Markus Andrews

The Consumer Financial Protection Bureau has finalized a rule that will remove an estimated $49 billion in medical bills from credit reports.
With the change, Americans with medical debt could see their credit scores increase by an average of 20 points, the CFPB reported.
Vice President Kamala Harris also announced more than $1 billion in medical debts have been eliminated.

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The Consumer Financial Protection Bureau on Tuesday announced it has finalized a rule to remove about $49 billion in medical debt from credit reports, a change that will affect an estimated 15 million Americans.
Individuals who have medical debt on their credit reports may see their credit scores increase by an average of 20 points following the rule, according to the CFPB. It said the change is also expected to result in the approval of about 22,000 additional affordable mortgages every year.

With the rule, consumer reporting agencies will be prohibited from including medical debt information with credit reports and credit scores sent to lenders. In addition, creditors will no longer be able to use certain medical information for lending decisions. The CFPB proposed the rule in June.
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More than 100 million Americans struggle with medical debt, which comprises the largest type of debt in collections ahead of auto loans, credit cards and utilities, according to the Biden-Harris administration.
Consumers are often asked to pay balances that should be covered by health insurance or financial assistance programs, and also frequently report receiving inaccurate medical bills, according to the CFPB.
The consumer finance watchdog agency’s move comes after its own research found medical bills on credit reports are not good predictors of whether someone will repay a loan.

“People who get sick shouldn’t have their financial future upended,” CFPB Director Rohit Chopra said in a statement. “The CFPB’s final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe.”

A 2022 report released by the agency found medical bills accounted for $88 billion of debts reported on credit reports as of June 2021. Following those findings, the three major credit reporting agencies — Equifax, Experian and TransUnion — took some types of medical debt off credit reports, such as debts under $500. Credit scoring companies FICO and VantageScore also moved to de-emphasize the impact of medical debt on credit scores.

More than $1 billion in medical debt eliminated

Along with the finalization of the CFPB rule, Vice President Kamala Harris announced that more than $1 billion in medical debt has been eliminated for more than 750,000 Americans in certain states, counties and cities.
Residents have had medical debt eliminated in states including New Jersey and Connecticut; counties including Cook County, Illinois; Lucas County, Ohio; Wayne and Oakland counties, Michigan; and cities including Cleveland and Toledo, Ohio; New Orleans; St. Paul, Minnesota; and Washington, D.C.
Up to $7 billion in medical debt may be eliminated for almost 3 million Americans by the end of 2026 with the support of the American Rescue Plan Act, legislation that was enacted in 2021.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Harris said in a statement.

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If you’re eager to max out your 401(k) plan early in 2025, you could miss part of your employer’s matching contribution without the “true-up” feature.
The true-up deposits the rest of your company’s 401(k) match if you max out employee deferrals before year-end. 
Roughly 67% of 401(k) plans that offer matches more than annually had a true-up in 2023, according to a yearly survey by the Plan Sponsor Council of America in December.

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A penalty ‘for maxing out too early’

Lump-sum investing, or putting larger amounts of money to work sooner, maximizes time in the market, which can increase growth potential, according to research from Vanguard released in 2023.    
But it’s important to understand your 401(k) plan before front-loading contributions, because not all plans offer a true-up feature, experts say.

Roughly 67% of 401(k) plans that offer matches more than annually had a true-up in 2023, according to a yearly survey released by the Plan Sponsor Council of America in December.

Clients have been “penalized for maxing out too early” without a true-up, which meant “leaving money on the table,” said CFP Ann Reilley, principal and CEO of Alpha Financial Advisors in Charlotte, North Carolina. She is also a certified public accountant.
For example, let’s say you’re under age 50, making $200,000 per year, and your company offers a 5% 401(k) match without a true-up.
With 26 pay periods and a 20% contribution rate, you’ll reach the $23,500 deferral limit for 2025 after 16 paychecks and only receive about $6,200 of your employer match. In this case, you’d miss roughly $3,800 of your employer 401(k) match by maxing out early without a true-up.
You can learn more by checking your 401(k) summary plan description, which outlines key details about the account, Reilley said.  

