For Medicare beneficiaries who receive Social Security benefits, the annual Cost of Living Adjustment (COLA) can offer some financial relief from increased costs and inflation. We have details on the 2025 adjustment.
Beneficiaries receive the annual COLA via their Social Security benefit checks. It’s also not unusual that the COLA affects Medicare Part B premiums. We’ll discuss this year’s adjustment and what it means for your Medicare clients.
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What Can COLA Clients Expect for 2025
The Social Security Administration (SSA) has announced the COLA for 2025 will be 2.5 percent. This year’s adjustment is slightly lower than last year’s 3.2 percent adjustment. A 2025 COLA increase of 2.5 percent means that your clients can expect to see an increase of about $49 in their Social Security benefit checks.
Note: To calculate the COLA, the U.S. Bureau of Labor Statistics uses data reported in the Consumer Price Index (CPI), which measures the costs of goods and services. According to the latest CPI, there was a 2.4 percent increase in inflation over the previous year.
Your clients should receive a personalized letter from the SSA in December providing specific benefit details. This information is also available online. If your client has a my Social Security account, they will find their notice in the Message Center.
This year, beneficiaries will receive a newly designed COLA notice that the SSA hopes will make it easier for consumers to find the information they need most. The improved COLA notice is only one page, uses plain and personalized language, and provides exact dates and dollar amounts of new benefit amounts and any deductions.
How Does the COLA Affect Medicare Premiums?
A 2025 COLA increase of 2.5 percent means that your clients can expect to see an increase of around $49 in their Social Security benefit checks.
Typically, an increase in COLA foreshadows a rise in Medicare Part B premiums. Since Medicare premiums are directly removed from Social Security benefit checks, your clients could feel less financial relief from the adjustment if Medicare Part B premiums increase.
However, even if numbers were to increase, the hold harmless provision requires that “no increase in Part B premiums can reduce a Social Security recipient’s monthly check below what it was in the previous year.” Rest assured, your clients will be protected, even though the COLA is lower than last year’s.
When Will the Latest COLA Take Effect?
Benefit checks arriving in January 2025 will begin to reflect the annual increase. Exact payment dates depend on beneficiaries’ birth dates:
- Born the 1st through the 10th of the month: Second Wednesday of the month — January 8, 2025
- Born on the 11th through the 20th: Third Wednesday of the month — January 15, 2025
- Born on the 21st through the 31st: Fourth Wednesday of the month — January 22, 2025
Beneficiaries who receive Supplemental Security Income (SSI) will see the new COLA reflected in their payment on December 31, 2025.
The COLA increases Social Security payments for seniors, helping them cover Medicare premiums more easily. This addition to their monthly benefits allows them to afford everyday expenses, while also helping to reduce the financial strain caused by inflation on both the economy and their personal finances.
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