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Medicare Hold Harmless Provision

Medicare Hold Harmless Provision

What Is the Medicare Hold Harmless Provision?

The Medicare hold harmless provision prohibits Medicare Part B premiums from diminishing the amount of your Social Security benefits year over year. This limits the rise in Medicare Part B premiums paid by Social Security beneficiaries in a given year to something like the cost of living increase given by Social Security. The hold harmless provision limits the financial strain certain Social Security beneficiaries might experience assuming Medicare costs rise.

Understanding the Medicare Hold Harmless Provision

The Medicare hold harmless provision originates from a statutory restriction that keeps Medicare from raising most Social Security beneficiaries' Medicare Part B premiums by more than the cost of living adjustment (COLA) given by Social Security in a given year. The administration calculated the adjustment for 2022 at 5.9% (up from 1.3% in 2021).

Consistently, the Centers for Medicare and Medicaid Services (CMS) must lay out a standard installment for Medicare Part B insurance.

The standard month to month premium for Medicare Part B is $148.50 for 2021 and $170.10 for 2022. The annual deductible is $203 for 2021 and $233 for 2022.

By law, Medicare must collect a portion of its Part B expenses from beneficiaries. Low COLA increases can put the calculation of the standard premium in strain with the hold harmless provision since it influences the majority of Part B enrollees. This can place an increased burden on the people who are exempt from the hold harmless provision.

Requirements for the Hold Harmless Provision

The majority of enrollees in Medicare Part B are covered by the hold harmless provision. To meet all requirements for decreased payments under this provision, you must receive Social Security benefits and have Part B premiums paid out of those benefits for no less than two months in the previous year.

The individuals who make payments for Part B insurance straightforwardly to Medicare and the people who have premiums paid by Medicaid don't qualify and, thus, might be subject to higher premiums.

The excess Medicare Part B enrollees are the individuals who report modified adjusted gross income (MAGI) over a certain amount. Individuals with a MAGI above $91,000 in 2022, up from $88,000 in 2021, must pay income-related month to month adjustment amounts (IRMAAs) that raise their month to month premiums over the laid out standard.

Likewise, married couples filing jointly with a MAGI of more than $182,000 in 2022, increased from $176,000 in 2021, must pay an income-related month to month adjustment amount notwithstanding the standard month to month premium.

For instance, in 2021, single beneficiaries with a MAGI of more than $88,000 however under $111,000 pay a month to month adjustment amount of $59.40. The month to month adjustment amount for single filers who make $500,000 or more is $356.40 for 2021.

In 2022, single beneficiaries who earn more than $91,000 however not exactly or equivalent to $114,000 will pay an extra $68 month to month adjustment, notwithstanding the standard premium of $170.10, carrying their total premium to $238.10 each month. Single filers who earn equivalent or more than $500,000 will pay an extra $408.20 each month, carrying their total premium to $578.30 each month.

Your premium relies upon your MAGI as reported on your federal tax return from a long time back. For instance, you would utilize your 2019 income to decide your 2021 premiums.

Special Considerations

One more potentially negative side-effect of the hold harmless provision happens when the COLA moves from almost zero to higher numbers. Social Security changes the COLA in response to changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In theory, this means rises in Social Security benefits ought to cover increased prices for goods and services.

Whenever the COLA tumbles to zero, as it did in 2015, the Medicare hold harmless provision powers Medicare to charge proportionally higher premiums to those ineligible for the provision's protection. When the COLA rises once more, nothing keeps Medicare Part B premiums from rising in tandem.

In 2018, for instance, Medicare estimated that 42% of enrollees subject to the provision would pay the full premium as increases to their benefits from the rising COLA covered the cost, wiping out some or all of the increased income they would otherwise have received.

Features

  • Individuals who pay Part B premiums straightforwardly to Medicare — or who have premiums paid by Medicaid — don't meet all requirements for the hold harmless provision.
  • To qualify, beneficiaries must receive Social Security benefits and have their Medicare Part B premiums paid by those benefits for at least two months in the previous calendar year.
  • The Medicare hold harmless provision forestalls a beneficiary's Social Security benefits from being diminished due to Medicare Part B premiums.

FAQ

How Can I Qualify for the Hold Harmless Provision?

To qualify, individuals must have paid for their Medicare Part B costs with their Social Security savings for no less than two months. In the event that an individual pays Medicare straightforwardly, they don't qualify.

How Much Will My Medicare Costs Increase Each Year?

On the off chance that an individual is paying for Medicare Part B costs with their Social Security savings, the cost will just increase at a rate in light of the cost of living. For 2022, it is estimated that this cost increase will be 5.9%, an outstanding increase from 1.3% in 2021.

Will My Medicare Premiums Drain My Social Security Savings?

The Medicare hold harmless provision is in place to safeguard your Social Security savings. While the cost of Medicare Part B will increase with time, in the event that an individual is paying for it with Social Security, the cost will just increase in view of a foreordained cost-of-living adjustment. For 2022, this cost is estimated to increase to 5.9%.