Social Security COLA Increases: What They Mean for Medicaid Eligibility in 2025

This year, people receiving Social Security benefits saw a 2.5 percent Cost-of-Living Adjustment (COLA) added to their monthly benefit payments. However, these COLA increases do not affect Medicaid eligibility for a certain period at the start of each year. This is because COLAs take effect before the federal government updates the Federal Poverty Levels (FPLs), which determine Medicaid income limits. The 2025 FPLs were published in January, but the new COLA amounts should not be counted until March 2025 for most Medicaid eligibility categories.

Each year, PHLP receives reports from people whose Medicaid benefits have been reduced or terminated because the County Assistance Office (CAO) mistakenly counted the Social Security COLA too early. Those affected should file an appeal immediately and request that the CAO reinstate their benefits in accordance with Operations Memorandum 25-01-01, which outlines the rule described above.

People who encounter eligibility issued caused by the CAO counting their COLA too early are encouraged to contact their local legal aid program or PHLP’s Helpline at 1-800-274-3258 for assistance.