Higher deferrals, catch-up contributions for 2025 

Of course, many investors can’t afford to max out employee deferrals amid competing financial priorities.  
Only about 14% of employees maxed out 401(k) plans in 2023, according to Vanguard’s 2024 How America Saves report, based on data from 1,500 qualified plans and nearly 5 million participants.
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The Social Security Fairness Act has been signed into law by President Joe Biden.
The law eliminates two provisions, the Windfall Elimination Provision and the Government Pension Offset, that reduced Social Security benefits for some public pensioners.
Here’s how that affects retirement planning for almost 3 million beneficiaries.

President Joe Biden after he signed the Social Security Fairness Act at the White House on Jan. 5 in Washington, D.C. 
Kent Nishimura | Getty Images News | Getty Images

President Joe Biden on Sunday signed the Social Security Fairness Act into law, clearing the way for nearly 3 million public workers including teachers, firefighters and police to see an increase to their Social Security benefits.
Now, two provisions that reduced Social Security benefits for certain public workers who receive pensions — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO — have been eliminated.

The WEP and GPO were put in place more than four decades ago. When the provisions were created, the goal was to ensure that workers who earn public pensions from employment where they did not pay into Social Security, but who also qualify for Social Security benefits through other work, receive the same payout as workers who pay into Social Security for their entire careers.
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The WEP was enacted in 1983 and reduces Social Security benefits for some workers who also receive pension or disability benefits from work where Social Security payroll taxes were not withheld.
The GPO was enacted in 1977 and reduces Social Security benefits for certain spouses, widows and widowers who also receive income from their own government pensions.

How much Social Security benefits may increase

The new law affects benefits payable after December 2023.

More than 2.5 million Americans will receive a lump-sum payment of thousands of dollars to make up for the shortfall in benefits they should have received in 2024, Biden said on Sunday.
Eliminating the WEP will increase monthly Social Security benefits for 2.1 million beneficiaries by $360, on average, as of December 2025, the Congressional Budget Office has estimated.
Eliminating the GPO will increase monthly benefits by an average of $700 for 380,000 spouses and by an average of $1,190 for 390,000 surviving spouses as of December 2025, according to CBO.

“The Social Security Administration is determining the timelines for implementing this new law,” a Social Security spokesperson told CNBC on Monday. “We will provide more information on our website as it becomes available.”
For now, beneficiaries should make sure the Social Security Administration has their current mailing address and direct deposit information on file, according to the agency. That information can be updated online or by calling or visiting a Social Security office.

WEP, GPO often came as unpleasant surprise

The WEP and GPO benefit reductions often came as an unpleasant surprise to affected beneficiaries during the retirement planning process because the provisions were often not well publicized, said Abrin Berkemeyer, a certified financial planner and senior financial advisor at Goodman Financial in Houston.
“It should be a windfall for quite a lot of folks,” Berkemeyer said of the change.
For some beneficiaries affected by the change, the extra income will be life-changing, according to CFP Barbara O’Neill, owner and CEO of Money Talk, a provider of financial planning seminars and publications.
O’Neill, a former Rutgers University professor, has been personally affected by the WEP.
Once she started to claim her pension, she notified the Social Security Administration. At that point, her monthly benefits were reduced, but it took about five months for the change to be processed, prompting the agency to claw back the benefits she was overpaid during those months.

Now that the WEP and GPO provisions have been eliminated, that takes away a common source of overpayments, where beneficiaries owe money to the Social Security Administration after receiving more money than they were due. The provisions have prompted overpayment issues due to a lack of available data on pensions from noncovered employment, according to the Congressional Research Service.
Generally, the elimination of the WEP and GPO will make retirement planning simpler, experts say.
The extra money the change provides to beneficiaries puts less pressure on them to generate income from other assets they may have, said Michael Carbone, a CFP and partner at Eppolito, Carbone & Co. in Chelmsford, Mass.
What’s more, it also eliminates the need for the complex calculations the provisions required in order to gauge benefit income, said CFP Andrew Herzog, associate wealth manager at The Watchman Group in Plano, Texas.
“That certainly makes things easier,” Herzog said. “It gives people a sigh of relief.” More

Spot bitcoin ETFs combined to rake in tens of billions of dollars in 2024.
The Calamos fund will combine options exposure on the Cboe Bitcoin U.S. ETF Index with Treasury holdings and is designed to be held for 12 months.
Calamos is not the only ETF manager working on how to marry crypto exposure with other popular styles of funds.

