Medicare costs are going up in 2025, with implications for many retirees on fixed incomes. The Centers for Medicare and Medicaid Services (CMS) recently announced the new Medicare premiums, revealing that the Part B premium increase may impact retirees more than they anticipated.
For those who rely on Social Security, understanding how these changes affect their monthly budget is essential, as the increase outpaces the Social Security cost-of-living adjustment (COLA).
In this article, we’ll break down what you need to know about the 2025 Medicare Part B premiums, how the increases work, and what options exist to manage these costs.
Part B Premium Increase in 2025: A 5.9% Rise
Starting in 2025, the standard Medicare Part B premium will be $185 per month, a $10.30 increase from the 2024 rate. CMS attributes this increase to “projected price changes and assumed utilization increases,” consistent with historical trends. This rise may put pressure on retirees, especially given that the Social Security COLA for 2025 is only 2.5%.
- Part B Premium: $185 per month (up 5.9% from 2024)
- Social Security COLA: 2.5% increase in 2025
What This Means for Social Security Recipients
Many retirees worry about the “hold harmless” provision, which prevents Social Security benefits from decreasing due to Medicare premium hikes. However, CMS has not indicated that the provision will apply this year, likely because the average COLA adjustment should cover the Part B premium increase for most beneficiaries.
“The Part B premium is increasing $10 per month, but the COLA will add about $50 to the monthly benefit for single recipients and $75 for couples,” explains CMS. Thus, few Social Security recipients will need protection from a reduction in benefits.
Income-Related Monthly Adjustment Amounts (IRMAA): What to Expect
IRMAA, which adds extra costs to Medicare premiums for high-income earners, is also going up in 2025. This surcharge is based on income and affects both Part B and Part D premiums.
- IRMAA Thresholds for Single Filers and Married Individuals Filing Separately: $106,000 (up from $103,000)
- IRMAA Thresholds for Married Individuals Filing Jointly: $212,000 (up from $206,000)
How These Changes Affect Monthly Costs
For those subject to IRMAA, monthly adjustments for prescription drug coverage (Part D) will also increase, with the range shifting from $12.90-$81 in 2024 to $13.70-$85.80 in 2025.
“IRMAA adjustments range from $74.00-$443.90,” CMS reports, showing a noticeable jump from last year’s $69.90-$419.30.
Should You Consider Filing Separately?
Some couples wonder if filing separately might reduce their Medicare premiums under IRMAA. However, CMS warns that couples who file separately may pay more because there are only two income tiers for those filing this way.
- Income Tiers for Separate Filers: $130,000-$397,000 and over $397,000
- Impact: Filing separately often leads to higher premiums, especially for those in higher income brackets.
Key Takeaways: Preparing for Rising Medicare Costs
Understanding these Medicare premium changes helps retirees better manage their budgets. Here are some steps to consider:
- Budget for Higher Costs: While premiums increase yearly, budgeting in advance can make these hikes more manageable.
- Review IRMAA Impact: If your income qualifies you for IRMAA, it’s helpful to review the updated CMS tables to see how it affects your total Medicare costs.
- Consider Filing Status Carefully: Married couples should carefully evaluate the pros and cons of filing separately, as it could lead to unexpectedly high premiums.
Final Thoughts
Medicare is a critical expense for retirees, and rising premiums are an unavoidable part of today’s healthcare. While no one can fully predict next year’s changes, preparing for a slight increase each year can provide some financial stability.
Staying informed on Medicare costs, understanding how COLA affects Social Security benefits, and carefully considering filing options can help you navigate these changes more effectively.
By anticipating these adjustments, retirees can take steps to maintain their financial well-being even as healthcare costs evolve.