Q: Are all Medicare beneficiaries paying higher Part B premiums in 2020?
A: Yes, unless they’re also covered by Medicaid. Virtually all other Medicare beneficiaries are paying higher premiums for Part B (exceptions would include a person who previously had an income that was high enough to trigger the high-income surcharges for Part B, but whose income has dropped below that level for 2020).
For a few years prior to 2019, premiums for Part B varied quite a bit depending on the size of each person’s Social Security cost of living adjustment (COLA). Although premiums for Part B increased in 2016, 2017, and 2018, the COLA that many Social Security beneficiaries received wasn’t enough to cover the increase in Part B premiums. Since Part B premiums for most Medicare beneficiaries are deducted from Social Security checks, and since Social Security checks (in most cases) can’t decline from one year to the next (ie, there’s a “hold harmless” provision), most Medicare Part B enrollees couldn’t be charged the full premiums during those years. Here’s more about this, including a summary of which beneficiaries were protected from the brunt of the premium increases.
For 2017, the COLA was so small that most enrollees’ Part B premiums only increased by a little more than $4 per month. But since the COLA was larger for 2018, at 2 percent, the average premium increase was larger too. But the increase in Medicare Part B premiums absorbed the full COLA for most people, so most seniors ended up getting the same Social Security checks in 2018 that they got in 2017, after their Part B premiums were deducted.
For about 70 percent of Part B enrollees, the average premium in 2018 was about $130/month — up from about $109/month in 2017, but the increase was fully covered by the Social Security COLA. The standard premium, however, was $134/month in both years (but the average COLA wasn’t enough to cover the full increase to that amount, which is why the average actual premium was lower).
For 2019, the COLA was 2.8 percent, which was larger than it had been in several years. The standard Part B premium increased to $135.50/month, and nearly everyone’s COLA was sufficient to cover that full amount without a decline in Social Security checks (CMS estimated that only about 3.5 percent of beneficiaries would still be paying less than $135.50 due to an insufficient COLA).
And for 2020, the COLA was 1.6 percent, which amounted to about $24 per month in additional Social Security benefits for the average beneficiary. The standard Part B premium is $144.60/month in 2020, which is $9.10/month more than it was in 2019. Since the average Social Security check increased by more than that amount, most beneficiaries are paying the full standard premium for Part B in 2020, which is about $9/month more than they were paying in 2019.
Who wasn’t protected by the hold-harmless provision in prior years?
We’ve already talked about how 70 percent of Medicare beneficiaries were paying Part B premiums that were less than the standard premium in 2017 and 2018. But who were the other 30 percent of enrollees who were paying more than $109/month in 2017 and more than $130/month in 2018? These are mostly the people who were not subject to the “hold harmless” provision, and consist of four groups:
- New enrollees, including those who enrolled in 2017. People who were newly enrolled in Medicare Part B in 2018 were paying $134/month for Part B. This is also true for people who were newly enrolled in 2017, since the standard premium that year was also $134/month. People who enrolled in 2017 were charged the standard premium that year (as opposed to the lower average premium that applied to people who were protected from the full 2017 rate increase due to the very small COLA that applied that year). For 2018, the 2 percent COLA was simply added to their Social Security check, and they were able to continue to pay $134/month for Part B, without a decrease in their Social Security check.
- Enrollees who pay higher premiums based on their income. For single enrollees whose income is higher than $87,000 (or married couples with income above $174,000), Part B premiums are higher than the standard rate (these limits were $85,000 and $170,000 prior to 2020). For high-income enrollees, the monthly Part B premium ranged from $187.50 to $428.60 in 2018, and ranges from $189.60 to $465.50/month in 2019. In 2020, they range from $202.40 to $491.60/month.
- Enrollees who hadn’t begun receiving Social Security checks. Some Medicare enrollees between age 65 and 70 have opted to begin receiving Social Security benefits after age 65, which means they pay Medicare directly for Part B, rather than having the premium withheld from a Social Security check. The hold-harmless provision only keeps Social Security checks from declining from one year to the next — it doesn’t prevent a Part B premium from increasing if the person pays the premiums directly. People in this situation were already paying $134/month for Part B in 2017 (since they weren’t protected by the hold-harmless provision that year either), and that continued to be the case in 2018.
- Enrollees who are covered under a public sector retirement program instead of Social Security. There are about 1.6 million public-sector retirees who paid into a different pension system in lieu of Social Security. This includes some firefighters, police officers and teachers (about 40 percent of public school teachers are in this position), as well as government employees who are covered under the Civil Service Retirement Program. These retirees pay Part B premiums directly to Medicare, since they don’t receive a Social Security check from which the premium can be deducted. Just like people who have not yet begun to receive Social Security, this group paid $134/month for Part B in 2017 and 2018.
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.
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