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Bitcoin ETFs were a hit with investors in 2024, and now asset management firms are starting to build out ways to combine crypto and derivatives in exchange-traded packages.
New products are set to roll out this month. Asset manager Calamos announced Monday that it will launch a structured protection ETF that aims to give investors a way to capture some of bitcoin’s upside with 100% downside protection.

The fund will combine options exposure on the Cboe Bitcoin U.S. ETF Index with Treasury holdings and is designed to be held for 12 months. The exact upside cap will be determined Jan. 22, based on options pricing. It will be traded under the ticker CBOJ.
The fund is essentially bringing a popular equity ETF strategy to crypto investing. Defined outcome products, including buffer funds, have boomed in recent years as investors look for new ways to diversify their portfolios. Their gain in popularity was seemingly helped by the 2022 market sell-off, when stocks and bonds both declined.
Spot bitcoin funds launched in January 2024 and had arguably the best debut in ETF history. The funds combined to rake in tens of billions of dollars and helped fuel bitcoin’s run to a record high above $100,000.

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Bitcoin has rallied sharply since ETFs tracking the cryptocurrency were approved last January.

The inflows and the crypto rally pushed the iShares Bitcoin Trust ETF (IBIT), the most popular of the funds, over $50 billion in total assets.
However, Matt Kaufman, head of ETFs at Calamos, said his team believes that financial advisors are still largely avoiding bitcoin because of its volatility history, and that these structured funds can win them over.

“For folks looking to access that space, they want to do so in a risk-managed framework, or something that makes a little more sense for their portfolio,” Kaufman said. He also thinks investors will hold the Calamos fund in conjunction with the pure-play bitcoin ETFs.
Calamos is not the only ETF manager working on how to marry crypto exposure with other popular styles of funds.
Innovator and First Trust are two other ETF issuers that have filed to launch funds with strategies similar to those of Calamos. Firms are also trying to combine bitcoin with income-generating strategies, including proposed covered call funds from issuers such as Grayscale and Roundhill.
More funds are likely to be filed throughout 2025, especially with a Securities and Exchange Commission that is expected to be more friendly to crypto under President-elect Donald Trump.

How it works

The Calamos fund is designed to be held for a 12-month period. The stated holding period is Jan. 22, 2025, to Jan. 31, 2026. Because the bitcoin exposure is built through options, which change in price as their expiration date gets closer, it is possible that investors who sell the fund early will get less than the expected gain from a bitcoin rally and could even suffer a loss.

Calamos Bitcoin Structured Alt Protection ETF – January

Ticker
Holding Period
Downside protection Target
Annual fee

CBOJ
1/22/2025-1/31/2026
100%
0.69%

Source: Calamos

Calamos also plans to launch “floor” funds that offer 90% and 80% protection for bitcoin, allowing for some initial losses in exchange for more upside.
Kaufman said the structure of the bitcoin products that work will likely look different than traditional buffer funds, which protect against the first stated percentage loss, because of the volatility in crypto.
“If you look at the S&P 500 returns, it looks like a normal bell curve distribution. If you look at the distribution of bitcoin returns, it looks much more like a smile. It’s all left tail risk or extreme far right on the upside. So if you built a buffer, you’re really not protecting against much of anything,” Kaufman said.
Another thing to watch is how the options market grows alongside the funds. Options tied to bitcoin ETFs only began rolling out in late 2024. Liquidity issues for options have hurt the performance of leveraged funds tied to MicroStrategy, which is often seen as a proxy for bitcoin.
“We have no concerns about capacity whatsoever,” Kaufman said about the options market for the Calamos funds. More

On Sunday, President Joe Biden signed the Social Security Fairness Act, paving the way for nearly 3 million public workers to boost their Social Security benefits.
The bipartisan legislation repeals two provisions that reduced Social Security benefits for certain public workers who also receive pension income.
Advocacy groups who lobbied for the changes for decades praised the change as a historic move.

 U.S. President Joe Biden speaks as he participates in a bill signing ceremony for the “Social Security Fairness Act” in the East Room of the White House, in Washington, U.S. on Jan. 5, 2025.
Nathan Howard | Reuters

President Joe Biden on Sunday signed the Social Security Fairness Act, bipartisan legislation that clears the way for teachers, firefighters, policeman and other public sector workers who also receive pension income to receive increases in their Social Security benefits.
The benefit boost comes as the new law repeals two provisions — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO — that have been in place for more than four decades.

