Social Security benefits may be going down for just about everybody.
If you have been paying attention to Medicare and Social Security, it is obvious that come 2017 the Medicare Part B premium is going to a little dance. Unfortunately there will be no love, as many retirees will see their Social Security benefit go down after the stroke midnight on December 31, 2016 and unlike a Disney movie, there is no Prince Charming who will rescue Cinderella from her evil stepmother and sisters.
Per the Medicare Board of Trustees, the Part B premium is projected to increase by 51.8% in 2016, up to $159.30 from 2015’s premium of $104.90. But thankfully, they are also calling for a zero percent cost of living adjustment (COLA) for those collecting Social Security.
This is good news because of a regulation that was created in 1988 – the Hold Harmless Act. Retirees who are collecting Social Security as well as being enrolled into Medicare cannot see their Social Security benefit decreased due to a rise in the Part B premium.
So for many retirees (about 70%, according to Michael Kitch’s recent article), this increase in the Part B premium will not affect them, as their Social Security benefit can’t decrease. The bad news? Their Social Security benefit in 2016 will remain the same as it was in 2015.
As for the remaining 30% of retirees… Well, they aren’t as lucky to have their Social Security benefit remain constant. Due to the structure of the Hold Harmless Act as well as a regulatory change in 2009 by Congress, those who are enrolled into Medicare but are not collecting Social Security benefits, cannot be “held harmless”, nor can those retirees who happen to be earning too much income.
So for those that are impacted by Medicare’s “means testing” (the Income Related Monthly Adjustment Amount, or IRMAA), they will not only be impacted by this premium increase, but they will also see their Social Security decrease in 2016 from 2015.
By 2017 though, things change. The Medicare Board of trustees is also projecting in its 2015 report that the Part B premium will decrease from $159.30 to $120.80. This is about a 24% decrease from the 2016 premium, but it’s also a 15% increase for those who were “held harmless” in 2016.
The problem is that the “hold Harmless Act” specifically protects the Social Security benefit of Medicare beneficiaries from an increase, and with this Part B decrease from $159.30 to $120.70, those 70 percent of retirees will be left without protection.
If there happens to be either no COLA increase for Social Security benefits in 2017 (or a very slight increase) many retirees will be faced with receiving less in benefits than they were told they would get.
The scarier part, for those that happen to follow the nail-bitingly fast paced data of Medicare, is the fact that the federal government may have just figured out a method to actually decrease the amount of payouts it is obligated to distribute to our nation’s retirees.
Please note that these numbers from the Medicare Board of Trustees are not final, as they are only projections. But please consider the fact that the groundwork has been set, even if it is only a projection as of right now.