Social Security 2026 COLA estimated at 2.7%, but much of it will go to Medicare Part B
Social Security recipients could get a 2.7% raise next year, up from last month's estimate of 2.5%, based on the latest inflation report, according to a new estimate.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the index used to calculate the annual adjustment to Social Security benefits, gained 2.6% in June. Overall inflation rose 2.7% from May's 2.4% increase. The Federal Reserve's inflation goal is 2%.
A cost-of-living adjustment, or COLA, is meant to help Americans keep up with inflation so they can maintain their standard of living year to year. But the hikes are falling short, especially when Medicare premiums, alone, are rising at a faster clip, seniors say. That happened in 2025 and is set to do so again next year.
“It’s not uncommon for Part B premiums to consume much or even all of the annual COLA, leaving little extra to cover other big cost increases,” says Mary Johnson, an independent Social Security and Medicare policy analyst.
How fast are Medicare premiums rising?
Medicare Part B costs are rising several times faster than its average rate of increase in recent years.
According to the 2025 Medicare Trustees annual report released in June, the Medicare Part B premium for 2026, is expected to increase to $206.50 from $185.00 in 2025 for a jump of $21.50 per month, or 11.6%. That’s the largest Part B increase since 2022 when it rose 14.5%.
The Social Security Administration automatically deducts the Part B premium cost from Social Security benefits for most Medicare recipients. A bigger Medicare bite means monthly checks will shrink.
“Medicare recipients are quick to point out that Part B premiums can frequently take much or even all of the annual COLA, leaving little extra to cover other big cost increases, such as housing or groceries,” Johnson said.
Who hurts the most?
If COLA rises by 2.7%, which is in line with the average 2.6% increase over the past 21 years, and Medicare Part B increases by 11.6%, those with the lowest Social Security benefits would hurt the most.
"If the COLA in 2026 is 2.7%, a Part B premium jump of $21.50 would take the entire COLA of beneficiaries who receive around $800 or less," Johnson said. "This is especially the case for all individuals who receive a low Social Security retirement, spousal, or widow or widower’s benefit."
How is COLA calculated?
The Social Security Administration bases its COLA each year on average annual increases in the consumer price index for urban wage earners and clerical workers (CPI-W) from July through September. That means July inflation numbers will be especially important to pay attention to.
The index for urban wage earners largely reflects the broad index the Labor Department releases each month, although it sometimes differs slightly. Last month, the overall consumer price index rose 2.7% and the index for urban wage earners increased 2.6%.
How many people receive Social Security benefits?
In May, 74.269 million people received Social Security, according to the Social Security Administration. These beneficiaries include retired workers, disabled workers, survivors of deceased workers, and those receiving Supplemental Security Income (SSI).
The average monthly benefit was $1,860.64 in May.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.