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How does the ‘hold harmless’ provision protect beneficiaries from Medicare Part B premium increases?
A provision known as the "hold harmless" provision protects many Medicare beneficiaries by essentially capping Medicare Part B premiums so increases aren't higher than Social Security's Cost of Living Adjustment (COLA).
Four ways to save money on your Medicare Part B premiums
Here's how to save money on premiums for Medicare Part B – which covers doctor visits, diagnostics, and preventive care – charges participants a premium.
How does a doctor’s participation in Medicare affect reimbursement?
Medicare reimbursement refers to the payments that hospitals and physicians receive in return for services rendered to Medicare beneficiaries. The reimbursement rates for these services are set by Medicare, and are typically less than the amount billed or the amount that a private insurance company would pay.
Four ways to adjust your Medicare coverage
If you're like most Medicare enrollees, you probably aren't planning to make any changes to your existing coverage for the coming year, but – like most beneficiaries – you should probably at least consider it during Medicare's open enrollment period. And if you have Medicare Advantage, you also have an opportunity to change your coverage between January and March each year.
Important Medicare enrollment dates
Enrollment dates for Medicare are critical. Missing an enrollment date could cost you higher premiums down the line — or it could cost you coverage entirely.
What is the income-related monthly adjusted amount (IRMAA)?
For high-income Medicare beneficiaries, Part B and Part D premiums will include an additional charge based on MAGI.
Q: How much does Medicare Part B cost the insured?
A: In most cases, Part B premiums are deducted from beneficiaries’ Social Security checks. In 2022, most people earning no more than $91,000 ($182,000 for a married couple; note that these amounts are based on 2020 tax returns) pay $170.10/month for Part B. But in welcome news for millions of Medicare beneficiaries, the premium for Part B is dropping to $164.90/month in 2023.
How the income-related monthly adjusted amount (IRMAA) affects enrollees with incomes over $97,000 a year.
Year-over-year decreases in Part B premiums are very rare (see a list of annual amounts below; the last time there was a decrease was 2012). But Part B costs in 2022 have been lower than expected, due in part to less spending on Aduhelm (the new Alzheimer’s drug) than CMS had expected when the 2022 premiums were being set. This left enough of a surplus that the government was able to decrease the Part B premium and deductible for 2023.
For perspective, the standard Part B premium increase for 2022 amounted to nearly $22/month, and was higher than the premium that had been projected in the Medicare Trustees Report. CMS noted that the higher Part B premiums in 2022 were due to a variety of factors, including costs associated with the COVID pandemic, the 2020 legislation that kept 2021 Part B premiums lower than they would otherwise have been (so premiums are catching up to where they would have been), and potential costs related to new drugs that might be covered under Part B in the near future.
(Most medications are covered under Part D, but infusion drugs that are administered in a clinic are covered under Part B instead; the potential for sharply higher costs due to Aduhelm was one of the reasons Part B premiums increased so much for 2022.)
As described below, the Social Security cost-of-living adjustment can sometimes limit the increase in Part B premiums, but that was not the case for 2022. Although the premium increase was significant, the Social Security COLA was historically large for 2022, and adequate to cover the additional Part B premiums. The COLA for 2023 will be even larger – 8.7%, versus under 6% for 2022. And the decrease in Part B premiums will put even more money back into millions of beneficiaries’ monthly Social Security checks, giving them more money to cover other expenses.
The Part B premium has generally increased over time, although there have been some years when it stayed the same or even decreased. Here’s an historical summary of Part premiums over the last several years (see Table V.E2):
In 2023, most enrollees will pay $164.90/month for their Part B coverage, which is the standard amount. Most enrollees were also paying the standard amount in 2022 ($170.10/month), in 2021 ($148.50/month), in 2020 ($144.60/month), and in 2019 ($135.50/month). Some enrollees pay more than the standard premium, if they’re subject to a high-income surcharge (described below).
But that’s in contrast with 2017 and 2018, when most enrollees paid a premium that was lower than the standard premium. The standard premium in 2018 was actually $134/month, but the cost of living adjustment for Social Security wasn’t quite large enough to cover all of the increase from 2017’s premium for most enrollees. That’s why most people paid about $130/month.
The standard Part B premium increased by about $9/month in 2020. But the 1.6% Social Security COLA for 2020 increased the average beneficiary’s Social Security benefit by $24/month. Since the COLA for most beneficiaries exceeded the premium increase for Part B, most Part B enrollees paid the standard premium in 2020. And for 2021, the 1.3% COLA was adequate to cover the increase to the new standard premium ($148.50/month) for virtually all enrollees.
