Medicare Part B premiums and deductibles are going up again for 2025, and a new analysis has found that the premiums are growing at more than double the rate of the annual Social Security cost-of-living adjustment (COLA) in recent years.
“The Part B premium is growing by 5.9%, but the COLA will only increase checks by 2.5%.”
Mary Johnson
Late last Friday afternoon, the Centers for Medicare and Medicaid Services (CMS) released the 2025 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs, and the 2025 Medicare Part D income-related monthly adjustment amounts.
Each year, the Medicare Part B premium, deductible, and coinsurance rates are determined according to provisions of the Social Security Act. The standard monthly premium for Medicare Part B enrollees will be $185.00 for 2025, an increase of $10.30 from $174.70 in 2024. The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.
CMS said the increase in the 2025 Part B standard premium and deductible is mainly due to projected price changes and assumed utilization increases that are consistent with historical experience.
For those who already receive Social Security benefits, the new 2025 Part B premium is automatically deducted from Social Security checks, and the new amount will be deducted starting in January. Those who aren’t receiving Social Security benefits yet and paying Medicare Part B each month will have to make sure they pay the new higher amount, starting in January.
And that new higher amount will eat further into Social Security beneficiaries’ COLA, according to an analysis by independent Medicare and Social Security policy analyst Mary Johnson.
“Part B premiums are consuming a growing share of monthly Social Security checks, in 2025. The Part B premium is growing by 5.9%, but the COLA will only increase checks by 2.5%,” Johnson said. “That growth rate is about average for Part B premiums for the past decade, but slightly lower than the 2.8% average rate of growth in COLAs over the same period.”
While most Social Security recipients aged 65 and older will have benefits high enough to cover the $10.30 per month increase of Part B premiums from $174.70 to $185.00, the same is not true of individuals who pay higher premiums based on income, Johnson noted. Medicare recipients with incomes greater than $103,000 and couples with incomes greater than $206,000 and up pay higher monthly premiums. Depending on filing status, she said some Medicare beneficiaries with joint returns could pay as much as $552.10 per month, or even $628.90 per month if married and filing separately in 2025.
Because a beneficiary’s Part B monthly premium is based on income, high-income Americans also pay an Income-Related Monthly Adjustment Amount, or IRMAA, that affects roughly 8% of people with Medicare Part B, CMS said.
Medicare Part A covers inpatient hospitals, skilled nursing facilities, hospice, inpatient rehabilitation, and some home health care services. About 99% of Medicare beneficiaries do not have a Part A premium because they have at least 40 quarters of Medicare-covered employment, as determined by the Social Security Administration.
CMS said the Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital will be $1,676 in 2025, an increase of $44 from $1,632 in 2024. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2025, beneficiaries must pay a coinsurance amount of $419 per day for the 61st through 90th day of a hospitalization ($408 in 2024) in a benefit period and $838 per day for lifetime reserve days ($816 in 2024). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $209.50 in 2025 ($204.00 in 2024).
2025 FSA contribution limit
In a Nov. 7 news release, the Internal Revenue Service reminded taxpayers that during open enrollment season for flexible spending arrangements (FSAs) they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans.
An employee who chooses to participate in an FSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax.
If the plan allows, the employer may also contribute to an employee’s FSA. If the employee’s spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household.
For FSAs that permit the carryover of unused amounts, the maximum carryover amount to 2025 is $660, increasing from $640 in tax year 2024. The carryover doesn’t affect the maximum amount of salary reduction contributions that can be made.
Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take advantage of an FSA during 2025. Self-employed individuals are not eligible.
2025 HSA limits
Back in May, the IRS announced that Health Savings Account owners will be able to contribute slightly more to the triple-tax-advantaged accounts in 2025. The IRS raised limits by $150 for individuals and by $250 for individuals with family coverage compared to this year’s limits.
According to IRS Revenue Procedure 2024-25, for calendar year 2025, the annual HSA contribution limit for an individual with self-only coverage under a high-deductible health plan (HDHP) will be $4,300, up from $4,150 in 2024. For an individual with family coverage, the amount will be $8,550, up from $8,300. Those who are age 55 or older by the end of the year can contribute an additional $1,000 to their HSA.
To be eligible to contribute, a participant must have an HSA-qualified high-deductible health plan (HDHP) and not be enrolled in Medicare. The IRS also updated the definition of an HDHP for 2025. Next year, a health plan with an annual deductible that isn’t less than $1,650 for self-only coverage, up from $1,600 this year, or $3,300 for family coverage, up from $3,200 in 2024, will be defined as a high-deductible health plan.
Medicare future in doubt?
As a result of the Nov. 5 election, Johnson hinted that the future of Medicare is somewhat murkier.
“With control of Congress coming into focus, I’m expecting to see potential legislative proposals that may try to end Medicare as we know it, replacing it with a system of private health plans and providing beneficiaries with vouchers or tax credits to purchase coverage,” Johnson said. “We already are painfully aware of the hassles of private Medicare Advantage plans. Enrollees in these plans spend hours trying to confirm participating providers, must get prior authorization requirements for nearly every procedure, and then wind up with extremely high annual out-of-pocket maximums which can range in the five digits for out-of-network care.”
Efforts to significantly alter or defund such a deeply embedded program with strong bipartisan support as Medicare would likely face strong opposition from the public, advocacy groups, and many members of Congress, making a full repeal within the next four years unlikely.
However, the Trump administration and Congress could pursue changes that may affect Medicare’s structure or funding, including increasing privatization efforts, adjusting eligibility criteria, or modifying the way benefits are delivered.
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