SS COLA & Medicare B Premiums

[Helena]

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The 2017 SS COLA increase is projected to be the lowest ever...
but it will be gobbled up in a major increase in Medicare B premiums.


But it gets worse... unless congress intervenes like it did last year.


Social Security cost-of-living adjustment expected to be lowest ever


" People who enrolled in Medicare in 2016 pay a higher base amount of $121.80 per month. Their Medicare premium for 2017 could also increase by the amount of their Social Security COLA.

Higher-income retirees, as well as people who are enrolled in Medicare but not collecting Social Security benefits, will pay even higher Medicare Part B premiums next year. So will people who enroll in Medicare for the first time in 2017.

“ Beneficiaries who do not qualify for protection under the hold-harmless provision could face large Medicare premium increases in 2017,” according to a Congressional Research Service report on Medicare Part B Premiums published in August. “If there were a 0.2% Social Security COLA in 2017, the Medicare Trustees estimate that the standard premiums of those not held harmless would increase to $149 per month with those paying the high-income premiums potentially facing monthly premiums ranging from $204.40 to $467.20 per month.”

more at link above


Here is more interesting info:


Last year's COLA headache is likely to return this fall | PBS NewsHour


" ... if the COLA actually increases near the projected amount... people will find themselves paying different amounts for Part B premiums. Here’s how it will work:

People now held harmless and paying $104.90 a month would still be held harmless. Their monthly Social Security payment would stay the same, and their tiny COLA would be paid out as higher Part B premiums. Based on average Social Security monthly retirement benefits, the Part B premium for these folks would rise by $2.70 a month, from $104.90 to $107.60, explains Dan Adcock, director of government relations and policy for the National Committee to Preserve Social Security & Medicare. But the actual amount of the Part B increase would be 0.2 percent of a person’s actual monthly Social Security payment.

So if you thought last year was confusing, wait until next year! The implication of a 0.2 percent COLA (or, in fact, any COLA that is smaller than Part B premium increases) is that people’s Part B premiums would no longer be the same. Based on Adcock’s projections, the $2.70 average monthly Part B premium increase would only be paid in reality by someone earning the average monthly Social Security benefit of about $1,350 a month. People with smaller benefits would face smaller Part B increases and those with larger benefits would pay more. Last year’s smaller mess would become a much bigger mess!

And it will be made bigger or at least more confusing still, because the group not held harmless last year has been paying monthly Part B premiums this year of $121.80. Many of them will now join the hold harmless group for 2017, meaning their Social Security payments cannot be decreased. So all of their 0.2 percent COLAs also would go to higher Part B premiums. But these, too, would be linked to specific monthly benefits, meaning that this group’s 2017 Part B premiums would be $121.80 a month plus 0.2 percent of their actual monthly Social Security benefit.

Do you think this will be unbelievably confusing? You betcha! "

Lest we forget, there will be a new group of 30 percent of beneficiaries who will not be held harmless next year. Adcock says their projected Part B premiums would jump more than 22 percent from $121.80 to $149 a month. Congress would not like this any more than it did last year, he notes. But providing another one-year fix is likely the best we can do. Even here, however, the outlook is dicey. "

more at link above

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[Helena]

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Yes, it is very confusing...

I am on early SS now and become eligible for Medicare next year.
So it appears my Medicare B premium will be $149 a month, much
higher than most SS recipients will be paying... but none of us will
be pocketing the tiny COLA increase.

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[Helena]

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Health Care: Medicare Costs Higher As Open Enrollment Begins


" Premiums and other out-of-pocket Medicare costs will be higher in 2017. The Medicare Part B premium may jump 22 percent to $149 for some enrollees, although final numbers will not be released until later this month.

The higher premium amount would be charged to enrollees who are not “held harmless” under the program’s rules, which do not allow the Part B premium to rise at an amount greater than the annual Social Security cost-of-living adjustment. The higher premium will be charged to enrollees, people not yet receiving Social Security and more affluent beneficiaries subject to high-income premiums.

Meanwhile, the Part B deductible for all enrollees is expected to jump to $204 from $166. "



Why Your Part B Medicare Premiums Are Likely to Increase : Filbrandt Investment Advisers


" Premiums for Part B Medicare coverage are likely to increase significantly in 2017, and wealthier Americans will see a substantially greater increase than the majority of beneficiaries.

