The Centers of Medicare/Medicaid Services (CMS) announced that Part B coverage for those beneficiaries who are enrolled into Medicare will be $134.00 per month in 2017.
This new premium is just over a 10 percent increase in Part B premiums from 2016, when the Part B premium was $121.80 a month.
For many retirees who are enrolled into both Social Security and Medicare they will have the benefit of being protected by what is known as the Hold Harmless Act and their Part B premiums will, thankfully, not increase to $134.00 a month in 2017.
The Hold Harmless Act is a provision created by the federal government that protects those who are receiving Social Security benefits from any possible decrease in their Social Security benefit due to any increases in Medicare Part B premiums.
Unfortunately, though, every retiree who is enrolled into both Medicare and Social Security will experience no actual increase in their take home Social Security benefit in 2017 even as Social Security announced a 0.3 percent cost of living adjustment (COLA).
According to federal regulations those who are enrolled in both Social Security and Medicare must have their Medicare Part B premiums as well as any other surcharges related to Part B automatically deducted from any Social Security benefit they may be receiving.
Ultimately, Medicare Part B premiums increased by $12.20 a month while the average Social Security beneficiary will experience an increase of only roughly $5.00 a month. The good news is that these retirees will have their 2016 Part B premiums capped by what their Social Security benefit increased by in 2017, but, again, the bad news is that they won’t see an increase in actual Social Security benefits.
There is also another unfortunate outcome with this increase in Part B premiums too, as those retirees who are impacted by Medicare’s Income Related Monthly Adjustment Amount (IRMAA) will experience an actual net loss in Social Security benefits as they are no longer afforded protection from the Hold Harmless Act.
These retirees who happen to earn too much income as defined by Medicare’s IRMAA will not only experience an added surcharge of, at least, $53.60 added on to their 2017 Part B premium of $134.00, for a total of $187.60, but their Social Security COLA will also not be enough to cover the new amount.
Thus, these high-income earners will, in 2017, see a reduction in their net Social Security benefit due to increases in their health coverage.
With Medicare increasing Part B premiums for all retirees many will now, more than ever, have to rely on their savings to help them cover their other everyday expenses as well as their health coverage.
Going forward, those in retirement may want to not only start planning for possible increases in health coverage, but also plan for the reality that their Social Security benefit not be increasing as well.