Some People Won’t Keep Their Entire 3.6% Social Security COLA. Here’s How to Know if You’re 1 of Them
Your Social Security raise for 2027 looks promising on paper, but a quiet deduction could shrink what actually lands in your bank account. Whether you feel the full benefit depends on a factor most recipients overlook until it is too…
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Recently, seniors on Social Security received good news regarding their upcoming cost-of-living adjustment, or COLA. The Social Security Administration announced that benefits will rise by 3.6% in 2027.
By comparison, Social Security benefits got a 2.8% COLA at the start of 2026. Many seniors were unhappy with a sub-3% raise when it was announced last October, and for good reason.
Inflation outpaced that 2.8% COLA for much of the year. In the wake of the Middle East conflict, oil prices soared, impacting expenses overall.
It’s too soon to know whether 2027’s Social Security COLA will hold up well to inflation. If inflation moderates or falls, that 3.6% raise could end up helping seniors quite a bit. If inflation picks up, a 3.6% COLA could still fall flat.
But even if you choose to look at Social Security’s upcoming 3.6% COLA as a good thing, you should know that you may not be able to pocket your raise in its entirety. Though this isn’t the case for all Social Security recipients, some seniors could see their 2027 COLA significantly whittled down.
Will a big Medicare premium hike reduce your COLA?
If you’re not enrolled in Medicare, you don’t pay any premiums for it out of your Social Security checks. But if you’re on Medicare, Part B, which covers outpatient care, charges a monthly premium that’s deducted from your Social Security benefits automatically.
This year, the standard monthly Part B premium is $202.90, but higher earners subject to surcharges known as IRMAAs may pay more.
The cost of Medicare Part B is expected to rise in 2027. As of now, we don’t know what that increase will entail.
Part B premiums rose by $17.90 per month in 2026, a notably high increase. The upcoming increase could be a bit smaller, but that’s not guaranteed.
Either way, if you’re on both Medicare and Social Security, you won’t get to keep your COLA in full, because whatever increase applies to Part B will come out of your raise directly. The only way you’ll get to keep your COLA in full is if the cost of Part B does not go up at all, which isn’t expected to be the case in 2027.
Don’t crunch those numbers just yet
The fact that seniors who are enrolled in Social Security and Medicare pay for Part B out of their benefits is actually a good thing. That’s because people in that boat are protected thanks to the hold harmless provision that states that Social Security checks can’t decrease from one year to the next if a Part B hike exceeds the amount a COLA provides.
In other words, let’s say there’s a small Social Security COLA one year, so your checks only rise by $7 per month. If the cost of Medicare Part B increases by $8 per month, you’d lose $1 in your benefits. But thanks to the hold harmless provision, that won’t happen.
Still, it can be frustrating to see your COLA whittled down by Medicare premium hikes. And it can be equally frustrating to finally have Social Security announce an official COLA only to have to wait on a Medicare announcement.
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 so your numbers are as accurate as possible.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, The Washington Post, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