Individuals earning between $85,001 and $170,000 may see their premiums increase to around $204.40, or around 20 percent. Couples earning between $170,001 and $214,000 could see a similar increase.

The increase for couples earning between $214,001 and $428,000 will be even steeper, to $467.20 per month, also a 20 percent hike. "

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[rodi]

This is not new information. My MIL was complaining 15 years ago about how Medicare premiums ate 100% of the SS COLA.

Like you my husband took SS early, and starts on medicare in 2017. It is what the system is... I'm ok with it. This is not something to be outraged about. There are much better things to be outraged about. LOL.

 

[aja8888]

After age 65, I think it's prudent to worry about staying healthy rather than what future minor changes are in store for Medicare or SS.

 

[rayvt]

Yeah, I figured this out a few months ago. Even with no increase in the Medicare premium. Those of us who were in the held-harmless group in 2016 were underpaying Medicare by $17. And from what I read, that $17 was not forgiven, it was kept on the books as a debit that must eventually be repaid.

A small COLA will be eaten up by the $17 shortfall, not to mention paying back the debit, and not to mention a likely increase in the Medicare premium (which it looks like might be an additional $27).

I think that what we got net from SS in 2015 is what we will be getting for several years. Maybe for the rest of our lives. Little 1% COLA increases are not going to be enough to be larger than the Medicare increase. The entire increase will just go to the Medicare premium.

The people who are *really* hurt by this are those people who cleverly decided to delay collection SS until 70 to get the higher SS benefit. Most of their higher benefit will be consumed by the higher Medicare premium which they get the full brunt of, since they are not held-harmless.

We told them that there were risks and little net benefit to delaying, but noooooo they just had to go chasing that phantasm.
In the near future, as these facts get brought to people's attention, those of us who said to file at 62 will look like geniuses.
Actuarially equivalent AND lower Medicare premium.

 

[Sunset]

.....
The people who are *really* hurt by this are those people who cleverly decided to delay collection SS until 70 to get the higher SS benefit. Most of their higher benefit will be consumed by the higher Medicare premium which they get the full brunt of, since they are not held-harmless.

We told them that there were risks and little net benefit to delaying, but noooooo they just had to go chasing that phantasm.
In the near future, as these facts get brought to people's attention, those of us who said to file at 62 will look like geniuses.
Actuarially equivalent AND lower Medicare premium.

Lets ignore the actuarially equivalent of SS at age 62 vs 70 as long as you die at the average age. I'll take it as true.

So how is the Medicare premium lower if you take SS at 62 vs say age 65 ? Or is it only lower if you go a year or 2 on Medicare without SS , and then turn on SS ?
Why would my medicare payment at age 70 and onwards be higher if I took SS at age 70 , vs someone taking SS at 62

 

[Helena]

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Medicare B premium is higher for those on Medicare at age 65 but not on SS until 70 because one has to be on SS to be in the "hold harmless" group.

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[Helena]

The people who are *really* hurt by this are those people who cleverly decided to delay collection SS until 70 to get the higher SS benefit. Most of their higher benefit will be consumed by the higher Medicare premium which they get the full brunt of, since they are not held-harmless.

We told them that there were risks and little net benefit to delaying, but noooooo they just had to go chasing that phantasm.
In the near future, as these facts get brought to people's attention, those of us who said to file at 62 will look like geniuses.
Actuarially equivalent AND lower Medicare premium.

I considered all the variables and did all the math... including family longevity... and I too retired at age 62.

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[rayvt]

Ah, I found the spreadsheet where I noodled this out.

Starting at $1600 SS in 2005, when Medicare was $105. Therefore net benefit = $1495.
0% CPI for 2016, but (uncapped) Medicare went to $122, that's $17 shortfall.

Assuming 0.7% CPI for 2017 -- BLS will give exact figure any day now -- and MC going to $145 (estimate I read somewhere), that's $29 shortfall for 2017, therefore the net received SS benefit will stay the same at $1495.

If CPI goes up 1.5% thereafter, and Medicare premium goes up 5% (as if!), the net benefit will not get above $1495 until 2021, when it will jump to $1503. That'll almost pay for a McDonalds Happy Meal. Whoppee.

Uh, except the accumulated shortfall debit will be $31, so if that debit gets added in until paid off, it's another 2-3 years before the net SS benefit finally gets above $1495.

And that with CPI bump of 1.5% each year. And the purchasing power of $1495 will have shrunk to $1376.