The WEP reduces Social Security benefits for individuals who receive pension or disability benefits from employment where Social Security payroll taxes were not withheld. As of December 2023, that provision affected about 2 million Social Security beneficiaries.
The GPO reduces Social Security benefits for spouses, widows and widowers who also receive income from their own government pensions. In December 2023, the GPO affected almost 750,000 beneficiaries.
“By signing this bill, we’re extending Social Security benefits for millions of teachers, nurses and other public employees and their spouses and survivors,” Biden said Sunday. “That means an estimated average of $360 per month increase.”
That extra income is a “big deal” for middle-class households, he said.
More than 2.5 million Americans will receive a lump sum payment of thousands of dollars to make up for the shortfall in benefits they should have received in 2024, Biden said.

The Social Security Fairness Act will affect Social Security benefits payable after December 2023. More details on how the benefit increase will be implemented are not yet available, according to the Social Security Administration.
“With the repeal of WEP and GPO, federal retirees, along with so many others, will finally receive the full Social Security benefits they’ve earned,” William Shackelford, president of the National Active and Retired Federal Employees Association, said in a statement.
The bill was passed by the Senate on Dec. 21 with a 76 bipartisan majority vote, including Sens. Sherrod Brown, D-Ohio, and Susan Collins, R-Maine, who co-led the legislation in that chamber. In November, the Social Security Fairness Act was passed by the House with a 327 bipartisan majority, led by Reps. Garret Graves, R-La., and Abigail Spanberger, D-Va.
Advocacy groups who lobbied for the changes praised Biden’s signing of the bill as a historic move.
“Our organization has spent decades lobbying for the repeal of the WEP and GPO,” Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said in a statement. “We endorsed the Social Security Fairness Act — and are gratified to finally see this legislation enacted and signed by the president.”
The provisions have reduced Social Security benefits for decades.
“This victory is more than 40 years in the making, and while we celebrate today, we also reflect on those who were impacted by these provisions but are no longer here to witness this change,” Shackelford said. “Their service and contributions are not lost on us, and we honor their legacy by continuing to advocate for fairness in retirement benefits for all public servants.” More

Some 40% of Americans are behind on retirement planning and savings, according to a CNBC poll conducted by SurveyMonkey.
Starting in 2025, you can boost your 401(k) plan with higher deferral limits and catch-up contributions for some older workers.
Many plans also have a “true-up” feature, which allows workers to max out their plan early without losing part of their employer match.

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If you’re eager to save more for retirement, you could be overlooking ways to maximize your 401(k) plan, including key changes for 2025.
Some 40% of Americans are behind on retirement planning and savings, according to a CNBC poll conducted by SurveyMonkey, which polled 6,657 U.S. adults in August.

But before making 401(k) plan changes, experts say you should always review your financial situation, including your income, immediate spending needs and goals. 
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“401(k) investing focuses on long-term retirement goals,” said certified financial planner Salim Boutagy, partner at Moneco Advisors in Fairfield, Connecticut. But it should work alongside other savings that cover your midterm goals, emergencies and immediate spending needs.  
If you’re ready to boost retirement savings, here are some key things to know about your 401(k) for 2025.

Use higher 401(k) contribution limits as a ‘prompt’

Starting in 2025, employees can defer $23,500 into 401(k) plans, up from $23,000 in 2024. The catch-up contribution limit remains at $7,500 for investors age 50 and older.    

“This higher ceiling isn’t just a win for high earners,” said CFP Jon Ulin, managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida. “It’s a prompt for everyone to consider boosting their savings rate,” Ulin added.
Even 1% yearly increases “can make a substantial difference” thanks to compound growth over time, he said.
The retirement plan savings rate for the third quarter of 2024, including employee deferrals and company contributions, was an estimated 14.1% as of Sept. 30, according to Fidelity Investments, based on an analysis of 26,000 corporate plans.

Leverage the 401(k) ‘super max catch-up’

On top of higher 401(k) deferral limits, there is also a new “super max catch-up” opportunity for some older investors in 2025, said CFP Dinon Hughes, a greater Boston area-based financial consultant with Nvest Financial.
If you are between the ages of 60 and 63 in 2025, the catch-up contribution limit increases to $11,250, which brings the total deferral cap to $34,750 for this group.
Only about 14% of employees maxed out 401(k) plans in 2023, according to Vanguard’s 2024 How America Saves report, based on data from 1,500 qualified plans and nearly five million participants.