The COLA for 2022 was the largest it had been in 30 years, and more than adequate to cover even the substantial increase in Part B premiums. The 8.7% COLA for 2023 is even larger, at a time when Part B premiums are declining. So the COLA that Social Security recipients will see in 2023 will not need to be used to cover any additional Part B premiums.
But if the COLA is ever not sufficient to cover the Part B increase, most enrollees — those who receive Social Security retirement benefits and do not have incomes above the high-income threshold — are charged a lower-than-standard premium for Part B. This is to avoid a year-over-year decrease in their net Social Security check after the Part B premium is subtracted each month.
Since 2007, people who earn more than $85,000 ($170,000 for a couple) have paid higher Part B premiums (and higher Part D premiums) based on their income.
For the first time, the threshold for what counts as “high income” was adjusted for inflation as of 2020, increasing it to $87,000 for a single individual and $174,000 for a couple. It increased again for 2021, 2022, and 2023. Harry Sit, of The Finance Buff, explains how the inflation indexing works here.
Indexing the high-income threshold: The math
The indexing is based on the percentage by which the average of the Consumer Price Index for Urban consumers (CPI-U) for the 12-month period ending in the most recent August exceeds the average of the 12-month period that preceded that. So for 2021, for example, we can look at how the average CPI-U from September 2019-August 2020 exceeded the average CPI-I from September 2018-August 2019.
On this page, you can pull up the data for CPI-U (select the first box under “Price Indexes”) and manually calculate how the average CPI-U has changed. You’ll add up all the numbers from September 2019 through August 2020 (don’t include the “Half1” and “Half2” numbers), and divide by 12 to get the average (in this case, 257.72). Then you’ll do the same thing for September 2018 through August 2019 (you’ll get an average of 254.016). The difference between those two numbers is 3.705, which represents a 1.46% increase from the 254.016 average CPI-U for September 2018 to August 2019.
So as Sit explains here (for the 2020 increase, but the process is the same for 2021 and 2022, albeit with different numbers), we increase 87,000 by 1.46% — which results in 88,270 — and then round to the nearest $1,000. That gives us an income threshold of $88,000, which was the lower bound of “high-income” as of 2021.
For people with income above $87,000 ($174,000 for a couple) in 2020, Part B premiums for 2020 ranged from $202.40/month to $491.60/month.
As explained by the math above, the high-income threshold increased to $88,000 for a single individual and $176,000 for a couple in 2021. And for 2022, the threshold grew again, to $91,000 and $182,000, respectively. The 2022 Part B premiums for people with income above those thresholds range from $238.10/month to $578.30/month.
For 2023, the high-income threshold is increasing significantly, to $97,000 for an individual and $194,000 for a couple. The sharp increase is not unexpected, given the high rate of inflation we’ve seen in 2022. And just as standard Part B premiums are decreasing in 2023, so are the premiums that high-income beneficiaries pay. These will range from $230.80/month to $560.50/month, depending on income.
The government determines whether you have to pay an income-related premium surcharge based on your income tax return from two years ago, since that is the most recent tax return they have on file at the start of the plan year. 2021 tax returns were filed in 2022, so those are the most current returns available when income-related premium adjustments are determined for 2023.
But if a life-change event has subsequently reduced your income, there’s an appeals process you can use. In the appeal, you can request that the income-related premium adjustment be changed or eliminated without having to wait for it to reflect on a future tax return.
Medicare B also has a deductible, which is decreasing to $226 in 2023, down from $233 in 2022. As is the case for Part B premiums, this is the first time in a decade that the Part B deductible decreased.
The Medicare Part B deductible only has to be paid once per year, unlike the Part A deductible, which has to be paid once per benefit period.
After the Part B deductible is met, the enrollee is generally responsible for 20% of the Medicare-approved cost for Part B services for the remainder of the year. But supplemental coverage (from an employer-sponsored plan, Medigap, or Medicaid) often covers these coinsurance charges.
For people who became eligible for Medicare before the start of 2020, there are Medigap plans available (Plans C and F) that cover the Part B deductible, in addition to coinsurance charges. But those plans are no longer available for Medicare beneficiaries who became eligible for Medicare after the end of 2019.
