Your Real 2026 Social Security Raise After Medicare: What Maryland Retirees Need to Know

The 2026 Social Security cost-of-living adjustment (COLA) is 2.8%. That sounds like a meaningful raise—until Medicare Part B takes its cut. After the $17.90/month Part B premium increase, the average retiree’s net raise drops to roughly 1.8–2.0%. For a typical retired worker, that’s about $38 per month in actual additional income—not the $57 the headlines suggest.

This guide walks through the real math, explains who the hold harmless rule actually protects, covers the ACA premium spike hitting early retirees, and outlines the Maryland-specific tax strategies that can help offset what Medicare takes away.

How Much Is Your Real 2026 Social Security Net Increase?

For the average retired worker, about $38 per month. Here’s the step-by-step math:

The 2026 COLA is 2.8%. The standard Medicare Part B premium increased by $17.90 to $202.90 per month. To see what you actually keep, you need to subtract the premium increase from your COLA increase.

Item	Amount
2025 Average Monthly Benefit (retired worker)	$1,976 per SSA
2026 COLA (2.8%)	+$55.33
Medicare Part B Premium Increase	–$17.90
2026 Net Monthly Increase	+$37.43
Effective Raise After Part B	~1.9%

Note: The average benefit figure above should be verified against the latest SSA data for your planning. Your personal COLA increase depends on your individual benefit amount. You can find your exact 2026 benefit in your my Social Security account or December COLA notice.

Why does one-third of the COLA disappear?

Because Medicare Part B premiums have been rising faster than inflation for three consecutive years. In 2026, the Part B increase of 9.7% was more than three times the COLA of 2.8%. The COLA is designed to help retirees keep up with inflation, but healthcare costs consistently outpace the general inflation measure used to calculate it.

And that’s before you consider Part D premium changes, the new Part B deductible of $283 (up $26), IRMAA surcharges for higher-income retirees, and inflation in everyday essentials like utilities, food, and property taxes.

One bright spot for 2026: the Inflation Reduction Act’s new $2,100 annual out-of-pocket cap on Part D prescription drug costs is now in effect. If you take expensive medications, this could meaningfully offset some of the premium squeeze.

Does the Hold Harmless Rule Protect Your COLA?

For most retirees, no—not in the way you’d expect. The hold harmless provision prevents a Medicare Part B premium increase from reducing your monthly Social Security check below what it was the prior year. It does not guarantee you will receive the full COLA.

In practical terms, hold harmless only fully applies if your monthly benefit is roughly $640 or less—because at that level, 2.8% of your benefit is less than the $17.90 premium increase. For everyone above that threshold (which is most retirees), the full $17.90 comes out of your COLA.

Common Misconceptions

Misconception	Reality
“Hold harmless means my full COLA is protected.”	It only prevents a reduction below your prior-year check. It does not preserve the full raise.
“New Medicare enrollees are protected.”	New enrollees are NOT covered by the hold harmless provision.
“Married couples get special treatment.”	Part B premiums are assessed per person, not per household.

What About IRMAA? Higher-Income Retirees Pay Even More

If your modified adjusted gross income exceeds $106,000 (single) or $212,000 (married filing jointly), you’re subject to Income-Related Monthly Adjustment Amounts (IRMAA). For 2026, IRMAA-adjusted Part B premiums range from $284.10 to $689.90 per month, depending on your income tier.

IRMAA is based on your tax return from two years prior—so your 2024 return determines your 2026 premiums. This is important because a one-time income event (selling a property, Roth conversion, large capital gain) can push you into a higher bracket temporarily.

Planning point: If you experienced a life-changing event—such as retirement, divorce, or loss of income—you may appeal your IRMAA determination using SSA Form SSA-44. This is one of the most underused tools in retirement income planning.

The Pre-Retiree Cliff: Maryland’s ACA Premium Spike

If you’re retired but not yet on Medicare—typically ages 62 to 64—the 2026 picture is even more challenging.

Maryland’s ACA marketplace premiums for 2026 rose an average of 13.4%. But that’s only the base rate increase. The enhanced federal premium tax credits that had been in place since 2021 expired on January 1, 2026, which means many early retirees are now paying significantly more out of pocket—even with Maryland’s new state Premium Assistance program partially filling the gap.

