Key Takeaways
- In 2024, Social Security will get a little increase; however, the cost-of-living adjustment will be reduced due to increases in Medicare premiums.
- Increasing inflation might essentially eliminate the portion of your raise that remains after deducting Medicare expenses.
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Your 2023 Social Security boost could not even help you at all, depending on how inflation plays out and whether or not you’re enrolled in Medicare. Here’s why:
Increases in Medicare premiums may reduce your future COLA
The Part B premiums for seniors who are enrolled in Medicare and Social Security at the same time are automatically subtracted from their benefits. (The majority of Medicare beneficiaries pay no payment for Part A.)
The current regular monthly premium for Part B is $164.90. It will increase to $174.70 in 2024. For seniors on Social Security and Medicare, that alone implies that increased Part B expenses will rob them of about $10 of their monthly COLA.
However, if you make more money than $174.70 a month, you can be charged extra. Furthermore, that surcharge may further reduce your COLA if that occurs.
Having income other than Social Security is preferable
There’s a goal, though, and that is to urge pre-retirees to prepare for their senior years independently and not become overly dependent on Social Security payments alone. At this point, you may be asking, “What’s the sense in raining on seniors’ upcoming Social Security raise?”
If your monthly benefit is your only source of income, a COLA that isn’t able to keep up with inflation and increases in Medicare premiums might seriously damage your finances and compel you to make tough lifestyle choices. However, a poor COLA would not be as bad if you could enter retirement with a healthy amount of funds to augment your Social Security income.
Assume that, after accounting for Medicare and other considerations, your Social Security income will not increase significantly the next year. You might be able to make ends meet if you have a nest egg that you can take out for up to $500 a month.
In summary, the COLA for 2024 is not the lowest that Social Security beneficiaries have ever received. In light of COLAs over the last 20 years, it is actually rather generous.
However, depending too much on Social Security COLAs is not a wise move. If you haven’t retired yet, now is the time to start saving so that you won’t be too upset if COLAs in the future are even lower than expected.
Medicare Premium Part A and Part B costs and covers
Medicare coverage is essential for people 65 and older to maintain their health. However, Medicare is a complex program since it consists of several components that are meant to function as a whole to offer complete coverage. Medicare Part A, which helps cover hospital stays and other inpatient treatment you may require, is a crucial component of that jigsaw.
For those who qualify, Medicare Part A offers coverage for hospital stays, skilled nursing facility stays, or other inpatient treatments. For the most part, patients may anticipate a semi-private hospital room as well as any services, tests, and prescription medications needed to treat whatever ails them. Meals are also covered during hospital stays under Part A.
Getting patients back to full health after a covered sickness or injury is the main goal of Medicare Part A. Part A benefits are available for stays of two days or more, and as explained below, coverage can last for several months.
Under the scheme, there are extra expenses for those who utilize their Part A coverage during the year. The inpatient deductible will increase to $1,632 in 2024, a $32 increase.
A surge in coinsurance amounts is also observed. Medicare usually pays the whole cost of a hospital stay for the first sixty days after you’ve paid the deductible. However, after that, you will be required to make a contribution. The coinsurance from the 61st to the 90th day will cost $408 a day, an increase of $8 from 2023. You will pay $816 per day in 2024 for your 60 lifetime reserve days after that 90th day. Compared to 2023, that is $16 more.
The majority of medical needs that don’t require hospital stays or other inpatient treatment are covered by Medicare Part B. In addition to covering standard medical visits, Part B also assists with the expense of intricate surgical treatments that don’t necessitate hospital stays. Part B also covers a wide range of additional healthcare concerns, including mental health expenditures, as well as compensation for items like medical equipment, ambulance transportation, and diagnostic tests.
Treatments that are medically required to identify, diagnose, and treat diseases, injuries, or other medical disorders are the only ones covered under Part B. Certain preventive treatments are also covered by Part B; these include yearly physicals and the initial wellness visit that Medicare beneficiaries get upon turning 65.
You must make monthly payments in order to receive Part B coverage. Medicare Part B will cost $174.70 per month for the majority of members, an increase of $9.80 from $164.90 in 2023.
The primary cause of the rise in Part B rates, according to the Centers for Medicare & Medicaid Services, was anticipated increases in healthcare costs in general. Medicare Part B must charge enough to cover projected expenditures, so if those costs increase, Medicare’s participant fees increase as well.
Additionally, you can receive partial coverage for immunosuppressive medications if you are not eligible for full Part B coverage due to a kidney transplant. In 2024, the monthly premium for the coverage will be $103, an increase of $5.90 from 2023.
