For the rule to apply, retirees must have Medicare Part B premiums deducted from their Social Security benefits. Thus, people who delay Social Security benefits — even if they already receive Part B of Medicare and pay the premiums — are not eligible for the Hold Harmless provision, and their Medicare premiums would go up (even if not everyone would). In addition, low-income Medicare beneficiaries are generally not subject to the liability exemption provision, simply because they are doubly eligible for Medicaid and their Medicare premiums are instead paid by their state Medicaid agencies (meaning that an increase in Medicare premiums still has no impact on the insured, only on the state`s Medicaid program). In particular, the Secretary of Health, Sylvia Burwell, has the option of setting a lower premium than this and has already indicated that she is considering other policy options; The “final” Medicare Part B rates for 2016 won`t be finalized until October. Nevertheless, the potential increase in Medicare Part B premiums is quite large according to current projections. at least for the subset of Medicare participants who are not eligible for the premium increase liability exemption rules! This is also known as IRMAA. The IRMA is based on a two-year timeline and adjusted adjusted gross income. And fortunately, we see these IRMAA thresholds rise again in response to inflation. However, if those numbers were reversed and the increase in Part B premiums was greater than that of the COLA, you would likely get harmless coverage.
The disclaimer is a key tool for preventing financial hardship for Social Security recipients on Medicare. But it doesn`t work as well as many people think. Unfortunately, limiting Medicare premium increases to Social Security`s COLA percentage would be much more onerous for Medicare`s financial viability, and so retirees are unlikely to see any changes in that direction anytime soon. The rule is commonly referred to as the Medicare Hold Harmless provision, but the official title is the variable supplemental health insurance premium. (We`ll simply call it Hold-Harmless determination in this article for simplicity.) The other thing to remember about the harmless provision is that it doesn`t permanently reduce your monthly Medicare premiums. If the COLAs for future years exceed the increase in Medicare costs, you must make up the difference with additional Medicare premium increases that you temporarily avoided because of the rule. For example, Medicare costs remained at $104.90 in 2014, but Social Security COLAs were 1.5%. Even for our $200 beneficiary in the example above, this would have been enough to increase the cost of the premium to $104.90. Here`s how it works based on the 2022 increases in Medicare Part B premiums and Social Security OLA. Let`s say your Part B premium increases by 3.5% and your COLA by 5.5%. In this case, the disclaimer would probably not apply to you because the COLA increase was greater than the Part B premium increase.
At the other end of the spectrum, the continuing liability provisions for health insurance premiums also do not apply to individuals subject to the monthly income-tested adjustment (MIRA) amount mentioned above to Part B premiums. These “high-income” individuals (and couples) were considered not to be covered by the liability exemption clause because of their “higher” income. Therefore, any person whose AGG has been amended with a 2-year period that exceeds the first threshold of $85,000 (for individuals or $170,000 for married couples) is not eligible for the continuing liability provision. The worry-free Medicare Hold provision prohibits Medicare Part B premiums from reducing the amount of your Social Security benefits year after year. This limits the increase in Medicare Part B premiums paid by Social Security recipients in a given year to no more than the increase in the cost of living through Social Security. The indemnified provision limits the financial burden some Social Security recipients may experience as Medicare costs rise. Each year, the Centers for Medicare & Medicaid Services (CMS) determines the Part B premium for the following year. In 2020, the base premium for Part B will be $144.60. Most people will pay that amount. A small number of people pay a premium lower than the basic premium. These people are protected by the rule of harmlessness. Except in the upcoming year 2016, when the Social Security COLA is expected to be 0.0%, the combination of these two rules means that none of next year`s Medicare Part B premium increases can be applied to the 70%+ of Medicare participants eligible for the Hold Harmless provision.
This means that the entire increase will instead have to be borne by the approximately 25% of Medicare participants who are not subject to the “Hold Harmless” provision. If the Department of Health and Human Services does not intervene by October, the disclaimer, based on current projections, could result in an increase in Medicare Part B premiums of up to 52% (or more than $600 per person) for those not covered by the rule! So when Medicare calculates its new premium for next year, they take into account who is compensated and who is not. Keep in mind that the net result of incoming rewards must be 25% of the cost of the Part B program. You should also consider joining the 260,000+ subscribers on my YouTube channel! For visual learners (like most of us), this is where I break down the complex rules and help you understand how to use them to your advantage.