Social Security--New Complication--Deferring Beyond Age 66 Affects Medicare Costs

[Conan]

Under federal law, Medicare premiums are linked closely to Social Security benefits because most people on Medicare have their premiums deducted from their monthly Social Security checks. To protect older Americans, federal law stipulates that, in most cases, the increase in a person’s Medicare premium cannot exceed the increase in the person’s Social Security benefit. The purpose of this “hold harmless” provision is to prevent a reduction in Social Security benefits.
....
But by shielding 70 percent of beneficiaries from premium increases, that same law exposes the other 30 percent to price shocks....
....
The House Democratic leader, Representative Nancy Pelosi of California, and Speaker John A. Boehner of Ohio had been quietly exploring a deal to limit the increase in Medicare premiums.

But with turmoil in Republican leadership ranks, touched off by Mr. Boehner’s plan to retire this month, Congress is barely able to function. He has insisted that the cost of legislation to stabilize premiums, estimated at $7.5 billion to $10 billion, be offset by savings elsewhere in the federal budget.
http://www.nytimes.com/2015/10/16/u...iums-social-security-cost-of-living.html?_r=0

So if you're among the 70% of Medicare participants who are protected, your Part B premium in 2016 will stay at $104.90 per month ($209.80 for two people).

But you're not protected if you're not getting a social security check - - for example because you're waiting for age 70 to collect. In that case, your Part B premium in 2016 will increase to $159.30 per month ($318.60 for two people). [Apparently you're also not protected if 2016 is the first year you're receiving benefits.]

A good reason to start collecting Social Security at age 65 or 66!

Note: You're also not protected if your modified adjusted gross income (MAGI) is more than $170,000 for a married couple filing jointly (it's a lower threshold of you're single or a couple filing separately.) Then not only does your base premium go to $159.30 as above, there's also a further penalty rate added on.

The penalty addition for 2016--the amount added to the $159.30/month per person base rate--for a couple filing jointly is

$63.70/month per person for MAGI $170,000 to $214,000;
$159.30/month per person (i.e. a doubled rate) for MAGI $214,000 to $320,000;
$254.90/month per person for MAGI $320,000 to $428,000; or
$350.50/month per person for MAGI above $428,000.

 

[rapmarks]

explains why we pay more, not getting SS, just Medicare

 

[WinniWoman]

So. I guess you can't win? They take it from you one way or another.....Delaying SS increases your Medicare premium? Even if you take Medicare at age 65? What the?

 

[urban5]

Its my understanding this increase is a one time event due to no cost of living adjustment (COLA) for 2016 and the hold harmless provision of the SS rules. So in 2017 the increase will removed if there is a COLA.

 

[Conan]

Its my understanding this increase is a one time event due to no cost of living adjustment (COLA) for 2016 and the hold harmless provision of the SS rules. So in 2017 the increase will removed if there is a COLA.

That's not how I see it. The hold harmless rule is that people getting social security checks, if their MAGI is low enough, won't have their benefits reduced due to a Part B premium increase.

So if the COLA is 1% and the Plan B premium increase is $200, somebody with a $1,500 social security check would have their check go up by $15, then down by the same amount thanks to being held harmless. So they only are paying a $15 Plan B premium increase, and the hold harmless saves them $185. Meanwhile somebody not getting a social security check, or somebody with too much MAGI, sees his Plan B premium go up by the full $200.

See Also:
Should you take Social Security early to avoid a likely massive Medicare premium increase in 2016?
http://www.pbs.org/newshour/making-...nefits-early-avoid-medicare-premium-increase/