However, there is “one major caveat,” Hughes said.
Your 401(k) must allow the increased catch-up contributions. Otherwise, payroll could flag the added funds as excess 401(k) deferrals, he said. There can be tax consequences if excess deferrals are not removed.
“Check with your employer now to avoid a much bigger headache at the end of 2025,” Hughes said.

Check for ‘true up’ before maxing out early

Generally, experts recommend investing sooner to boost compound growth over time. But you could lose part of your employer’s matching contribution by maxing out your 401(k) early — unless your plan has a special feature.  
Typically, your employer’s 401(k) match uses a formula to deposit extra money into your account. You must defer a certain percentage of income from each paycheck to receive your full employer match for the year. 
Some plans offer a “true-up,” or deposit of the remaining employer match, for employees who max out their 401(k) plan before year-end. 

If your plan offers this feature, it’s a green light to contribute aggressively in January, maximizing market exposure from day one.

Managing principal of Ulin & Co. Wealth Management

“If your plan offers this feature, it’s a green light to contribute aggressively in January, maximizing market exposure from day one,” Ulin said.
Some 67.4% of plans made true-up matches when matches were not made annually in 2023, according to the Plan Sponsor Council of America’s latest yearly survey. The feature is most common in larger plans.

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Major U.S. indices had a good run in 2024, thanks to the buzz around artificial intelligence and interest rate cuts. However, macro uncertainty could weigh on investor sentiment in 2025. In this scenario, investors looking for regular income can consider adding dividend stocks to their portfolios.
Top Wall Street analysts can help investors pick attractive dividend stocks that offer consistent payments, supported by strong fundamentals.

Here are three dividend-paying stocks, highlighted by Wall Street’s top pros as tracked by TipRanks, a platform that ranks analysts based on their past performance.
Ares Capital
We start with Ares Capital (ARCC), a specialty finance provider that offers financing solutions to private middle-market companies. With a quarterly dividend of 48 cents per share, ARCC stock offers a yield of 8.7%.
In a research note on the 2025 outlook for business development companies (BDC), RBC Capital analyst Kenneth Lee reiterated a buy rating on ARCC with a price target of $23, calling the stock RBC’s favorite BDC name for 2025.
“ARCC has a leading position in the BDC space, with benefits from scale, strong originations engine in the Ares direct lending platform (coverage across all MM segments), and ~20 years of experience and solid performance in the space,” said Lee.
The analyst highlighted ARCC’s ability to offer flexible capital across various financing solutions for clients as differentiating it from its peers. Lee also noted other strengths, including the company’s impressive history in managing risks through the cycle, access to the resources of the Ares Credit Group, and scale advantages, given that it is the largest publicly traded BDC by assets.

