For months on end, seniors on Social Security have been wondering what sort of raise they'd be in line for come 2024. And we recently got an answer.
The official Social Security cost-of-living adjustment, or COLA, for 2024 is 3.2%. Now that's a much smaller raise than Social Security recipients got at the start of 2023, when benefits rose a whopping 8.7%. But because inflation has cooled nicely over the past 12 months, a smaller Social Security COLA for 2024 makes sense.
Meanwhile, a 3.2% COLA could raise the average monthly Social Security benefit of $1,848 to $1,907 in the new year. That's a $59 lift. But thanks to a change coming to Medicare, you may not get to keep your raise in full.
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Will a rise in the cost of Medicare Part B wipe out your Social Security COLA?
Unlike Medicare Part A, which covers hospital care and is generally free, Part B, which covers outpatient care, comes at a cost. Enrollees are charged a monthly premium for coverage under Medicare Part B.
Meanwhile, seniors who are enrolled in Social Security and Medicare at the same time have their Part B premiums deducted from their benefits automatically. What this means is that when the cost of Medicare Part B goes up, seniors end up with a smaller COLA.
Such will be the case in 2024. Although the cost of Medicare Part B actually went down in 2023, next year, it's going to rise.
Beginning in January, the standard monthly Part B premium is rising from $164.90 to $174.70 -- an increase of $9.80. And that's actually not so bad.
Earlier in the year, Medicare announced plans to cover a new drug to treat Alzheimer's disease. It was assumed that the program would incur much higher costs as a result of that, leading to a larger increase in the standard Part B premium. But thankfully for seniors, average earners are only going to see their costs rise by about $10 a month.
Higher earners, however, are going to see their Medicare costs rise even more. Higher-income seniors are subject to an income-related monthly adjustment amount, or IRMAA, that raises the cost of not just Part B, but also Part D.
A silver lining
Many seniors are disappointed in the fact that their 2024 COLA is not going to be anywhere close to as large as their 2023 raise. And now, they're going to lose some of that COLA to a Medicare Part B premium hike.
But all told, the average Social Security recipient should still be in line for about a $50 monthly raise, or $600 in the course of the year. That's a higher lift than what's come down the pike in previous years.
Of course, the other good news in all of this is that inflation has cooled nicely over the past 12 months -- hence the smaller 2024 COLA. And that alone could provide a much-needed dose of financial relief to the many seniors who have been struggling to keep up with their living costs.
