get What’s Yours for Medicare.”

In general, people who receive Social Security benefits are notified by mail in early December about their new benefit amount. Most beneficiaries can also view their COLA notice online through their personal Social Security account at ssa.gov/myaccount/.

Read more: How to find out your 2025 Social Security COLA increase

The more you earn, the more you pay

Since 2007, a beneficiary’s Part B monthly premium is based on his or her income. About 8% of Medicare users earn too much to qualify for the standard Part B and Part D premiums and must pay the surcharges, known as Income-Related Monthly Adjustment Amounts (IRMAA). Details can be found on the CMS fact sheet.

This year, Medicare beneficiaries with income over $106,000 (for single tax filers), $212,000 for joint filers and $106,000 (for married people that file separately) will pay the surcharge. For these beneficiaries, total monthly Part B premiums will range from $259 to $628.90.

Your eligibility is determined by the Social Security Administration. The surcharge is calculated on a sliding scale with five income brackets topping out at $500,000 and $750,000 for individual and joint filing, respectively. These figures change annually with inflation.

Calculations have a two-year lag time. Whether you pay a surcharge in 2025 depends on the income shown on your 2023 tax returns.

“Unfortunately, it’s easy to trigger IRMAA when you first retire due to the two-year look back feature,” Miller said. “It’s also easy to encounter the surcharges if you’re enrolled in Medicare but still working full time. It’s a feature of Medicare that really angers retirees — and with good reason. You’re paying more for health insurance but not receiving anything additional in return.”

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Black Friday sale?

If you haven’t reviewed your Medicare coverage for next year, maybe the urgency of a deadline will help. There is still time to shop around to save on your Medicare coverage. Open enrollment for 2025 is underway, ending on Dec. 7. If you’re eligible for Medicare, you can compare 2025 coverage options among Original Medicare, Medicare Advantage, and Part D prescription drug plans.

Medicare’s online searchable Plan Finder on the Medicare.gov site allows you to review plan options. If you have a limited income, you might be eligible for Medicare’s Extra Help, which covers Part D premiums and deductibles and caps drug costs. Free one-on-one counseling is available through state Health Insurance Assistance Programs (SHIP).

“It’s particularly important to review your plan this year,” Juliette Cubanski, deputy director of the program on Medicare policy at KFF, previously told Yahoo Finance.

“We’re seeing some changes not just in terms of premiums, but in terms of cost-sharing, deductibles, and aspects of coverage that could affect both what people pay, but also their ability to access the medications that they need,” she said.

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.

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