The Cost-of-living adjustment (COLA) is the yearly increase to Social Security and Medicare benefits that reflects changes in the Consumer Price Index, accounting for inflation or deflation.
Congress added the COLA provision to Social Security in 1972, making benefit increases automatic instead of requiring separate congressional action. In 2025, as many as 68 million people receiving Social Security benefits may be affected by the COLA.
In 2025, the COLA increase is 2.5%. The size of the annual COLA increase is based on the Consumer Price Index (CPI), which tracks changes in the prices of everyday goods and services.
Anyone who receives any Social Security benefits qualifies for the COLA adjustment. This includes people collecting:
- retirement benefits
- Supplemental Security Income (SSI) benefits
- Social Security Disability Insurance (SSDI) benefits
- survivor benefits
A person typically has to receive such benefits for one year before they would qualify for COLA.
COLA can indirectly apply to Medicare by affecting the Social Security benefits that help pay for Medicare.
But, Medicare Part B and Part D premiums can also rise to match inflation. This means that often the increase in Social Security benefits goes toward paying higher Medicare costs.
Since Medicare premiums are usually deducted from Social Security checks, a bigger COLA can reduce or even cancel the extra money a person receives from their benefit.
Medicare resources
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