Expert's View

Retirees and survivors who have elected to be covered by Medicare Part B are confused. That’s because some of them aren’t seeing increases in their premiums and others are. What’s up? Well, here’s the story.

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In 2010 retirees and survivors won’t be receiving a cost-of-living increase in their annuities. Normally, that fact would have no bearing on the amount on Medicare Part B premiums. However, this isn’t a typical year. Because of a "hold harmless" provision in the Social Security Act, beneficiaries can’t have their Social Security benefits reduced. While that provision was intended to prevent those with modest incomes from having their Social Security benefits reduced, this year it is also has the unintended – but welcome – consequence of protecting them from having to pay increased premiums for their Part B coverage. Thus, the premium is remaining at $96.40 a month.

According to Medicare, this means that 73 percent of Medicare beneficiaries will be protected from an increase in their 2010 Part B monthly premiums. However, approximately 27 percent of them will see an increase because they aren’t covered by the "hold harmless" provision. These include new enrollees (3 percent), those who are subject to the income-related additional premium amount (5 percent), and those who don’t have their Part B premiums withheld from Social Security benefit payments (19 percent).

The latter category includes those who qualify for both Medicare and Medicaid and have their Part B premiums paid on their behalf by Medicaid (17 percent). Many of the rest are retirees who are not eligible for Social Security, such as many of those retired under CSRS. For them, the monthly premium is $110.50—unless they are subject to the higher rates for higher-income people, which start at $85,000 in taxable income for individuals, double that for joint filers.

The House last year passed a bill to extend the "hold harmless" provision to all categories of beneficiaries but the Senate didn’t take it up. A retroactive change is possible but that’s not something you would want to count on, if you’re among those not held harmless.

So there you have the answer for 2010. As for 2011, if there isn’t any COLA payable in 2011, as predicted by the Social Security Administration, there won’t be any increase in Part B premiums either.