The Part B deductible has generally increased over time, although there have been some years when it stayed the same or even decreased. The increase for 2022 was the largest year-over-year dollar increase in the program’s history. But the decrease for 2023 was the first time the deductible has declined in over a decade. Here’s an historical summary of Part deductibles over the last several years (see Table V.E2):
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
A provision known as the "hold harmless" provision protects many Medicare beneficiaries by essentially capping Medicare Part B premiums so increases aren't higher than Social Security's Cost of Living Adjustment (COLA).
Here's how to save money on premiums for Medicare Part B – which covers doctor visits, diagnostics, and preventive care – charges participants a premium.
Medicare reimbursement refers to the payments that hospitals and physicians receive in return for services rendered to Medicare beneficiaries. The reimbursement rates for these services are set by Medicare, and are typically less than the amount billed or the amount that a private insurance company would pay.
If you're like most Medicare enrollees, you probably aren't planning to make any changes to your existing coverage for the coming year, but – like most beneficiaries – you should probably at least consider it during Medicare's open enrollment period. And if you have Medicare Advantage, you also have an opportunity to change your coverage between January and March each year.
Enrollment dates for Medicare are critical. Missing an enrollment date could cost you higher premiums down the line — or it could cost you coverage entirely.
For high-income Medicare beneficiaries, Part B and Part D premiums will include an additional charge based on MAGI.
A provision known as the "hold harmless" provision protects many Medicare beneficiaries by essentially capping Medicare Part B premiums so increases aren't higher than Social Security's Cost of Living Adjustment (COLA).
Here's how to save money on premiums for Medicare Part B – which covers doctor visits, diagnostics, and preventive care – charges participants a premium.
Medicare reimbursement refers to the payments that hospitals and physicians receive in return for services rendered to Medicare beneficiaries. The reimbursement rates for these services are set by Medicare, and are typically less than the amount billed or the amount that a private insurance company would pay.
If you're like most Medicare enrollees, you probably aren't planning to make any changes to your existing coverage for the coming year, but – like most beneficiaries – you should probably at least consider it during Medicare's open enrollment period. And if you have Medicare Advantage, you also have an opportunity to change your coverage between January and March each year.
Enrollment dates for Medicare are critical. Missing an enrollment date could cost you higher premiums down the line — or it could cost you coverage entirely.
For high-income Medicare beneficiaries, Part B and Part D premiums will include an additional charge based on MAGI.
My wife and I started Social Security around November 2019. I retired in 2018 and my wife has not earned an income for some years. We had a high income in 2017, so I received a letter from SS that I have a high premium amount for Medicare B and D that will be deducted from 2020 SS based on our joint income in 2017. However my wife received the same letter with the same amounts. Isn’t this double dipping by SS?? Shouldn’t we be paying one amount for our earned joint income instead of paying 2x for a joint income?
Medicare sends notices to each person about their coverage and premiums. Because it sounds like you’ll each have a higher premium due to income, you’ll both receive notices about your costs.
Please note the government can sometimes adjust income-related Medicare premiums based on life circumstances, such as retiring. If retirement means your current income is lower than in 2017, you may be able to appeal that higher premium. More information can be found here: https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html
I will be 65 next month and I have no income and am single. My age to get social security isnt until 66 and 2 months. So with no income and no social security money until then how do I pay for medicare part B? If I dont sign up for it I get charged penalties! I will not be forced to file early social security with 25% less monthly. How is this legal when the government is who upped my retirement age! I could apply for welfare to help with part B but only if I take early social security now at almost $300 a month less. The government should not force us to take early social security by fining us for not applying when they are the ones who changed our age requirements! !!
For Medicare Part B, for a married couple, is the 2020 standard Medicare premium $144.60 for each person or is it for the married couple?
The premium for Part B is per person. A married couple would each have to pay the Part B premium if they’re both enrolled in Medicare.
I retired this pass June due to cover -19, my income will be drastically reduced. Will the amount that I pay medicare ($144.60 MONTH) be reduced?
Depending on your new income, you might qualify for one of the Medicare Savings Programs that can cover your Part B premium: https://www.medicareresources.org/faqs/is-there-help-for-me-if-i-cant-afford-medicares-premiums/ You’ll want to contact your state Medicaid office (Medicare Savings Program funding comes from the state’s Medicaid program) to see if you qualify.
You can also reach out to the State Health Insurance Assistance Program in your state: https://www.shiptacenter.org/ These offices provide help and advice for Medicare beneficiaries.
What if u only receive $250 mo. from social security n can’t afford the premium or deductible?