The standard monthly Part B premium for Medicare rose about 10% this month, to $134. However, roughly 70% of Medicare beneficiaries will be paying an average premium of just $109. These are the people who have their Medicare premiums deducted from their Social Security benefits each month. They are protected by a “hold harmless” provision in the event that Medicare costs rise faster than can be covered by the annual cost-of-living adjustment (COLA) in Social Security benefits. An annual Medicare premium increase can’t be larger than the increase in cash benefits for the year. The COLA has been less than 2% in each of the last four years, and it was just 0.3% for 2017.
The shortfall is passed on to those who are not protected by the hold harmless provision, so the gap between the two groups has been getting wider.
Who are the unlucky 30% who pay the higher rate? Those who join Medicare in 2017 will pay the full freight, as well as those on Medicare who haven’t started their Social Security benefits. Beneficiaries who qualify for Medicaid have their premiums paid by state agencies, and the states do not get the benefit of the hold harmless provision. Finally, about 5% of higher-income retirees pay a premium-related surcharge, in addition to the $134 per month. The monthly surcharges range from $53.50 to $294.60. They begin to apply to singles with income above $85,000 and marrieds filing jointly at $170,000.
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