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“Hold-Harmless” Provision Turns Out to Be Not So Harmless

Substantial increase in Part B premiums possible for some Medicare recipients in 2016

gi_patientharm_questionnaire_300-300x200Under an obscure provision of Medicare-related law, as many as 14% of recipients will pay more – some substantially more – for their Part B premiums in 2016. The increase is the result of something known as the Hold Harmless provision. It is meant to protect Medicare recipients who also receive Social Security benefits from increases in Part B premiums, during years when there will be no Cost of Living Allowance (COLA) increase to Social Security payments.

 

It’s expected that 2016 will bring no COLA increase to Social Security benefits, so the Part B premium increase will be paid by several groups of Medicare recipients. The largest of those groups is comprised of those who have elected to delay receiving their Social Security benefits. However,those who pay higher Part B premiums due to having a higher income, as well as those who are new to Medicare in 2016, will pay more.

The increase in premiums will be at least 52%. That means if you were paying $104.90 per month, as most Part B participants are, you’ll pay $159.30 in 2016. That number could be even higher if your Part B premiums are higher based on your income. The highest bracket’s premiums will jump from $335.70 to $509.80 per month.

If you have your Part B payments deducted directly from your Social Security check, don’t worry – your premiums will not increase. You are one of those who will be “held harmless” under the provisions of the Medicare law. If your Part B premiums are paid by your state, they’ll also remain static in 2016.

How are Part B premiums determined? Typically they are set so that the population of enrollees pays 25% of the expected costs of care, and the federal government pays the rest. When there’s a need to increase Part B premiums, in most years, the whole population of recipients shares in the cost. But without a COLA in Social Security, the increase falls to a small minority of recipients, as it will in 2016.

If you’re one of those who elected to defer receiving Social Security in order to increase your benefit, you might be tempted to consider changing your status so that you can start receiving your payments, thus avoiding this increase in premiums. But because the increase will likely be for only one year, most experts don’t recommend this.

Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.

 

 
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