[Editor’s note: Social Security’s 2026 cost-of-living adjustment (COLA) will be 2.8 percent in 2026.]
Social Security’s automatic annual cost-of-living adjustment is intended to ensure that benefits don’t erode over time. It is one of the key reasons Social Security is superior to private sector alternatives.
However, the current COLA measure is inadequate to fully cover rising costs, especially health care costs. That’s especially true this year. Medicare premiums are projected to rise by about 11.6 percent, around twice as large an increase as last year. For the average beneficiary, this will consume almost half of their COLA increase. For some beneficiaries, it will consume their entire COLA increase — even as the costs of other necessities balloon due to the Trump tariffs.
For those Social Security beneficiaries who aren’t yet eligible for Medicare and rely on the ACA marketplaces to purchase health insurance, the situation is even worse. ACA premiums are projected to skyrocket next year, with those over 50 hit hardest. For many of these beneficiaries, the COLA increase won’t come close to covering their increased health care premiums.
The solution is two fold: Congress should update the formula used to calculate annual COLAs to more accurately measure rising costs. Congressional Democrats have introduced legislation to do just that, along with other improvements to Social Security.
Additionally, Congress must act to bring down health care costs, so that seniors and people with disabilities can keep their hard-earned Social Security benefits. Unfortunately, Republicans have chosen a weeks-long government shutdown instead.
Here’s more from Just Care:
- Expand Social Security, don’t means test it
- 2025: Our Social Security system remains strong!
- 2025: Planning for health care costs in retirement
- Health care costs are prohibitive for one in three people with Medicare
- Will older Americans get the long-term care they need?
