2025 Medicare Premiums: Higher Part B Costs Outpace Social Security COLA and Inflation
In 2025, Medicare Part B premiums will see a substantial
increase, impacting seniors across the country. According to the Centers for
Medicare and Medicaid Services (CMS), the standard monthly premium for Medicare
Part B will rise to $185.00 in 2025, up from $174.70 in 2024. This $10.30
increase comes after a smaller $9.80 jump from 2023 to 2024. Additionally, the
annual deductible will increase to $257, compared to $240 in 2024. These
adjustments reflect expected rises in medical service costs and usage rates, as
stated by CMS.
The 2025 Medicare Part B premium increase outpaces both
inflation and the Social Security cost-of-living adjustment (COLA). For 2025,
COLA is set at 2.5%, or an average of $50 more per month for Social Security
recipients, while inflation rose by 3.2% in October 2024. Mary Johnson, an
independent Social Security and Medicare policy analyst, noted that when
Medicare Part B premiums increase faster than Social Security COLA, it reduces
the portion of monthly Social Security benefits seniors have available for
other expenses.
Higher Premiums for High-Income Beneficiaries
Medicare Part B premiums vary based on income.
High-income beneficiaries, or approximately 8% of Part B enrollees, will pay an
additional Income-Related Monthly Adjustment Amount (IRMAA). This income-based
surcharge results in the following 2025 costs for married beneficiaries filing
separately:
- Modified
adjusted gross income (MAGI) of $106,000 or less: standard premium of
$185.00
- MAGI
between $106,000 and $394,000: IRMAA of $406.90 plus $185.00 for a total
of $591.90 per month
- MAGI
above $394,000: IRMAA of $443.90 plus $185.00 for a monthly total of
$628.90
A History of Medicare Part B Increases Outpacing COLA
Rising Part B premiums relative to COLA is not new.
According to Johnson’s analysis, Medicare Part B premiums have grown by an
average of 5.5% per year from 2005 to 2024, while COLA has averaged only 2.6%.
This gap has led to increased financial strain for many seniors. Since Medicare
costs are not factored into the consumer price index used to determine COLA,
the growth disparity between these costs continues to impact seniors.
Only a few years, such as 2009, 2014, 2015, and 2018,
have seen no increase in Part B premiums, though each recent administration has
faced years with notable double-digit spikes.
When Will Seniors Start Paying the New 2025 Medicare Part
B Premium?
Starting in January, Social Security recipients with
Medicare Part B will see the new premium automatically deducted from their
benefits. Those not yet on Social Security but enrolled in Medicare Part B must
adjust their monthly payments to cover the new rate beginning in 2025.
What Does Medicare Part B Cover?
Medicare Part B primarily covers outpatient services,
doctor visits, some home health care, and durable medical equipment. Medicare
Part A, by contrast, covers inpatient care, hospital stays, skilled nursing,
and certain other health services.
Most Medicare beneficiaries receive Part A at no
additional cost if they meet the 40-quarter Medicare-covered employment
requirement. However, for those who don’t meet this requirement, the 2025
premium for Part A will be $518 per month, a $13 increase from 2024.
For seniors and families planning their 2025 budgets,
understanding these Medicare changes is crucial as they impact both healthcare
expenses and Social Security benefits.
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