Some people will not keep their entire 3.6% Social Security COLA. Here’s how to know if you’re one of them
Your Social Security increase for 2027 looks promising on paper, but a quiet deduction could reduce what actually lands in your bank account. Whether you feel the full benefit depends on a factor that most recipients overlook until it is too…
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Recently, seniors on Social Security received some good news about their upcoming cost of living adjustment, or COLA. The Social Security Administration announced that benefits would increase by 3.6% in 2027.
For comparison, Social Security benefits got a COLA of 2.8% in early 2026. Many seniors were unhappy with a less than 3% increase when it was announced last October, and for good reason.
Inflation has been above 2.8% COLA for much of the year. As a result of the conflict in the Middle East, oil prices have skyrocketed, impacting overall spending.
It is too early to know whether the 2027 Social Security COLA will hold up well against inflation. If inflation moderates or declines, this 3.6% increase could end up helping seniors significantly. If inflation picks up, a COLA of 3.6% could still fall flat.
But even if you choose to view Social Security’s upcoming 3.6% COLA as a good thing, know that you may not be able to pocket your entire increase. Although this is not the case for all Social Security recipients, some seniors could see their 2027 COLA significantly reduced.
Will a big increase in Medicare premiums reduce your COLA?
If you are not enrolled in Medicare, you pay no premium on your Social Security checks. But if you have Medicare, Part B, which covers outpatient care, charges a monthly premium that is automatically deducted from your Social Security benefits.
This year, the standard monthly Part B premium is $202.90, but high earners subject to surcharges known as IRMAA may pay more.
The cost of Medicare Part B is expected to increase in 2027. At this time, we do not know what this increase will cause.
Part B premiums increased by $17.90 per month in 2026, a particularly large increase. The future increase could be a little less, but it is not guaranteed.
Regardless, if you have both Medicare and Social Security, you won’t be able to keep your entire COLA, because any increase applicable to Part B will come directly from your increase. The only way to keep your full COLA is if the cost of Part B does not increase at all, which is not expected to be the case in 2027.
Don’t calculate these numbers yet
The fact that seniors enrolled in Social Security and Medicare pay Part B on their benefits is actually a good thing. Indeed, the people on board this boat are protected by the hold harmless provision which states that Social Security checks cannot decrease from one year to the next if an increase in Part B exceeds the amount provided by a COLA.
In other words, let’s say there is a small Social Security COLA over a year, so your checks only increase by $7 per month. If the cost of Medicare Part B increases by $8 per month, you will lose $1 of your benefits. But thanks to the safe harbor clause, that won’t happen.
Still, it can be frustrating to see your COLA reduced by Medicare premium increases. And it can be just as frustrating to see Social Security finally announce an official COLA only to have to wait for an announcement from Medicare.
But if you’re enrolled in both, don’t start finalizing your 2027 budget just yet. You’ll need to see what Medicare has in store for you so your numbers are as accurate as possible.
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