Quote: "The hold harmless provision kicks in when the dollar amount of an individual's Medicare Part B premium rises more than the dollar amount of an individual's COLA adjustment to prevent a reduction in Social Security benefits."
Despite receiving the largest Social Security cost of living adjustment (COLA) in five years, the majority of retired and disabled beneficiaries will not see any increase in their net Social Security benefits in January, warns The Senior Citizens League. A big jump in Medicare Part B premiums is to blame.
The Centers for Medicare and Medicaid Services recently announced that the Medicare Part B premium will be $134 for next year. That's the same amount that the Part B premium is today, but tens of millions of Medicare beneficiaries are paying less than that this year. Millions of beneficiaries pay roughly $26 less - and their annual COLA may not be enough to cover the difference.
"For this group of Medicare beneficiaries, this will also be the largest Medicare Part B increase in five years after premiums remained relatively flat since 2013," says Mary Johnson, a Social Security and Medicare Policy Analyst for The Senior Citizens League. The jump in premiums is due to a special provision of law known as "hold harmless," which protected millions of Social Security recipients from reductions to their Social Security benefits in 2016 and 2017, when then the annual - cost - of - living adjustments (COLAs) were zero and just 0.3 percent, respectively.
The hold harmless provision kicks in when the dollar amount of an individual's Medicare Part B premium rises more than the dollar amount of an individual's COLA adjustment to prevent a reduction in Social Security benefits.
The provision applies to individuals with incomes below $85,000, and whose Medicare Part B premium is automatically deducted from their Social Security benefits. Johnson estimates that about 35.5 million Social Security recipients were held harmless in 2016 and 2017.
People who have been held harmless in both those years are paying premiums that are roughly $108 per month in 2017 on average, a difference of about $26 from the current $134 premium. However, for many of those people, especially those with below - average Social Security benefits, the 2018 COLA won't be high enough to cover the full $134 Part B premium.
According to Johnson's calculations, the Social Security beneficiaries who are most likely will not to see an increase in their net monthly check are those with benefits below $1,264 per month. These individuals will once again be subject to hold harmless in 2018. Their COLA will be completely offset by the Part B premiums, but their Social Security benefits will not be reduced. "The net result will be no growth in the benefit for the third year in a row," Johnson says. "And that leaves nothing to meet other rising costs, such as Medigap premiums, Part D premiums, out-of-pocket costs, or anything else," Johnson notes.
"While hold harmless is very valuable protection, the lack of an adequate COLA to begin with, and rapidly growing Part B costs, will keep millions of beneficiaries stuck in a no-growth rut in 2018," Johnson says.
The Senior Citizens League is advocating legislation that would provide a more fair and adequate COLA, by tying the annual adjustment to the Consumer Price Index for the Elderly (CPI-E). Projections for The Senior Citizens League show that by using the CPI-E, Social Security benefits would be about 9 percent higher over 25 years. A benefit of $1,300 in 2017 would be about $112 per month more using the CPI-E at the end of the 25 year period instead of the current method.
With 1.2 million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.
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