Lee also emphasized ARCC’s dividends, which are backed by the company’s core earnings per share and potential net realized gains.
Lee ranks No. 23 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, delivering an average return of 18.1%. See Ares Capital Ownership Structure on TipRanks.
ConocoPhillips
We move to ConocoPhillips (COP), an oil and gas exploration and production company. In October, the company delivered better-than-expected third-quarter earnings and raised its full-year output guidance to reflect the impact of operational efficiencies.
Moreover, ConocoPhillips raised its quarterly dividend by 34% to 78 cents per share and boosted its existing share repurchase authorization by up to $20 billion. Based on an annualized dividend per share of $3.12, COP stock offers a dividend yield of 3%.
In a research note on the U.S. oil and gas outlook, Mizuho analyst Nitin Kumar upgraded ConocoPhillips stock to buy from hold and raised the price target to $134 from $132. “COP offers an enviable combination of long-duration inventory, a fortress balance sheet and peer-leading cash returns,” said Kumar.
The analyst noted that the pullback in COP shares since the announcement of the Marathon Oil acquisition indicates that moderate inventory dilution resulting from the deal has already been priced into the stock. Additionally, Kumar noted the company’s confidence about achieving significantly high-than-expected deal synergies. Specifically, ConocoPhillips expects to generate about $1 billion in annual synergies, which is twice its initial target of $500 million.
Kumar also emphasized that COP expects its 2025 capital expenditure to be below $13 billion, which could translate into additional free cash flow. The analyst believes that with its growing LNG presence and strong commercial marketing business, the company is well-positioned to gain from the rising global LNG demand and international pricing. 
Kumar ranks No. 336 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, delivering an average return of 12.1%. See ConocoPhillips Insider Trading Activity on TipRanks.
Darden Restaurants
Finally, let’s look at Darden Restaurants (DRI), a restaurant company that owns several popular brands like Olive Garden, LongHorn Steakhouse, Yard House, and Cheddar’s Scratch Kitchen. The company recently announced its results for the second quarter of fiscal 2025 and raised its annual sales guidance.
Along with its Q2 FY25 results, the company announced a quarterly dividend of $1.40 per share, payable on Feb. 3. At a quarterly dividend of $1.40 per share (annualized dividend of $5.60), DRI offers a yield of about 3%.
Following the results, BTIG analyst Peter Saleh reiterated a buy rating on DRI stock and raised the price target to $205 from $195, saying that “management has multiple levers to achieve full-year guidance.” He thinks that while the results were encouraging, the impact of hurricanes and the Thanksgiving calendar shift overshadowed certain favorable sales trends.
Highlighting the strong performance of the LongHorn Steakhouse and Olive Garden chains, the analyst noted that the rise in visits from lower-and middle-income consumers reflected a notable turnaround from the trends observed in recent quarters. 
Among the other positives, Saleh also noted the faster-than-anticipated rollout of Uber Eats delivery and the reducing value gap compared with quick-service restaurants, thanks to Darden’s restrained pricing. The analyst expects all these positive factors to drive robust performance in the second half of fiscal 2025. Overall, Saleh views Darden as an industry-leading restaurant operator delivering consistent earnings growth at a lucrative valuation.
Saleh ranks No. 366 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, delivering an average return of 11.8%. See Darden Restaurants Hedge Funds Activity on TipRanks. More

While all Social Security beneficiaries will get a boost to benefits in 2025, certain pensioners are also expected to see a notable change to benefit rules.
A new $2,000 annual cap for Medicare Part D prescription drug costs also kicks in.
Here are big changes coming this year that beneficiaries should be aware of, experts say.

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Retirees can expect to see some big changes in 2025 when it comes to their Social Security and Medicare benefits.
President Joe Biden is expected to sign a bill that will increase Social Security benefits for certain pensioners. Additionally, the annual Social Security cost-of-living adjustment goes into effect for all beneficiaries.

And Medicare enrollees who are worried about health-care costs now have a $2,000 annual out-of-pocket Part D prescription drug cap aimed at helping to reduce those financial pressures.
Here are some important changes to note for the coming year.

Some pensioners could get benefit increase

The Senate passed a bill in the final legislative days of 2024 to boost Social Security payments for millions of people who receive pensions from work in federal, state and local government, or in public service jobs such as teachers, firefighters and police officers. The House had passed the bill in November.
Now, Biden is expected to sign the bill into law in the coming days.
The Social Security Fairness Act eliminates two provisions that reduce Social Security benefits for certain individuals who also have pension income from public work where Social Security payroll taxes were not paid.

That includes the Windfall Elimination Provision, or WEP, which reduces Social Security benefits for individuals who also receive pension or disability benefits from employers who did not withhold Social Security taxes.
More from Personal Finance:Senate passes Social Security benefits increase for some public workers73% of workers worry Social Security won’t be able to pay benefitsEarly retirement is a surprise for many workers, study finds
It also includes the Government Pension Offset, or GPO, which reduces Social Security benefits for spouses, widows and widowers who receive their own government pensions.
Together, the rules affect around 2.5 million beneficiaries, according to the Congressional Research Service. Once enacted, the law may provide higher benefit payments to those individuals.
Notably, it may provide retroactive payments of those benefit increases for the months after December 2023.  
The legislation marks the biggest change to Social Security since certain couples claiming strategies were phased out in 2016, said Martha Shedden, president of the National Association of Registered Social Security Analysts.
“We’re sort of in limbo as to how that process will proceed, when people will see that increase and how the retroactive [benefits] will be applied,” Shedden said.

All Social Security beneficiaries to get 2.5% COLA

In 2025, all beneficiaries will see a 2.5% increase to their Social Security benefit checks, thanks to an annual cost-of-living adjustment.
Of note, the 2024 increase was 3.2%. This year’s COLA is the lowest increase beneficiaries have seen since a 1.3% increase in 2021, reflecting a decrease in the pace of inflation.
The change will be effective with January checks for more than 72.5 million Americans, including Supplemental Security Income beneficiaries.
The average worker retirement benefit will be $1,976 per month, up from $1,927 in 2024, according to the Social Security Administration.

