Social Security COLA forecast for 2024 is around 3%

The Social Security inflation adjustment for next year is coming into view, and it looks like it will a healthy figure - just not as large as this year’s historic 8.7 percent raise.

The recent slowdown in inflation points to a 2024 Social Security cost-of-living adjustment, or COLA, of around 3 percent, although some forecasts peg the figure a bit higher. But a COLA in that range would still be larger than the average 2.6 percent adjustment over the past two decades.

The COLA is a crucial feature of Social Security that helps seniors and other Social Security beneficiaries keep up with inflation. The Social Security Administration will announce the COLA in October, after September inflation data is released. Beneficiaries will begin to receive the increases in January, but for retirees enrolled in Medicare, the amount of the raise will depend on one more number: the monthly Medicare Part B premium.

The premium for Part B typically is deducted from Social Security benefits, and large increases can cut deeply into COLAs. Official word on the 2024 Part B premium won’t come until the fall, but Medicare’s trustees forecast a premium of $174.80 — an increase of 6 percent, or $9.90 per month, from the current standard premium.

Social Security beneficiaries have experienced unusual volatility recently in the COLA and Part B premium changes. This year, the 8.7 percent adjustment was the largest in 40 years, and the Part B premium was reduced to walk back a 14.5 percent increase in 2022. It was the first time the premium fell in more than a decade.

In part, Medicare officials were aiming to recoup costs that went uncovered in 2021 after Congress capped the increase that year as a pandemic relief measure. But they also were building financial reserves to cover the expected cost of Aduhelm, a controversial, high-cost drug used to treat Alzheimer’s that the Food and Drug Administration approved. The drug would be covered under Part B because it is administered intravenously by health care providers. Medicare ultimately limited its availability, but the large premium increase in 2022 stuck.

The possible financial impact of another expensive drug surfaced with the recent F.D.A. approval of Leqembi, an Alzheimer’s drug that has shown more promising results than Aduhelm.

Medicare will cover Leqembi under Part B for patients who qualify, although it will also require physicians to participate in a data-collection effort to monitor the drug’s effectiveness and risks. The manufacturer’s projected uptake for the drug is modest — 100,000 patients over the first three years of availability. The drug seems unlikely to have a major impact on the Part B premium, at least in the short term.

Learn more in my latest Retiring column for The New York Times.

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