For a couple in their early 60s, this could mean $250–$500+ more per month in net premiums, depending on income and plan selection. This hits pre-retirees hardest because they face the highest age-based ACA premiums, often rely on 401(k) withdrawals before Social Security starts, and have fewer tax-advantaged tools available.

Planning point: A strategic withdrawal plan—balancing Roth conversions, taxable income, and ACA subsidy eligibility—can be the difference between affordable coverage and a runaway cost. Under the reverted PTC rules, keeping household income under 400% of the federal poverty level ($62,600 single / $84,600 couple in 2026) is critical for maintaining any subsidy eligibility.

Maryland Tax Strategies That Can Offset the Medicare Squeeze

Maryland retirees have access to three meaningful tax advantages that most residents underuse. Used together, they can offset all—or even more—of what the Medicare premium increase takes away.

The Maryland Pension Exclusion

Maryland allows eligible retirees to exclude up to $41,200 (TY2025 amount) of qualifying retirement income from state taxation. Eligibility requires being age 65 or older, totally disabled, or having a totally disabled spouse.

This exclusion applies to distributions from qualified employer retirement plans—pensions, 401(k)s, 403(b)s, and 457(b) plans. It does not apply to IRA distributions. The exclusion is reduced dollar-for-dollar by Social Security and Railroad Retirement benefits received.

Planning caution: Rolling a 401(k) into an IRA eliminates pension exclusion eligibility for those funds. This is one of the most consequential—and commonly overlooked—decisions in Maryland retirement planning. Depending on your Social Security amount, this single move can cost $20,000–$50,000+ in lifetime state taxes.

The Maryland Senior Tax Credit

Maryland offers a nonrefundable Senior Tax Credit for residents age 65 or older. For TY2024 (the most recent published guidance), the credit amounts are:

• $1,000 for single filers with Federal AGI ≤ $100,000
• $1,750 for married couples filing jointly with Federal AGI ≤ $150,000 (reduced to $1,000 if only one spouse is 65+)

The credit is claimed on Maryland Form 502CR, Part M.

Does Maryland Tax Social Security?

No. Maryland does not tax Social Security benefits at all. This makes Maryland more retiree-friendly than many residents realize. When you combine zero Social Security state tax with the pension exclusion and senior credit, a coordinated strategy can substantially reduce your overall state tax burden.

What Should You Do Next? A 2026 Retirement Budget Checklist

The numbers above tell only part of the story. What matters is how you respond. Here’s a practical framework:

1. Calculate your personal net increase.

Log into my Social Security (ssa.gov) or review your December COLA notice. Take your new 2026 benefit amount, subtract $202.90 for Part B (plus any IRMAA surcharge), and compare to your 2025 net. That’s your true raise.

2. Check your IRMAA exposure.

Review your 2024 tax return. If your modified AGI exceeded $106,000 (single) or $212,000 (joint), you’re likely paying IRMAA surcharges in 2026. Consider whether a Life-Changing Event appeal applies.

3. Review your Part D plan.

Open enrollment ended in December, but if you missed it or your plan changed, review your drug formulary, premiums, and the new $2,100 out-of-pocket cap to ensure you’re in the best plan for your medications.

4. Verify your Maryland tax break eligibility.

Confirm that you’re claiming the pension exclusion correctly (especially if you’ve rolled funds into IRAs), taking the senior tax credit if eligible, and not overpaying state tax on Social Security.

5. Revisit your withdrawal strategy.

A coordinated plan across Social Security timing, Roth conversions, taxable withdrawals, and ACA/Medicare considerations can reduce taxable income, avoid or minimize IRMAA, optimize ACA subsidies for early retirees, and extend portfolio longevity. This is where working with a financial planner who understands the interaction between all seven of these retirement decisions makes the biggest difference.

Want clarity on your 2026 net income?

Retirement planning is more complex than ever—especially when premiums rise faster than benefits and taxes vary year to year. If you want a clear picture of where you stand, we’re happy to talk it through.