The lack of a COLA has raised the potential for CSRS retirees and certain other Medicare enrollees to pay premiums for Medicare Part B premiums in 2016 that would be higher than those paid by other enrollees. That’s due to a provision of law protecting those who pay Medicare premiums out of their Social Security benefits. The so-called “hold harmless” provision states that if the increase in a person’s Social Security benefit is not enough to cover the increase in the Part B premium, the premium is frozen. (Part B, which covers physician and related medical services, is voluntary but most federal retirees elect it even though most also continue their FEHB coverage, with Medicare becoming the primary payer.) If that provision kicks in, the entire cost of the Medicare premium increase is borne by those not covered by that protection, about 30 percent of those in the program. Those excluded from the protection include those who don’t get Social Security benefits, new Medicare enrollees and those who pay higher Medicare premiums because of high income. CSRS retirees didn’t earn Social Security coverage while federal employees and thus don’t get a benefit from that system, although some of them do receive a Social Security benefit (typically reduced by an offset, though) due to other employment or self-employment. It’s estimated that above half of CSRS retirees would be hit by the higher premium, which could cause them to pay upwards of $160 a month for Part B–the final figure hasn’t yet been announced–while the premium for others would hold steady at about $105. The situation has occurred before, in 2010 and 2011, when those retirees and others excluded from the protection paid about an extra $20 a month toward Medicare. Federal employee organizations and retiree interest groups are backing legislation to prevent the disparity. A similar attempt failed for 2010 and 2011 largely due to disputes over how else to pay for the higher spending on Medicare. Options include spreading the increase across all beneficiaries, drawing down the program’s already dwindling reserves, or adding to the budget deficit–all of which have drawbacks.
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