Every October, the Social Security Administration announces potential changes in Social Security benefits for the upcoming January, influenced by the rate of inflation. For 2024, the increase in Social Security benefits is projected to be smaller than in 2023. This raises questions about the implications for Medicare costs. The blog addresses these concerns and offers advice on managing Medicare expenses effectively.
The cost-of-living adjustment (COLA) for 2024 is set at 3.2%, increasing the average monthly retirement benefit by approximately $59, reaching $1,906. Recipients of Social Security benefits should expect notification of this increase through their online accounts by December’s end, with the new rates effective from January. Although this increase is less than the 8.7% rise seen in 2023, it remains above the 20-year average of 2.6%.
A critical question is whether this COLA will be sufficient to balance rising Medicare costs. Medicare Parts B and D, which cover medical services and prescription drugs, respectively, often experience annual cost fluctuations. Social Security typically offsets Medicare Part B premiums against its benefits, which could diminish the impact of any increase in Social Security benefits. For 2024, the standard premium for Part B is expected to rise by $9.80 to $174.70.
Moreover, increased Social Security benefits could inadvertently hike your Medicare costs if your income crosses certain thresholds, affecting premiums for both Part B and D. The determination of these premiums considers your income from two years prior.
To keep Medicare costs in check, it’s advisable to consult financial professionals for strategic tax planning, including considerations for income-related monthly adjustment amounts (IRMAA). Regular reviews of your Part D plan are recommended to ensure it aligns with your needs. Recent legislative changes, such as those introduced by the Inflation Reduction Act of 2022, are set to reduce healthcare costs for Medicare beneficiaries. These include capping Medicare Part D costs and limiting insulin-related expenses.
Considering these factors, consulting a financial advisor becomes crucial. They can offer tailored strategies to balance your Social Security benefits and Medicare costs effectively. If you’re not currently working with a financial advisor, the team at Omni360 is ready to assist. We encourage you to reach out for a comprehensive discussion of your financial situation and explore optimal strategies for your needs.
For more detailed information, please refer to the original article at Buckingham Strategic Partners.