Major Changes Ahead for Social Security and Medicare in 2025
As we enter a new year, retirees can expect significant changes to their Social Security and Medicare benefits. President Joe Biden is set to sign a bill that will increase Social Security payments for millions of pensioners, while the annual cost-of-living adjustment will also take effect.
Boost to Social Security Benefits
The Social Security Fairness Act, passed by the Senate and House, eliminates two provisions that reduce Social Security benefits for certain individuals with pension income from public work where Social Security payroll taxes were not paid. This change will affect around 2.5 million beneficiaries, providing higher benefit payments and potentially retroactive payments.
Cost-of-Living Adjustment
In 2025, all beneficiaries will see a 2.5% increase to their Social Security benefit checks, thanks to the annual cost-of-living adjustment. This increase will be effective with January checks for over 72.5 million Americans, including Supplemental Security Income beneficiaries. The average worker retirement benefit will be $1,976 per month, up from $1,927 in 2024.
Medicare Part B Premiums
Monthly Medicare Part B premiums will increase to $185 per month, a $10.30 rise from 2024. Part B deductibles will also rise to $257, a $17 increase from 2024. These premiums are based on a beneficiary’s modified adjusted gross income from their tax returns from two years prior.
Medicare Part D Prescription Drug Cap
Annual out-of-pocket Medicare Part D drug costs will now be capped at $2,000, thanks to changes enacted with the Inflation Reduction Act. Beneficiaries with Medicare Part D drug plans will pay out-of-pocket costs until the deductible is met, then owe 25% of the cost of coinsurance until their out-of-pocket spending reaches $2,000.
Insulin Costs Capped
Insulin costs have also been capped at $35 per month, both under Medicare Part D covered treatments and Medicare Part B covered insulin used with pumps.
Social Security Trust Fund Depletion
The Social Security trustees project that the trust fund may be depleted in 2033, with only 79% of benefits payable unless Congress acts sooner. The combined trust funds are projected to run out in 2035. The Social Security Fairness Act may move the trust fund depletion date six months closer.
Expert Insights
Financial advisors emphasize that the trust fund depletion shouldn’t affect personal claiming decisions. However, for younger generations, there could be changes to future benefits. For those already receiving or about to get Social Security checks, there’s no need to worry.
These changes will have a significant impact on retirees and pensioners, providing increased benefits and financial relief. As we move forward, it’s essential to stay informed about these changes and their implications for personal finance and retirement planning.
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