What is Medicare’s “hold-harmless rule”? How does it relate to cost of living adjustments (COLA) and Medicare Part B premium increases? In short, the rule protects most Social Security recipients, and we think it is important that everyone understand how they are protected.

The Hold-Harmless Rule and How It Protects Social Security Recipients

Most Social Security recipients are protected from reductions in their monthly benefits due to increases in Medicare Part B premiums. This protection is known as the “hold-harmless rule.” The rule comes in to play depending on the amount of the cost of living adjustment (COLA) and the Part B premium increase.

Both Part A and Part B are part of original Medicare.

•Medicare Part A covers Medicare inpatient care, including hospital, skilled nursing facility. Part A is generally included as a Social Security benefit and the recipient does not pay premiums, except under certain conditions.

•Medicare Part B covers professional services, outpatient care, preventive services, ambulance services, and durable medical equipment. There is a premium for Part B that is deducted from monthly Social Security benefits

For 2018, the Part B premium increased to $134 for most Social Security recipients. Considering that about 63 million Americans are receiving Social Security retirement or disability benefits—and that the average retiree benefits are $1,404 per month—it’s easy to see that deducting any additional amount from an already-low income can have serious impact.

The hold-harmless rule ties any increase to Part B premiums to COLA. It ensures that Part B premiums cannot increase more that the previous year’s COLA in Social Security benefits. In other words, an increase in Part B premiums cannot reduce the amount of monthly Social Security payments.

Who Is and Who Is Not Protected?

The hold-harmless rule does protect you if you were enrolled in Part B before 2017 and the premiums are deducted from your Social Security payment. Even though, for most, the Part B premium increased to $134 for 2018, the 2% COLA resulted in a small increase in benefits as well as covering the premium increase.

However, the hold-harmless rule does not protect those who are:

•Delaying Social Security benefits but benefiting from Part B

•The 5% of Social Security recipients with an annual income higher than $85,000

The 2018 Part B premium increase for those not covered by the rule is between $187.50 and $428.60. The premium increases are based on income with the highest paid by those with incomes over $214,000 (or $428,000 for couples).

Got Questions? We Can Help!

If you’re unsure about Medicare coverage, the Hold-Harmless Rule, we’re here to help! Medigap plans are available that complement Medicare, while Medicare Advantage plans can replace Medicare and must offer at least the same coverage. There are options available, and we can help you find the one that works best for you.

For questions about Medicare, the hold-harmless rule, or to get a free estimate, contact us today and schedule a FREE consultation.

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