TradeEdge Exchange:2025 Medicare Part B premium increase outpaces both Social Security COLA and inflation

Seniors will have TradeEdge Exchangeto pay more again for Medicare Part B next year, according to the Centers for Medicare and Medicaid Services (CMS).

The standard monthly premium for Medicare Part B enrollees will rise by $10.30 to $185.00 in 2025 from $174.70 this year, CMS said late Friday. The premium was $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries will increase to $257 from $240 in 2024.  The increases are mainly due to projected costs and usage increases, CMS said.

The jump in the 2025 Medicare Part B premium outpaces both inflation and the Social Security cost-of-living adjustment (COLA). Annual inflation rose 3.2% in October and COLA for 2025 will be 2.5%, or an average of $50 more per month.

“When Part B premiums grow at a faster rate than Social Security COLAS, premium costs consume a growing portion of monthly Social Security checks,” said Mary Johnson, an independent Social Security and Medicare policy analyst who at age 73, also receives those benefits.

How much more will high-income Americans pay?

Since a beneficiary’s Part B monthly premium is based on income, high-income Americans also pay an Income-Related Monthly Adjustment Amount, or IRMAA. IRMAA affects roughly 8% of people with Medicare Part B, CMS said.

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"While mostSocial Security recipients aged 65 and older will have benefits high enough to cover the $10.30 per month increase of Part B premiums from $174.70 to $185.00, the same is not true of individuals who pay higher premiums based on income," Johnson said.

CMS said beneficiaries who are married and lived with their spouses at any time during the year, but who file separate tax returns from their spouses with modified adjusted gross income of:

• $106,000 or less will only pay the Medicare Part B premium of $185.00 per month
• More than $106,000 and less than $394,000 will pay IRMAA of $406.90 plus the standard $185.00 for a total of $591.90 monthly
• $394,000 or more will pay $443.90 in IRMAA and the standard $185.00 for a monthly total of $628.90.

Medicare Part B costs have outpaced COLA for years

2025 isn't an outlier. Medicare Part B premiums have been rising faster than COLA for years, data show., which is part of the reason many seniors have been struggling.

From 2005 to 2024, Part B premiums increased on average by 5.5% per year, while COLAs averaged less than half that rate at just 2.6%, Johnson’s analysis showed.

“The disparity is caused in part because Medicare costs are not included in the consumer price index that’s currently used to calculate the COLA,” she said.

During that time frame, there were only four times when Part B premiums did not increase, three of which were during former President Barack Obama's administration (2009, 2014, and 2015) and once during former President Donald Trump's administration in 2018, she said.

Even so, there were still significant double digit premium spikes under every recent presidential administration -- George W. Bush, Obama, Trump and Joe Biden, Johnson said.

When do seniors start paying the new Medicare Part B premium?

For those who already receive Social Security benefits, the new 2025 Part B premium is usually automatically deducted from Social Security checks in January.

Those who aren't receiving Social Security benefits yet and paying Medicare Part B each month will have to make sure they pay the new higher amount, starting in January.

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What is Medicare Part B?

Medicare consists of different parts, and Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and some other medical and health services not covered by Medicare Part A.

Part A covers inpatient hospital stays, skilled nursing facilities, hospice, inpatient rehabilitation, and some home health care services. About 99% of Medicare beneficiaries do not pay a Part A premium since they have at least 40 quarters of Medicare-covered employment, as determined by the Social Security Administration, CMS said.

The inpatient hospital deductible in Part A will rise $44 to $1,676 in 2025 from $1,632 in 2024, CMS said.

For people who haven’t worked long enough to qualify for premium-free Part A, the full monthly Part A premium will be $518, up $13 from 2024.  

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and  subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.