Each year, the Centers for Medicare & Medicaid Services (CMS) set the following year’s Part B premium. In 2018, the Part B base premium will be $134. If you paid $134 in 2017, your premium will remain the same. If you paid less than $134 in 2017, your premium will likely go up to $134.
If you collect Social Security benefits and your Medicare Part B premium is deducted from those benefits each month (this is the case for the majority of people with Medicare), the hold harmless rule may apply to you. The hold harmless rule protects you from having your previous year’s Social Security benefit level reduced by an increase in the Part B premium so long as:
- You are entitled to Social Security benefits for November and December of the current year (2017);
- The Part B premium will be or was deducted from your Social Security benefits in November 2017 through January 2018;
- You don’t already pay higher Part B premiums because of Income-Related Monthly Adjustment Amount (IRMAA) eligibility;
- And, you do not receive a Cost of Living Adjustment (COLA) large enough to cover the increased premium. COLA is a change in the dollar amount of Social Security benefits to protect against inflation decreasing the benefit’s purchasing power. The COLA in 2018 will be 2% of your Social Security benefit.
About a quarter of people will not pay the full $134 Part B premium because their Social Security benefits did not increase enough as a result of the 2018 COLA. People in this situation pay a lower premium than the standard premium so that their Social Security benefits do not decrease. They pay a premium increase that is the same dollar amount as their COLA.
The hold harmless provision does NOT protect you if:
- You are new to Medicare. Hold harmless does not apply to you because you have not been enrolled in Medicare Part B long enough to qualify.
- You are subject to IRMAA.
- You are enrolled in a Medicare Savings Program (MSP). However, the MSP should continue paying for your full Part B premium.
- You were enrolled in a Medicare Savings Program in 2017 but lost the program because your income increased or you failed to recertify.
- Your COLA is large enough to cover the increased premium. This means that you may not see an increase to your Social Security benefits once the Part B premium is deducted. You should look at your Social Security statement for personalized information about your benefit and premium amount.
Here are examples of how the 2% COLA can affect the Part B premium:
- Geoff’s Social Security income in 2017 was $1,500, and his Part B premium was $109. In 2018, the dollar amount Geoff’s COLA will be 2% of $1,500, or $30. The increase in his Part B premium, from $109 to $134, is $25. Geoff will not be affected by the hold harmless provision this year, so he will pay $134 for the Part B premium, and will see a net increase of $5 in his monthly Social Security earnings.
- Louisa’s social security income was $950 in 2017 and her Part B premium was $104. This year, the COLA will increase her Social Security award by $19. Louisa’s premium will be raised by the dollar amount of her COLA, making it $123 in 2018. There will be no increase to Louisa’s Social Security award once the Part B premium has been deducted.
Note: If you qualify for the hold harmless provision but pay a Part B late enrollment penalty, the penalty will not be waived, and it may increase. This is because the penalty will be calculated based on the new, higher premium—even if you are not paying that higher amount.