MW Medicare premiums could double over next the decade, sabotaging retirement budgets

By Jessica Hall

Medicare costs typically increase at a higher rate than Social Security benefits

Medicare premiums could rise to $5,000 a year by 2035, a new report said.

Medicare beneficiaries could see their premiums double over the next 10 years, eating into their Social Security benefits and ultimately handicapping their buying power in retirement, due in part to rising healthcare costs and government overpayments to insurance companies that administer Medicare Advantage plans.

Medicare Part B premiums, which cover doctors and hospital outpatient services, will rise to about $5,000 a year by 2035, up from about $2,440, according to a recent report by the Senate Joint Economic Committee.

"Seniors face a dramatic reduction in the affordability of Medicare Part B," the report said. "It is therefore imperative for policymakers to act to prevent premiums from gradually eating away at seniors' social security checks."

Social Security beneficiaries get an annual cost-of-living adjustment $(COLA)$ to keep pace with inflation. However, that increase may not be enough to offset the growth in Medicare Part B premiums, which are automatically deducted each month from Social Security checks. This year, for example, Medicare Part B premiums increased 9.7%, outpacing the 2.8% COLA.

"The top factor eating into retirement checks and causing a loss of buying power is premiums. Checks don't go as far," said Mary Johnson, an independent Social Security and Medicare analyst.

Typically, Medicare costs increase at a higher rate than Social Security benefits, which shrinks the value of beneficiaries' checks, said Michael Cannon, director of health-policy studies at the Cato Institute.

Early estimates for 2027's COLA range from 1.7% to 2.8%, but those forecasts are expected to change once the impact of the Iran conflict is factored into the economy. The official announcement for COLA will come in October.

The prospect of higher Medicare Part B premiums comes as many older adults already struggle to make ends meet. Nearly half of adults 60 and older can't cover their basic needs of housing, food, transportation and healthcare, according to an analysis by the National Council on Aging and LeadingAge LTSS Center at UMass Boston.

Medicare Advantage overpayment

Part of the expected increase in Medicare Part B premiums - or about $450 a year of the projected $5,000 a year premium - would be due to overpayments made by the government to Medicare Advantage plans, the report said. Currently, the government spends more for Medicare Advantage than traditional Medicare beneficiaries. That overall overspending increases costs for all beneficiaries.

The forecasts for Medicare Advantage overpayments by the Senate Joint Economic Committee assumed a 20% overpayment rate. That rate could ease.

A new report by MedPAC, which advises Congress on Medicare, indicated that the overpayment estimate could fall to about 14% for 2026, compared with about 20% for 2025. That would mean a projected $76 billion more than the government would spend if those beneficiaries were enrolled in traditional Medicare.

That lower rate could mean the Medicare Part B premiums may escalate a little less than the Senate Joint Economic Committee forecast, said Matthew Fiedler, senior fellow at the Center on Health Policy at the Brookings Institution.

-Jessica Hall

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 16, 2026 12:01 ET (16:01 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.