There is a reliable seasonal story about Social Security: the COLA looks generous, then Medicare takes it back, and the raise evaporates. It gets written every autumn.
For 2027 it may not be true, and working out whether it is turns out to be more interesting than the headline. On the official projection, the deposit that reaches your bank account rises by slightly more than the COLA, not less. On the forecasts several private analysts prefer, it rises by noticeably less.
Meanwhile the thing that genuinely does eat a retiree’s raise gets almost no coverage, because it only affects about eight percent of people and is decided by something you did two years ago.
Quick answer
The COLA applies to your gross benefit. The Part B premium is deducted before payment. Whether your deposit grows by more or less than the COLA depends on one thing: whether the premium rises by a larger or smaller percentage than the benefit does.
For 2027 the standard premium is projected to rise about 3.25%, against COLA projections near 3.8%. If both hold, the deposit grows faster than the COLA.
The arithmetic, both ways
Take the average retirement benefit, currently around $1,938 a month, and apply a 3.8% COLA. The 2026 standard Part B premium is a confirmed $202.90.
| Trustees projection, $209.50 | Private forecasts, around $218 | |
|---|---|---|
| Gross benefit | $1,938 to $2,011 | $1,938 to $2,011 |
| Part B premium | $202.90 to $209.50 | $202.90 to $218.00 |
| Deposit before | $1,735 | $1,735 |
| Deposit after | $1,802 | $1,793 |
| Increase on the deposit | 3.86% | 3.37% |
The difference between those two columns is $9 a month, or about $107 a year, and it turns entirely on a premium figure nobody has announced yet.
The general rule is worth carrying away, because it applies every year: if the premium rises by a smaller percentage than your benefit, your deposit rises by more than the COLA. If it rises faster, your deposit rises by less. The premium is a small number sitting against a much larger one, so it takes a big premium increase to swamp a decent COLA.
Why the forecasts disagree
This is worth understanding rather than just picking a number.
The 2026 Medicare Trustees Report projects $209.50 for 2027, up from $202.90. Notably, the previous year’s Trustees Report had projected $218.60 for the same year, and the newer report revised it downward using a more recent year of spending and enrollment data.
Several private forecasters land between $216 and $219, arguing that Trustees projections have repeatedly come in below the eventual figure. There is also a mechanical wildcard: the Part B trust fund holds a contingency reserve, and whether it needs replenishing can push the premium up or hold it down in a given year.
Nobody is being dishonest here. Two reasonable methods produce different answers, and CMS settles it around November 2026. Budgeting on the lower figure with a small buffer is the sensible middle.
Hold harmless, and who it leaves out
The hold harmless provision prevents a Part B premium increase from reducing your Social Security payment in dollar terms. It is a floor, not a guarantee that the premium will not rise.
Two limits are worth knowing. It only helps when the premium increase would exceed the dollar value of your COLA, which in a year with a healthy COLA means it protects very few people. And it applies to those whose premium is deducted from a Social Security payment. Anyone billed directly by CMS, including retirees drawing a pension without Social Security, absorbs the full increase with no protection at all.
The surcharge that actually eats a raise
If you want the real threat to a retiree’s income, it is not the standard premium. It is the Income-Related Monthly Adjustment Amount.
IRMAA affects roughly eight percent of Part B enrollees. For 2026 it begins above $109,000 of income for single filers and $218,000 for joint filers, and the surcharges run from $81.20 a month at the first tier to $487 a month at the top.
Put that against the arithmetic above. A 3.8% COLA on an average benefit is worth about $74 a month. Crossing the very first IRMAA threshold costs $81.20 a month. One tier wipes out the entire raise and more.
The cruel part is the timing. Your 2027 surcharge is based on your income from your 2025 tax return. A Roth conversion, a property sale, a large retirement withdrawal, or a lump sum leave payout in 2025 can land as a Medicare surcharge two years later, long after the decision felt finished. The related planning point is in Retiree Paycheck Taxes.
If your 2025 income was unusually high because of a one-off event, and particularly because of a life change such as retirement itself, there is a process for asking Social Security to use more recent income instead. It is worth looking into rather than accepting the surcharge as fixed.
The third squeeze, which nobody announces
There is one more way a COLA gets partly taken back, and it has no premium attached and no announcement date.
Half your Social Security benefit counts toward provisional income, and the thresholds that determine how much of your benefit becomes taxable have never been indexed. A larger benefit means a higher provisional income measured against lines that have not moved since the 1980s, so a slightly larger share of your benefit can become taxable each year even when nothing else changes. That mechanism is set out in the 2027 COLA article.
What to do before November
- Budget on the projected premium as a floor rather than a ceiling, and add a small buffer.
- Look up your 2025 modified adjusted gross income and compare it against the IRMAA thresholds, since that is the year that determines your 2027 surcharge.
- If a one-off event pushed 2025 income up, find out whether you can ask for a redetermination based on current income.
- Wait for the CMS announcement, usually in November, before treating any premium figure as real.
- Remember the Part B deductible moves separately, having gone from $257 in 2025 to $283 in 2026.
The wider point is that the COLA is the number that gets the headlines and the smallest number in this article, the IRMAA threshold, is the one most likely to change what actually lands in your account.
Sources and notes
The confirmed 2026 Part B premium and deductible and the 2026 IRMAA thresholds and surcharge amounts come from CMS. The 2027 premium projection of approximately $209.50 comes from the 2026 Medicare Trustees Report, published June 2026, which revised down the prior year’s projection of $218.60. Higher private forecasts and the estimate that IRMAA affects around eight percent of enrollees are attributed to independent analysts, not to CMS.
Every 2027 figure in this article is a projection. CMS confirms the actual premium, deductible, and IRMAA brackets in its announcement, generally in November. The COLA figure used in the examples is likewise a projection and the official adjustment is announced in October. The examples use the average retirement benefit, and your own benefit is almost certainly different, so treat the percentages as the useful part rather than the dollar amounts. This article is for general educational purposes only and should not be treated as personal tax, Medicare, or financial advice.
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