What is the 2025 Cost of Living Adjustment?

The Social Security Administration has announced that the COLA for 2025 will be 2.5 percent, a decrease from last year's 3.2 percent. COLA is calculated using data from the Consumer Price Index, which measures the costs of goods and services, and this year's CPI showed a 2.4 percent increase in inflation over the previous year.

How will the 2025 COLA affect clients?

Clients can expect to see an increase of approximately $49 in their Social Security benefit checks due to the 2025 COLA of 2.5 percent. While an increase in COLA often indicates a rise in Medicare Part B premiums, the hold harmless clause in federal law protects Social Security recipients from having their monthly checks reduced below the previous year's amount, even if Medicare premiums increase.

When will the 2025 COLA take effect?

The 2025 COLA will begin to reflect in benefit checks dated January 2025. The exact payment date depends on the beneficiary's birthdate. Clients should receive a letter in December with specific benefit details, and this information is also available on the Social Security website.

How does the COLA benefit seniors and Medicare premium payments?

The COLA helps seniors when receiving Social Security benefits and paying Medicare premiums. By adding extra cushion to monthly benefit checks, seniors have more purchasing power. This also helps limit the effects that inflation has on the economy and the budgets of older Americans.

The 2025 COLA Increase & How It Affects Your Clients

For Medicare beneficiaries who receive Social Security benefits, the annual Cost of Living Adjustment (COLA) can offer some financial relief from increased costs and inflation. We have details on the 2025 adjustment.

Beneficiaries receive the annual COLA via their Social Security benefit checks. It’s also not unusual that the COLA affects Medicare Part B premiums. We’ll discuss this year’s adjustment and what it means for your Medicare clients.

What Can COLA Clients Expect for 2025

The Social Security Administration (SSA) has announced the COLA for 2025 will be 2.5 percent. This year’s adjustment is slightly lower than last year’s 3.2 percent adjustment. A 2025 COLA increase of 2.5 percent means that your clients can expect to see an increase of about $49 in their Social Security benefit checks.

Note: To calculate the COLA, the U.S. Bureau of Labor Statistics uses data reported in the Consumer Price Index (CPI), which measures the costs of goods and services. According to the latest CPI, there was a 2.4 percent increase in inflation over the previous year.

Historic Cost Of Living Adjustments

Your clients should receive a personalized letter from the SSA in December providing specific benefit details. This information is also available online. If your client has a my Social Security account, they will find their notice in the Message Center.

This year, beneficiaries will receive a newly designed COLA notice that the SSA hopes will make it easier for consumers to find the information they need most. The improved COLA notice is only one page, uses plain and personalized language, and provides exact dates and dollar amounts of new benefit amounts and any deductions.

How Does the COLA Affect Medicare Premiums?

A 2025 COLA increase of 2.5 percent means that your clients can expect to see an increase of around $49 in their Social Security benefit checks.

Typically, an increase in COLA foreshadows a rise in Medicare Part B premiums. Since Medicare premiums are directly removed from Social Security benefit checks, your clients could feel less financial relief from the adjustment if Medicare Part B premiums increase.

However, even if numbers were to increase, the hold harmless provision requires that “no increase in Part B premiums can reduce a Social Security recipient’s monthly check below what it was in the previous year.” Rest assured, your clients will be protected, even though the COLA is lower than last year’s.

When Will the Latest COLA Take Effect?

Benefit checks arriving in January 2025 will begin to reflect the annual increase. Exact payment dates depend on beneficiaries’ birth dates:

Born the 1^st through the 10^th of the month: Second Wednesday of the month — January 8, 2025
Born on the 11^th through the 20^th: Third Wednesday of the month — January 15, 2025
Born on the 21^st through the 31^st: Fourth Wednesday of the month — January 22, 2025

Beneficiaries who receive Supplemental Security Income (SSI) will see the new COLA reflected in their payment on December 31, 2025.

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The COLA increases Social Security payments for seniors, helping them cover Medicare premiums more easily. This addition to their monthly benefits allows them to afford everyday expenses, while also helping to reduce the financial strain caused by inflation on both the economy and their personal finances.

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