People who are living on SS will be hurting pretty bad over the next few years.

People who delayed in order to get the deferral bonus are in for a big surprise.

 

[Helena]

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SS COLA for 2017 is .3%

According to the government, inflation is low when factoring the SS COLA but inflation is high when factoring the Medicare B premium increases.

 

[audreyh1]

Yeah, I figured this out a few months ago. Even with no increase in the Medicare premium. Those of us who were in the held-harmless group in 2016 were underpaying Medicare by $17. And from what I read, that $17 was not forgiven, it was kept on the books as a debit that must eventually be repaid.

A small COLA will be eaten up by the $17 shortfall, not to mention paying back the debit, and not to mention a likely increase in the Medicare premium (which it looks like might be an additional $27).

I think that what we got net from SS in 2015 is what we will be getting for several years. Maybe for the rest of our lives. Little 1% COLA increases are not going to be enough to be larger than the Medicare increase. The entire increase will just go to the Medicare premium.

The people who are *really* hurt by this are those people who cleverly decided to delay collection SS until 70 to get the higher SS benefit. Most of their higher benefit will be consumed by the higher Medicare premium which they get the full brunt of, since they are not held-harmless.

We told them that there were risks and little net benefit to delaying, but noooooo they just had to go chasing that phantasm.
In the near future, as these facts get brought to people's attention, those of us who said to file at 62 will look like geniuses.
Actuarially equivalent AND lower Medicare premium.

I don't understand this. You're paying for Medicare anyway, whether you start SS at 65 or 70. As you mention, any shortfall from hold harmless is eventually paid back by folks starting SS earlier and having the Medicare premiums deducted from their SS check. The person delaying until 70 will have been paying full Medicare premiums already out of pocket. What's the difference? Both groups are seeing the Medicare increases.

People delaying may see a reduced benefit due to what is taken out for Medicare, but since they were already paying Medicare premiums out of pocket, it's a wash budget wise. They will see the full income increase of the new SS benefit since they won't have to pay premiums out of their non-SS income any more,

 

[gerntz]

After age 65, I think it's prudent to worry about staying healthy rather than what future minor changes are in store for Medicare or SS.

Don't think worry helps anyone on anything, but agree that focus on staying healthy is more important than focusing on future SS/Medicare changes. But I also don't think it can be know that future SS/Medicare changes will be minor. My judgment is they'll be significant.

 

[gerntz]

I don't understand this. You're paying for Medicare anyway, whether you start SS at 65 or 70. As you mention, any shortfall from hold harmless is eventually paid back by folks starting SS earlier and having the Medicare premiums deducted from their SS check. The person delaying until 70 will have been paying full Medicare premiums already out of pocket. What's the difference? Both groups are seeing the Medicare increases.

People delaying may see a reduced benefit due to what is taken out for Medicare, but since they were already paying Medicare premiums out of pocket, it's a wash budget wise. They will see the full income increase of the new SS benefit since they won't have to pay premiums out of their non-SS income any more,

The difference as I see it is that unless cumulative future COLA's exceed cumulative future Medicare increases, those taking SS earlier will never pay back Medicare for earlier reduced premiums. Since Medicare premiums are likely (I think.) to increase faster than COLA's for the foreseeable future, this will be the case. Of course, those folks will never see an increased SS check either.

The SS delayers won't see the full increase in SS provides as they'll be paying higher Medicare premiums than they would have; i.e., they'll only see the benefit of higher SS LESS their higher Medicare premiums. The premiums are out of ones' pockets whether you collect SS or not.

 

[ivinsfan]

My DH will be 68 in Jan and is not on SS so his premium will go up. Honestly we would just file now except for the little detail that I am 63 and need 2 more year of insurance. If I had to go to the exchange (which is very possible) for even one year, the SS income he would get would lower any potential savings by a large amount. Since all our household income would count toward my premium credit, we are being very careful until we are certain about how this will play out. Our small business is staggering under the cost of health insurance, but the state of MN is inn such turmoil on the exchange we are caught between a rock and a hard place.

 

[Huston55]

We told them that there were risks and little net benefit to delaying, but noooooo they just had to go chasing that phantasm.
In the near future, as these facts get brought to people's attention, those of us who said to file at 62 will look like geniuses.
Actuarially equivalent AND lower Medicare premium.