Monthly Medicare Part B premiums go up

Monthly Medicare Part B premiums — which are often deducted directly from Social Security checks — may affect just how much of a bump beneficiaries see in their 2025 benefit payments.
Medicare Part B covers physician, outpatient hospital and certain home health services, as well as durable medical equipment.
In 2025, the standard monthly Part B premium will be $185 per month — a $10.30 increase from $174.70 in 2024.
Part B deductibles will also rise, to $257, in 2025 — a $17 increase from the $240 annual deductible for 2024.
Medicare Part B premiums are based on a beneficiary’s modified adjusted gross income, or MAGI, from their tax returns from two years prior. In 2025, beneficiaries who had less than or equal to $106,000 in MAGI in 2023 will pay the standard monthly Part B premium, as will married couples with less than or equal to $212,000.
Beneficiaries with higher incomes will be subject to income-related adjustment amounts, or IRMAA, that increase their monthly premium payments.

Medicare $2,000 prescription drug cap goes into effect

Annual out-of-pocket Medicare Part D drug costs will now be capped at $2,000, as changes enacted with the Inflation Reduction Act go into effect.
Beneficiaries with Medicare Part D drug plans that have a deductible will pay out-of-pocket costs until that threshold is met. In 2025, the highest deductible for those plans is $590.
Once beneficiaries pay their full deductible, they will owe 25% of the cost of coinsurance until their out-of-pocket spending on both generic and brand-name drugs reaches $2,000. After that, those beneficiaries will have what’s known as catastrophic coverage, which means they won’t be on the hook to pay out-of-pocket Part D costs for the rest of 2025.
However, beneficiaries will also have the option to pay out-of-pocket costs monthly over the course of the year, instead of all at once.
Notably, insulin costs have also been capped at $35 per month, both under Medicare Part D covered treatments and Medicare Part B covered insulin used with pumps.

Social Security trust fund depletion dates get closer

In 2024, the Social Security trustees projected the trust fund the program relies on to help pay retirement benefits may be depleted in 2033. At that time, just 79% of those benefits may be payable, unless Congress acts sooner.
Social Security’s combined trust funds — used to pay both retirement and disability benefits — are projected to run out in 2035.
Now that the calendar has turned to a new year, those depletion dates are closer.
Notably, the previously mentioned Social Security Fairness Act that will provide increased benefits to some pensioners may move the trust fund depletion date six months closer.
“That’s the major looming issue right now, is what can be done to shore up those trust funds,” Shedden said. “That’s going to require very comprehensive, bipartisan changes to multiple parts of the Social Security rules in the program.”

However, most financial advisors emphasize that shouldn’t affect personal claiming decisions.
For younger generations, there could be changes to future benefits, said George Gagliardi, a certified financial planner and founder of Coromandel Wealth Strategies in Lexington, Massachusetts.
“But for those already receiving or about to get Social Security checks, I don’t think that there is anything to worry about,” Gagliardi said.

Other important changes to note

Maximum taxable earnings — the amount of wages subject to Social Security payroll taxes — will rise to $176,100 in 2025, up from $168,600 in 2024. Once workers hit that cap, they no longer pay into the program for the rest of the year.

Social Security beneficiaries who claim benefits before their full retirement age and who continue to work face what is known as a retirement earnings test. The earnings exempt from the retirement earnings test is now $23,400 per year in 2025 for those under full retirement age, up from $22,320 per year in 2024. For every $2 in earnings above the limit, $1 in benefits is withheld. For the year an individual reaches retirement age, a higher threshold of $62,160 in earnings applies, up from $59,520 in 2024. For every $3 in earnings above the limit, $1 in benefits is withheld. Of note: this only applies to the months before a beneficiary turns full retirement age. Starting from their birthday month, the retirement earnings test no longer applies. Importantly, once a beneficiary reaches full retirement age, any previously withheld benefits are applied to monthly benefits.

Do you want to talk to the Social Security Administration face to face? Starting Jan. 6, the agency is requiring appointments for local office services, such as obtaining Social Security cards. To improve efficiency, the agency is directing individuals who need help to first try its online or automated telephone services. However, people who are unable to schedule in-person appointments, particularly vulnerable individuals, may still come in and get in-person service.

 
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