Pensions are on track to get a 2.7% bump in 2026—but an 11.6% jump in Medicare Part B premiums could render that raise useless for millions of retirees. Here’s what’s going on and how to make sure your wallet doesn’t feel shortchanged.
Pensions — what a 2.7% raise really means
A 2.7% cost‑of‑living adjustment (COLA) sounds decent, but on the average $1,860 monthly benefit it’s roughly $50. That’s the entire increase many people are planning around —and it’s only a forecast until the Social Security Administration announces the official number in October. The number comes from the CPI‑W, an inflation yardstick the government averages for July, August, and September each year.
Medicare’s math: the $206.50 problem
Medicare Part B,on the other hand, is projected to jump from $185.00 to $206.50 in 2026. That’s $21.50 more per month… and it comes straight out of your Social Security check for most enrollees.
If your retirement benefit is around $800, your 2.7% COLA is only about $21.60. See the issue? Your entire raise can disappear before it even hits your bank account.
The hold harmless rule says your net Social Security payment can’t go down just because Medicare premiums go up. Good. But it doesn’t guarantee you’ll keep your full retirement check. In many cases, the premium simply swallows most or all of it, and you see only a few dollars extra each month. IRMAA surcharges (paid by higher‑income retirees) aren’t protected at all.
How is COLA actually decided? Well, the government compares the CPI‑W for July–September 2025 with the same months in 2024. Whatever that percentage increase is becomes your 2026 pensions COLA. The official figure comes out in October 2025, and your bigger check starts in January 2026. Until then, 2.6–2.7% is just an informed guess.
Who gets hit hardest—and who doesn’t
Hardest hit: People with lower pensions checks (around $800 or less) because a $21.50 premium hike can wipe out a 2.7% raise.
Also squeezed: Retirees paying IRMAA—they don’t get the hold harmless cushion.
Less affected: Beneficiaries with larger checks; they still feel the bite, but the raise usually leaves something left over.
Simple moves to protect your raise
1. Run your numbers now. Take your current monthly benefits amount, add ~2.7%, then subtract $21.50. That’s your rough 2026 “net.”
2. Shop your coverage. Review Medigap and Part D plans for 2026—savings there can beat your lost pensions raise.
3. Watch your income. Crossing an IRMAA line can spike Medicare costs and eat more of your pensions increase.
4. Bank the difference. If your 2025 COLA gave you breathing room, stash some of it now to offset 2026’s higher premium.
5. Trim auto‑bills. Cable, streaming, insurance deductibles—small cuts can outpace the pensions raise you may lose.
Two easy what‑ifs to stress‑test your plan
If COLA slips to 2.3%, your pensions raise will shrink, but the Medicare premium might not—tighten the budget accordingly.
However, Medicare will probably jump more than projected. It’s only an estimate; if healthcare costs run hotter, the premium could rise further, slicing deeper into pensions checks.
FAQ
– Will my pensions check actually go down? Probably not, thanks to hold harmless—but your raise can be nearly zeroed out.
– Why is Medicare taken from my pensions check at all? It’s the default way the government makes sure premiums get paid on time.
– When will I know my exact pensions raise? October 2025, after the July–September inflation data is in.
– Can Congress fix this? Lawmakers could change the COLA formula (some want CPI‑E) or adjust Medicare financing, but nothing has passed yet.
Plan for a 2.7% pensions raise you may barely feel after Medicare takes its cut. Do the math early, tweak your coverage, and make sure your pensions check isn’t your only line of defense against rising healthcare costs.
