By John I. Adams, Chairman, TSCL
Here at the Advisor, we bring together seniors from across America with all kinds of experiences. We’re writing to help American seniors of all races, creeds, and professional backgrounds learn more about what’s going on with their Social Security and Medicare benefits.
However, despite our many differences, we all have one thing in common: We’ve all been on Earth long enough to know that change is inevitable, and 2026 will be no exception. So, what changes should seniors watch out for next year?
1. New COLA Takes Effect for Social Security Benefits
One of the first big changes to affect seniors in 2026 will be the implementation of Social Security’s Cost-of-Living Adjustment (COLA). The COLA is an annual adjustment to Americans’ Social Security benefits to help monthly checks keep up with inflation over time.
The COLA for 2026 will be 2.8 percent, as announced by the Social Security Administration (SSA) on October 24th. That means if you receive $2,000 a month in benefits—which is just a tiny bit below average but convenient for the sake of math—your monthly check would increase by $56. This increase will be automatically applied to all Social Security benefits starting on January 1st, and you can calculate how much your benefits will increase by multiplying your current Social Security check by 2.8 percent.
2. Higher Medicare Part B Premiums
When Americans turn 65, they automatically become eligible for Medicare Part B health coverage. In 2025, the standard cost for that coverage was a monthly premium of $185 for single tax filers who earned less than $106,000 and joint filers who earned less than $212,000, with higher costs for those who earn more. However, Part B premium costs are set to increase. In 2026, the standard monthly premium will rise to $202.90. That’s nearly a 10 percent increase from 2025, which, as we’ll discuss in more detail in this issue’s article, “Medicare Keeps Going Up Faster Than Inflation,” continues a troubling pattern. This change will hit seniors’ monthly budgets starting January 1st.
3. Freshly Negotiated Drug Prices Take Effect for Medicare Beneficiaries
One event that will at least partially offset the rise in Medicare Part B premiums for many seniors will be lower costs on several high-use prescription drugs. Empowered by the
Inflation Reduction Act (IRA) of 2022, Medicare negotiated lower prices directly with pharmaceutical companies for the first time in its history. The negotiated prices will take effect on January 1st.
What’s more, Medicare’s new ability to negotiate looks like it will yield promising results. The list of drugs with new, lower prices as a result of the negotiation process will include some of the most popular medicines for treating heart disease, diabetes, kidney disease, and psoriasis. Most drugs that went through the negotiation process will see their prices reduced by at least 50 percent, and the Centers for Medicare and Medicaid Services (CMS) estimates that the new prices will reduce beneficiaries’ out-of-pocket spending $1.5 billion in 2026.
Additional progress on lowered drug prices is on the way, too. Medicare is currently negotiating lower prices for 15 additional drugs, with the changes taking effect in 2027. The drugs being negotiated include the popular weight-loss drugs Ozempic, Rybelsus, and Wegovy.
4. Higher-Earning Seniors Will See Tax Relief
When President Trump signed the One Big Beautiful Bill (OBBB) into law this July, it represented a win for seniors who pay federal taxes on their Social Security benefits. The law will provide an additional $6,000 deduction (per tax filer) on top of the standard deduction for many seniors.
However, it’s important to note that not all seniors will benefit equally. Those who don’t earn enough to pay federal taxes on their Social Security benefits ($25,000 per single filer and $32,000 for joint filers) won’t see a change. Those who earn enough to pay taxes on their benefits but still bring in less than $75,000 (for single filers) or $150,000 (for joint filers) will be able to use the entire $6,000 deduction, while those who earn more than that will see the additional deduction gradually phased out.
Eligible seniors will be able to begin claiming this new deduction on their taxes starting in 2026, for income and Social Security benefits earned in 2025. The new temporary tax credit will run through 2028, at which point Congress will need to pass formal legislation to renew it.