If what you're saying is that the extra value of delaying SS to 70 (as compared to taking SS at 62) will be completely consumed by increased MC premiums, I find this hard to believe. Have you done the math on this?

 

[gerntz]

If what you're saying is that the extra value of delaying SS to 70 (as compared to taking SS at 62) will be completely consumed by increased MC premiums, I find this hard to believe. Have you done the math on this?

I don't think he's saying the increased benefits will all be consumed by Medicare, but enough will be that taking at 62 became a net better payout. He/she could be correct from my viewpoint.

 

[Helena]

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The SS COLA will be eaten up by the Medicare B premium increases in the "hold harmless" group... but the problem is bigger than that. Because of the tiny SS COLA, the big Medicare B premium increases in 2017 will create an even bigger divergence in Medicare premiums among those on Social Security. For example, those who turned 65 and on Medicare for the first time in 2016 already pay a lot more than those who came on Medicare before 2016. And those newcomers who turn 65 and go on Medicare in 2017 will pay even more than the newcomers in 2016. As long as the COLA remains below the premium, each year the newcomers who are not in the hold harmless group will pay an ever larger premium.

As one article says at link above… it’s a mess… soon to become a bigger mess.

 

[ExFlyBoy5]

The lowest ever? Ummm...no. It was ZERO in 2009, 2010 and 2015.

https://www.ssa.gov/oact/cola/colaseries.html

 

[Koolau]

I went on Medicare at 65 (as soon as possible.) I pay quarterly premiums for MC. I am delaying SS until 70. Does all this mean that my cost of MC will suddenly jump when I take SS at 70? I would think anyone already on the MC system would be protected. Is that not the case? I would think the only difference is which pot of money the premiums come from, SS or my checking account.

Too late for me, anyway, but I still think I made the right decision as it was always about leaving a bigger COL protected benefit for DW after I am gone. What am I missing?

 

[Koolau]

On a more "ticklish" subject, I kind of look at this whole debate with the detached eye of, lets say, my kids (all late 20's, early 30's) who get to pay MOST of my Medicare payments to providers - through higher HC costs and HC ins. premiums and soon - higher taxes, not doubt - for themselves. Realistically, MC is a GREAT deal for us - even at twice the price! The gummint brow-beats the docs and hosps. into taking reduced fees, charges us a pittance ($105 and up) and then pays up to 80% of the reduced fees. YES, for that sweet deal, we did pay 1.??% of our salaries for all those years, but still... Right now, at least it is a sweat deal for us. Anyone who thinks our current health-care system is sustainable is smoking the wrong kind of tobacco (love that expression:cool smiley ) Prices have to go up for all of us in some form or other. I feel appropriately sorry for folks who live only on their SS checks, but some of them do so because they blew their money on new cars every 2 years instead of driving 10 year old used cars into the ground, etc. (like many of us did.) One "story" does not fit all, so clearly some folks will be hurt by any changes to the system. Still, it can't come as a big surprise to those of us who have planned FIRE for the past 10 to 30 years. As always, YMMV.

 

[REWahoo]

I went on Medicare at 65 (as soon as possible.) I pay quarterly premiums for MC. I am delaying SS until 70. Does all this mean that my cost of MC will suddenly jump when I take SS at 70?

No, it could mean it will jump beginning in January - and potentially every January until you start collecting SS. Depends on whether Congress provides some relief to folks on MC but not yet collecting SS.

Go back to the beginning of the thread and read up on the "hold harmless" provision and how it only applies to those on MC who are also collecting SS.

 

[Koolau]

No, it could mean it will jump beginning in January - and potentially every January until you start collecting SS. Depends on whether Congress provides some relief to folks on MC but not yet collecting SS.

Go back to the beginning of the thread and read up on the "hold harmless" provision and how it only applies to those on MC who are also collecting SS.

Thanks REWahoo! So, what if I tried to start collecting SS asap (i.e., before end of 2016)? That just might be doable - though I wouldn't count on it. I would be within 3 moths of 70, so close to my original goal. Any thoughts on this strategy or is it too late already?

 

[REWahoo]

Any thoughts on this strategy or is it too late already?

I've already exhausted all the knowledge I have on the subject. Maybe someone who knows the answer to your question will chime in.

 

[mickeyd]

Yet none of this mess has anything to do with obamacare. I wonder how it would look if (when?) the feds provide everyone with a Medicare-like health coverage?