“Hold Harmless” Will Become News Again

To many, a new phrase entered Medicare beneficiaries’ vocabulary last year. That phrase is “hold harmless.” This single phrase had ripple effects last year, and it is very likely going to be the case again this year.


What Happened Last Year

When Social Security has zero COLA adjustments, the bottom line is that Medicare Part B premiums cannot increase for people who are currently Medicare beneficiaries and received Social Security benefits during November and December of the prior year. Last point is that the person cannot have exceeded the $85,000 ($170,000 married couple) income threshold. That is the threshold that exposes a Medicare beneficiary to higher Part B premium.

At the end of last year, it was announced that there would be no COLA adjustment for 2016. It took a last moment agreement in order to limit the increase the 2016 Medicare Part B premium for new beneficiaries. There were other modifications to Medicare, which will take effect in 2020 (Medigap plans C and F will no longer be available to new Medicare beneficiaries, existing beneficiaries will be able to keep their policies).

As a result of the “hold harmless” provision, that basically meant that the funding had to come from “somewhere,” which meant higher Part B premiums for new beneficiaries, and higher premiums for those that exceed the $85,000 ($170,000 household) threshold. It could have been more than $150 a month for these new beneficiaries. The Bipartisan Budget Act of 2015 limited the increase of Medicare Part B premiums to $121.80 a month. This was made possible due to the closing of certain unintended loopholes for married couples that collect Social Security benefits (“file and suspend” strategies).


IRMAA Increases

For those that earn more than $85,000 (modified adjusted gross income, as measured two years prior, and $170,000 for married couples, it is not only that IRMAA will continue to exist, but the amount, and the percentage increased, and will continue to increase. For those that are fully employed and choosing whether or not to enroll in employer-provided health insurance, this will add a layer of complexity to the decision-making process.  

COLA Increases Unlikely for 2017 Means That…

Economists that are keeping track of CPI, the statistic on which COLA is based, have noted that for 2017, it is very likely that COLA will not increase. The almost-inevitable result of this will be that the “hold harmless” provision will likely become a topic in the public view again, during a federal election season, and without further legislative action, further increases to the Part B for new Medicare beneficiaries, and those that are subject to IRMAA, is very likely.