Members of the Texas Retired Teachers Association (TRTA) may have heard that premiums for Medicare Part B, which covers doctor visits and other outpatient care, are projected to rise in January 2017.
Our members may recall that last year, due to there being no cost-of-living adjustment (COLA) for Social Security beneficiaries, premiums were estimated to increase by 50 percent for 2016 for about 30 percent of Medicare Part B participants. That situation was rectified, in part, by a one-time infusion of funds from Congress in the amount of $7.5 billion. Premiums still increased for many participants from the standard $104.90 monthly rate to $121.80 in 2016, however.
This year, things are somewhat different. The Social Security Administration (SSA) has announced a COLA for its beneficiaries of 0.3 percent, effective January 2017. But like last year, the concept of “hold harmless” will once again place the burden of the majority of the projected Medicare Part B increase on just 30 percent of participants.
Right now, this could mean that Medicare Part B premiums could increase by 20 percent or more for those who are not held harmless! This will impact many of our members!
Why is this Happening and What is “Hold Harmless?”
Social Security recipients who are on Medicare must, according to law, have their Part B premiums withheld from their monthly Social Security payments. (This is true for the majority of Medicare Part B participants, but not for those who do not receive Social Security at all. Many public pensioners, including Texas retired public education employees, pay for Medicare Part B out-of-pocket).
The “hold harmless” provision is a rule that Social Security benefits cannot decline for beneficiaries from one year to the next. (This applies to married couples earning less than $170,000 modified adjusted gross income or individuals earning less than $85,000).
In most years in the month of October, Social Security announces a cost-of-living adjustment (COLA) for the following year for beneficiaries. When a COLA is announced, Medicare can boost Part B premiums, resulting in more money being deducted from people’s COLA-adjusted monthly Social Security benefits, essentially preventing the loss of income brought on by the premium increase.
The “hold harmless” rule means that most people who have their Medicare Part B premiums deducted from their SS checks are protected: their Medicare charges can’t increase by any more than their Social Security income goes up. For those 70 percent of beneficiaries, their Medicare Part B premium will rise only as much as 0.3 percent in 2017, but it will be covered by their SS raise.
Unfortunately, the projected increases in Medicare Part B expenses for 2017 are so high that Medicare does not expect to be able to absorb the extra costs. By law, Medicare must collect about 25 percent of Part B expenses from beneficiaries. Because Medicare cannot collect those funds from the 70 percent of beneficiaries who are held harmless, it must collect the 25 percent ratio from beneficiaries who are not held harmless.
Who is Not Held Harmless?
Those not held harmless from this projected increase in Medicare B premiums are:
- New enrollees to Medicare in 2017;
- People with modified adjusted gross incomes (MAGI) above $85,000 ($170,000 on joint tax returns);
- Those who pay their Medicare Part B premiums out-of-pocket, either because they haven’t yet begun receiving Social Security benefits or will never receive Social Security benefits.
Ninety-five percent of Texas public school employees do not pay into the federal Social Security program! This means potentially hundreds of thousands of TRS Texas retirees could be impacted by this premium increase! (People with low incomes who have their premiums paid by their state are also not held harmless, but this means state budgets would take the financial hit).
How Much Could Medicare Part B Premiums Increase?
Right now, we do not know the exact answer to this question. As mentioned earlier, right now Medicare Part B premiums for those who are not held harmless may increase by 20 percent or more as of January 2017.
An example provided by Money magazine states that “people who aren’t receiving Social Security and who pay $121.80 a month for Medicare now may have to pay $149 a month, up 22 percent.”
Much of this decision will depend upon Congress and their plans to address this unfair increase. Last year, Congress chose to defray part of the cost.
Congress returns to session shortly after the election ends.
What Can Be Done?
The Centers for Medicare and Medicaid Services is not able to fix this issue on its own, and must rely upon Congress to take action.
This potential premium increase affects public sector retirees disproportionately!Much like the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP), it is unfair.
Now is the time for our members to reach out to their Congressional members and tell them that Texas public education retirees should not have to subsidize the premiums of the other 70 percent of Medicare Part B enrollees across the nation!
Legislation must be filed and passed this year to prevent exorbitant Medicare Part B premium increases for people who do not receive Social Security!
We need your help reaching out to your Texas Congressional members today.
Protecting your health care benefits is TRTA’s top priority, and your participation can make all of the difference. Be sure to stay tuned to our other digital mediums to keep informed on all the latest news and updates. Like us on Facebook, follow us on Twitter, and subscribe to our YouTube channel.