COLA Adjustment for SS

[Snaggletooth]

I'll admit to being old enough to receive SS, and today got my COLA adjustment of 2.8%. I won't waste time complaining about it not being enough to cover inflation, most of you will agree to that.

What bothers me, is the ostensibly 2.8% provides virtually no net increase. Is the Medicare Part B and Part C increase limited to 2.8%??

[FEDUKE404]

Many (most?) retirees will see their net bank deposit for Jan 2026 to be smaller than their net bank deposit for Dec 2025, in spite of the COLA. The increase in Med B and Med D premiums is larger than the underlying COLA.
For those with IRMAA concerns, the gap will be even larger.
As for the misstatement "no tax on Soc Sec," many of my clients will never see such a reduction due to the income phase-out restrictions to the senior discount.

[Y2KEA]

The MAGI phaseout equation on the schedule 1A is rather obscure and I don't think too many people will be subject to it.
Start with AGI
Enter any income from Puerto Rico that you excluded
Enter the amount from Form 2555, line 45 (Foreign Earned Income)
Enter the amount from Form 2555, line 50 (Foreign Earned Income)
Enter the amount from Form 4563, line 15 (Exclusion of Income for Bona Fide Residents of American Samoa)

[FEDUKE404]

The MAGI phaseout equation on the schedule 1A is rather obscure and I don't think too many people will be subject to it.
Start with AGI
Enter any income from Puerto Rico that you excluded
Enter the amount from Form 2555, line 45 (Foreign Earned Income)
Enter the amount from Form 2555, line 50 (Foreign Earned Income)
Enter the amount from Form 4563, line 15 (Exclusion of Income for Bona Fide Residents of American Samoa)

It is not difficult for a retiree with pension income, investment income, RMDs, Soc Sec, et al to hit the limits merely with AGI numbers, aside from the specific add-ons to reeach the senior MAGI.

[Rapid Robert]

Many (most?) retirees will see their net bank deposit for Jan 2026 to be smaller than their net bank deposit for Dec 2025, in spite of the COLA. The increase in Med B and Med D premiums is larger than the underlying COLA.
For those with IRMAA concerns, the gap will be even larger.

You aren't taking the "hold harmless" provision into account. If the Part B increase is more than the COLA, the Part B will be temporarily decreased so that there is no reduction in net benefit paid. I'm not sure if it applies to Part D as well, and it doesn't apply to IRMAA payers, so instead of "many/most", I'd say "some or a few" SS recipients will see their net bank deposit go down.

[FEDUKE404]

You aren't taking the "hold harmless" provision into account. If the Part B increase is more than the COLA, the Part B will be temporarily decreased so that there is no reduction in net benefit paid. I'm not sure if it applies to Part D as well, and it doesn't apply to IRMAA payers, so instead of "many/most", I'd say "some or a few" SS recipients will see their net bank deposit go down.

You must love to chase rabbits, even on Christmas Eve.

Virtually none of my clients have any of the special "adjustments" for changing AGI for the potential shrinkage of the $6k senior adjustment. I will worry about that in a couple of months. But I have heard from a number of individuals, both clients and just friends, who have noted from the information letter sent to them earlier this month by Soc Sec that their ***NET*** bank deposit in Jan will be less than their ***NET*** bank deposit was in Dec. The smaller number of those individuals who get whacked with IRMAA see a larger difference between the two numbers. (No, I have not read their information letters, but their reading skills are certainly adequate.)

Maybe all of those people need a private session in hold harmless provisions or maybe just need to read their Soc Sec 2026 benefits letter more closely???

Merry Christmas!

[TaxGuyBill]

You aren't taking the "hold harmless" provision into account. If the Part B increase is more than the COLA, the Part B will be temporarily decreased so that there is no reduction in net benefit paid.

Interesting, I didn't know about that. Thanks for the information.

[Rapid Robert]

You must love to chase rabbits, even on Christmas Eve.

I have no idea what you are referring to, but go ahead and have some more eggnog. Cheers!

But I have heard from a number of individuals, both clients and just friends, who have noted from the information letter sent to them earlier this month by Soc Sec that their ***NET*** bank deposit in Jan will be less than their ***NET*** bank deposit was in Dec.

As I mentioned, the hold harmless provision only applies to Medicare Part B, and does not apply to those with IRMAA. Maybe their Medicare Part C or D has gone up, I've heard that under current government policy, health insurance premiums are increasing drastically for some.

In my own case, my net deposit is increasing by only 1.4%. My parts B, C, and D went up by almost $42. The COLA statement does not separate Part B from Part C, so you should check how many of your clients/friends are using Part C (Medicare Advantage) versus not. If you can show that the net deposit has gone down strictly due to Part B, please post the details, I'm sure SSA would like to know, as would we all.

To be clear, Medicare Part C premiums are not determined by Medicare, but by the selected Medicare Advantage insurance provider. Comparing the COLA statement of someone who has Part C deduction versus someone who pays their Medicare supplement insurance separately from their SSA benefit is bogus.

Maybe all of those people need a private session in hold harmless provisions or maybe just need to read their Soc Sec 2026 benefits letter more closely???

Or maybe just indicate which of your comments address the accuracy of what I posted.

https://www.socialsecurityintelligence.com/how-the-hold-harmless-rule-really-works-and-who-is-not-protected-by-it/

https://www.aarp.org/medicare/medicare-part-b-premium-increase-2026/

[FEDUKE404]

I think I will just revert to a "read only" mode for TTB Forum except for very extenuating, and unexpected, circumstances.

[Rapid Robert]

Is the Medicare Part B and Part C increase limited to 2.8%??

Based on the facts presented in this thread, the answer is "yes" for Part B (amount determined by federal law) and "no" for Part C (amount determined by individual insurers). There are some exceptions to the Part B restriction as discussed in the provided links.