Here's some math that millions of older Americans won't enjoy: Medicare Part B premiums are jumping to $202.90 per month next year, officially breaking the $200 barrier for the first time. The Centers for Medicare & Medicaid Services just confirmed the increase, and it's going to take a pretty good bite out of Social Security's cost-of-living adjustment.

When Your Raise Gets Eaten by Healthcare

The new premium represents a $17.90 monthly increase from the current $185 rate, which works out to roughly 10% more. Now compare that to the 2.8% Social Security COLA beneficiaries are getting in January. The average retiree will see about $56 more per month from that COLA, but since Part B premiums get automatically deducted from Social Security checks, roughly one-third of that increase evaporates immediately.

As Mary Johnson, an independent Social Security and Medicare analyst, told MarketWatch: "The public is likely to perceive this Part B increase as taking most of their COLA. This is just a continuation of rising cost news. We haven't seen any indications whatsoever that costs are going down."

Why Are Premiums Climbing So Fast?

CMS points to "projected price changes and assumed utilization increases" as the primary drivers. Translation: healthcare is getting more expensive, and people are using more of it. But here's where it gets interesting—the premiums would have climbed even higher if the federal government hadn't stepped in to address a spending explosion on wound-care products called skin substitutes.

Spending on these products grew from $256 million in 2019 to more than $10 billion by 2024, according to CMS. That's not a typo. New rules finalized in the 2026 Physician Fee Schedule are expected to slash spending on skin substitutes by 90%. Without that intervention, CMS says premiums would have been about $11 higher per month. So the $202.90 figure is actually the "good" news version.

Income Brackets Determine What You Actually Pay

The standard premium only tells part of the story. About 8% of Medicare beneficiaries will pay income-related monthly adjustment amounts on top of the base rate, and those can add up quickly.

Individuals earning above $109,000 and couples filing jointly with incomes above $218,000 will pay more than the standard $202.90. At the highest income tier—individuals making $500,000 or couples earning $750,000—premiums can reach $689.90 per month for full Part B coverage. CMS also updated figures for beneficiaries who carry Part B immunosuppressive drug coverage only, including higher charges for those above certain income thresholds.

The "Hold Harmless" Safety Net

There's a silver lining for some lower-income beneficiaries. The premium increase will trigger Medicare's "hold harmless" provision for about four million people, according to MarketWatch. This rule prevents your Social Security check from actually decreasing because of a Part B premium hike. For those receiving $640 or less per month in Social Security benefits, their premium increases will be capped at the dollar amount of their COLA increase.

Part A Costs Are Rising Too

While most Medicare beneficiaries don't pay a premium for Part A, CMS says the deductible and coinsurance amounts will rise in 2026. The Part A hospital deductible will increase to $1,736, and daily coinsurance amounts for longer hospital stays and skilled nursing facilities will also climb.

Planning for the New Reality

Social Security's COLA notices for next year may already be available online through recipients' my Social Security accounts. As households map out their budgets for 2026, the gap between rising Part B premiums and modest COLA increases is going to be a significant factor in planning for healthcare and monthly expenses. For many retirees, that anticipated cost-of-living adjustment is already spoken for before it even arrives.