Liz Weston: The reality is that rising Medicare premiums frequently consume the annual adjustments in Social Security due to cost-of-living increases. Here’s why that matters.
- Business (https://www.oregonlive.com/business/)
- Updated: Dec. 20, 2025, 7:11 a.m.
- Published: Dec. 20, 2025, 7:00 a.m.
Imagine opening your mailbox and finding the notice that you’ve received a 2.8% increase in your Social Security benefits for 2026. Exciting, right? But then you discover that your Medicare deductions have also increased, leaving you with a mere $20 more each month for your wife and $80 for yourself. This situation raises an important question: Are we really keeping pace with the cost of living as promised by the Social Security Administration (SSA)? Are we just fortunate that our benefits didn’t decrease?
Answer: In short, yes, you are fortunate, but the situation is indeed frustrating.
Healthcare expenses, including insurance premiums, tend to rise at a rate that outpaces general inflation consistently. While Medicare costs have not risen as rapidly as those associated with private insurance, it is still common for elevated Medicare premiums to negate any gains provided by Social Security cost-of-living adjustments (COLAs) within a given year.
Fortunately, there are other avenues available to help mitigate the effects of inflation. It’s important to note that the Income-Related Monthly Adjustment Amount (IRMAA)—an additional charge for those whose modified adjusted gross income exceeds $109,000 for single filers or $218,000 for married couples filing jointly—plays a role here. This surcharge is calculated based on your tax return from two years prior, meaning that your IRMAA for 2026 is derived from your 2024 income tax filings.
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Dear Liz: Your insightful response regarding the misleading advice about closing credit accounts was incredibly valuable to readers.
Throughout my financial journey, I have opened and closed numerous credit accounts. In fact, I’ve only encountered one instance where an issuer closed a credit card due to inactivity, and even then, my credit score remained largely unaffected. In my experience, closing an account has only slightly impacted my score by a few points, and those changes were short-lived.
Misinformation like what that individual shared can easily lead to confusion for those who are new to understanding credit and how it operates.
Answer: Historically, before the introduction of credit scoring systems, having a previous account closed by a lender could negatively impact your ability to secure new loans or credit cards. However, in today’s landscape, it no longer matters who initiates the closure of an account, and there’s no need to indicate whether you requested it to be closed. If you mishandled the account, missed payments will be recorded on your credit report, which will affect your scores. Conversely, if you managed the account well, that too will be reflected positively on your reports.
As discussed in earlier columns, closing credit accounts can have varying effects on your credit scores depending on your overall credit profile. For those with few accounts or significant negative marks on their credit history, closing a high-limit card might result in a more pronounced drop in score compared to shutting down a card with a lower limit.
However, individuals with an extensive array of credit accounts and a solid track record of responsible management are less likely to experience serious or enduring harm to their credit scores when they decide to close an account.
Liz Weston is a Certified Financial Planner and writes a personal finance column for NerdWallet. If you have questions, feel free to reach out to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or through the "Contact" form at asklizweston.com. (https://asklizweston.com/)
