Retirees Can Expect Significant Changes to Social Security and Medicare in 2025
President Joe Biden is expected to sign a bill that will increase Social Security benefits for certain pensioners, while Medicare enrollees will see a $2,000 annual out-of-pocket Part D prescription drug cap. Here are some key changes to note for the coming year:
* Some pensioners may see benefit increases: The Social Security Fairness Act eliminates two provisions that reduce Social Security benefits for certain individuals who also receive pension income from public work where Social Security payroll taxes were not paid. This includes the Windfall Elimination Provision and the Government Pension Offset, which affect around 2.5 million beneficiaries.
* 2.5% COLA: All Social Security beneficiaries will see a 2.5% increase to their benefit checks in 2025, due to an annual cost-of-living adjustment. The average worker retirement benefit will be $1,976 per month, up from $1,927 in 2024.
* Monthly Medicare Part B premiums: The standard monthly Part B premium will be $185 per month, a $10.30 increase from $174.70 in 2024. Part B deductibles will also rise to $257 in 2025.
* Medicare Part D prescription drug cap: Annual out-of-pocket Medicare Part D drug costs will be capped at $2,000, starting in 2025. Beneficiaries will have the option to pay out-of-pocket costs monthly or all at once.
* Social Security trust fund depletion dates: The Social Security trustees projected the trust fund may be depleted in 2033, at which point just 79% of benefits may be payable. The combined trust funds are projected to run out in 2035.
* Maximum taxable earnings: The amount of wages subject to Social Security payroll taxes will rise to $176,100 in 2025, up from $168,600 in 2024.
* Retirement earnings test: Social Security beneficiaries who claim benefits before their full retirement age and who continue to work face a retirement earnings test. The earnings exempt from the test is now $23,400 per year in 2025, up from $22,320 per year in 2024.
* In-person Social Security appointments: Starting January 6, the Social Security Administration will require appointments for local office services, such as obtaining Social Security cards.