What Is Medicare’s Hold Harmless Provision?
The hold harmless provision in Medicare protects you from having your Social Security benefits decreased year after year, as a result of your Medicare Part B premiums. This keeps the increase in Medicare Part B premiums paid by Social Security beneficiaries in a given year to no more than the Social Security cost-of-living increase. If Medicare prices increase, the hold-harmless provision protects certain Social Security recipients from financial hardship.
- The Medicare hold harmless provision ensures that a recipient’s Social Security payments do not diminish as a result of Medicare Part B premiums.
- The hold-harmless provision does not apply to anyone who pays their Part B payments directly to Medicare, or who has their premiums paid by Medicaid.
To be eligible, recipients must have received Social Security benefits for, at least, two months, in the previous calendar year, and had their Medicare Part B premiums covered by those benefits.
Understanding the Hold Harmless Provision in Medicare.
The Medicare hold harmless clause comes from a statutory restriction that precludes Medicare from increasing Medicare Part B premiums for most Social Security recipients, by more than the cost of living adjustment (COLA) provided by Social Security in any given year. The administration determined the adjustment for 2022 was determined at 5.9% by the administration (up from 1.3 percent in 2021).
CMS or Centers for Medicare and Medicaid Services sets a standard premium for Medicare Part B insurance every year.
Medicare Part B has a standard monthly premium of $148.50 in 2021 and $170.10 in 2022. For 2021, the annual deductible is $203, and for 2022, it is $233.
The Hold Harmless Provision’s Requirements.
The hold-harmless provision covers the vast majority of Medicare Part B subscribers. You must have received Social Security benefits and had Part B premiums paid out of those benefits for, at least, two months in the previous year–to be eligible for decreased payments under this provision.
Those who pay for Part B insurance through Medicare and those who get it through Medicaid don’t qualify and may have to pay more.
Monthly Income-Related Adjustments.
The remainder of Medicare Part B members have a modified adjusted gross income (MAGI) greater than a certain amount. Individuals with a MAGI of more than $91,000 in 2022, up from $88,000 in 2021, will have to pay income-related monthly adjustment amounts (IRMAAs), which will increase their monthly premiums above the stated level.
In addition to the usual monthly premium, married couples filing jointly with a MAGI of more than $182,000 in 2022, up from $176,000 in 2021, must pay an income-related monthly adjustment amount.
Income-Related Monthly Adjustments Examples.
Single recipients with a MAGI of more than $88,000, but less than $111,000, for example, will pay $59.40 per month in 2021. For 2021, the monthly adjustment amount for single filers with incomes of $500,000 or more is $356.40.
Single beneficiaries earning more than $91,000, but less than, or equal to $114,000, will pay an additional $68 monthly adjustment. This is an addition to the usual premium of $170.10 in 2022, increasing their total monthly premium to $238.10. Single filers earning $500,000 or more will pay an extra $408.20 each month, for a total premium of $578.30 monthly.
Particular Points to Consider.
Another unforeseen consequence of the keep harmless provision emerges when the COLA swings from near zero to greater amounts. Social Security adjusts the COLA in response to changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That is, rising Social Security benefits should cover rising costs of goods and services.
The Medicare hold harmless provision requires Medicare to charge proportionally higher premiums. Specifically to those who are not qualified for the provision’s protection when the COLA goes to zero. It also happened in 2015.
Nothing prevents Medicare Part B premiums from growing in lockstep with the COLA.
In 2018, Medicare estimated that 42% of those covered by the provision would be required to pay the full premium. This is because their benefits from the rising COLA covered the cost. This meant that some or all of the extra money they would have made had the COLA not gone up.
How much will my Medicare premiums rise each year?
If a person uses their Social Security savings to pay for Medicare Part B, the cost will only rise at a rate determined by the cost of living. This cost growth is expected to reach 5.9% in 2022, a significant increase from 1.3 percent in 2021.
How can I determine if I qualify for the Hold Harmless Provision?
Individuals must pay their Medicare Part B premiums for at least two months using their Social Security savings to qualify. Individuals who pay Medicare out-of-pocket do not become eligible.
The hold-harmless provision in Medicare is in place to protect your Social Security benefits. While the cost of Medicare Part B will increase over time. It will increase only following a predetermined cost-of-living adjustment if an individual pays for it through Social Security. By 2022 end, this cost will increase by 5.9 percent.