By Joanne Bump
Medicare Premium Increase Takes a Large Bite From the Social Security (SS) Benefits COLA–The official 2026 cost-of-living adjustment (COLA) for SS benefits is up 2.8 percent. However, the cost of Medicare premiums is up 11.6 percent, an increase of $21.54 monthly for a typical beneficiary. So, the increased Medicare cost erases about 40 percent of the increase in SS benefits. Beginning January 1, 2026, the Part B standard monthly Medicare premium will be $202.90, an increase of $17.90 from 2025. Michigan state employee retirees in the defined benefit plan may receive the Medicare Advantage (MA) health insurance. To participate in any Medicare Advantage plan (Part C), individuals need to first be enrolled in original Medicare Parts A and B, and must continue paying the premiums. Further, the Part B deductible will be $283, a $26 increase from 2025. The 2026 Part A inpatient hospital deductible will be $1,736. These higher costs will leave many retirees finding it difficult to keep pace with real-world inflation. Many older adults spend a higher percentage of their income on health care, housing, and utilities, which usually increase faster than overall inflation.
Pension Tax Relief Continues (Public Act (PA) 4 of 2023)–Michigan lowered the State income tax on pensions, effective February 13, 2024, making available substantial tax relief for seniors. It phased in an income tax reduction over a period of four years for retirees receiving a pension, by steadily restoring more favorable tax treatment for retirement income, with full restoration for most by 2026. See the Office of Retirement Services (ORS) “Retirement state tax changes” comparison chart, illustrating how PA 4 of 2023 cut the pension tax by phasing it in by tax year, giving taxpayers the option of choosing the most advantageous tax scenario. It allows retirees to choose annually between the limitations on the deductibility of retirement and pension income, as outlined in the Income Tax Act of 1967, or the new limitations in PA 4 of 2023.
Tax Filings for 2025 and 2026 State Pension Income – For the 2025 tax year that will be filed in 2026, Michigan’s tax return, forms, and instructions incorporate all retirement and pension benefit subtraction options – including those created by PA 4 of 2023. The options and eligibility depend on the taxpayer’s year of birth (or the older spouse’s birth year for joint filers). See the “FAQs for Public Act 4 of 2023 – Retirement State Tax Changes for Tax Years 2025 & 2-26” chart.
The State of Michigan Investment Board (SMIB) – The SMIB did not renew the $10 million State of Israel bond when it matured this November 1, according to a December 1, 2025, Gongwer report. Matt Clark, with Michigan Divest, an organization advocating for ending the State of Israel investments, called it a win, saying that actions speak louder than words. Those testifying made their voices heard in three separate SMIB meetings since October 2024. They asked the SMIB to stop all investments in the Israel bonds. Ron Leix, with the Michigan Department of Treasury, said that people shouldn’t read politics into the State’s financial portfolio. Investment decisions are made based on market conditions, risk assessments ,and expected returns. “It does not reflect any change in policy or position regarding the State of Israel …” Clark acknowledged that the State of Israel bonds are not likely to have the same return on investment as they would have two years ago. “They’re a riskier investment financially, and of course, morally,” he said.
Affordable Care Act (ACA) Health Insurance – ACA enrollment grew to over 24 million people for the 2025 plan year, with most receiving the enhanced Premium Tax Credit (PTC). That enhancement is set to expire at the end of 2025. With that expiration time drawing near, the U.S. Senate is expected to vote on the issue by mid-December 2025. This vote was negotiated as part of the agreement to recently reopen the federal government. While options are under consideration for this vote, there is no deal yet on the PTCs. One proposal extends the current subsidies for two to three years, allowing more time to plan. Or, the administration has floated providing direct cash assistance with the specific amount varying by proposal. The administration’s Truth Social post suggests direct payments to Americans of $2,000 as a tariff dividend, to cover health care costs, according to a November 11, 2025, CNBC report. Another approach provides Flexible Spending Accounts (FSAs) where those eligible would get a pre-funded FSA equal to the PTC amount, that they would have received if the money had gone through their insurance company. This could provide greater flexibility to pay for prescription drugs, dental, medical care, or eyeglasses.
ACA Premiums Are Expected to More Than Double – These premiums are expected to increase next year, according the Kaiser Family Foundation (KFF), a nonpartisan health policy research group. When enrollees were asked, “what would they do if their ACA cost doubled,” 25 percent said they would likely go uninsured, according to a 2025 KFF survey. When the ACA premium tax credits expire, our Medicare Advantage insurance plans do not directly change. However, the larger health system feels pressure. Enrollees have to pay significantly higher ACA premiums or be uninsured. This particularly affects older adults, aged 50-64, not yet qualifying for Medicare at age 65. This leads to worsening higher uncompensated care for hospitals. When healthier, young people frequently exit the marketplace first, this leaves the sicker, costlier group that drives up premiums for those remaining. When more people are uninsured, it increases costs that may be shifted to private plans. CVS Health, Humana, and UnitedHealth Group have announced they will scale back MA plans in 2026, due lower Medicare and Medicaid reimbursement, rising health care costs, and use as reported by Reuters on October 1, 2025.
Keeping Your Lights On – The Public Service Commission (PSC) recently approved 13 recommendations for improving the power restoration times for critical facilities like schools, hospitals, and those used by first responders following storms. These changes resulted from the work beginning in 2023 to improve services for customers during extreme weather. They are intended to enhance reliability requirements that serve our communities, and maintain important public health and safety, according to Gongwer on December 5, 2025.
(Editor’s Note: Joanne Bump serves as feature columnist for “Retirement Matters.” Column content is time sensitive and is based on information as of 12/7/25. Sources are primarily from non-profit, and government policy research organizations. Joanne can be contacted by e-mail at joannebump@gmail.com.)