Healthcare Educators


COLA Update May Not Help Medicare B Enrollees

by | Oct 31, 2017

Thanks to a Cost of Living Adjustment (COLA) for 2018, Social Security beneficiaries will be due more money in the coming year. While this is good news for many, it may not help everyone, specifically some Medicare B enrollees.

How much is the increase?

The Social Security Administration has announced that benefits for 2018 will increase by 2 percent. This increase goes into effect starting with benefits paid in January 2018, and it’s based on the Consumer Price Index (CPI-W) from the third quarter of 2016 to the third quarter of 2017.

As a result of the increase, someone currently receiving a $1,400 monthly benefit will start receiving a benefit of $1,428. It’s not a huge increase, but for individuals living on a tight budget, it’s very welcome. It’s also a bigger increase than has occurred in recent years. In 2017, the increase was a very meager .3 percent. In 2016, there was no increase at all.

Considering this, the more substantial increase of 2 percent seems like something to celebrate – but there’s a catch. For many Medicare B participants, the increase may never reach their wallets.

How will this impact Medicare B enrollees?

When Medicare B enrollees have their premiums deducted from their Social Security benefits, a provision protects them from having their benefits decrease when the Medicare premium increases more than the Social Security benefit. This provision, often called the “hold harmless” clause, came into play in 2017. The standard Medicare B premium was $134, but people who had their premiums deducted from their Social Security benefits paid an average of only $109.

In other words, many Medicare B enrollees received a discount averaging $25 in 2017. Without this discount, their monthly Social Security benefits would have gone down.

In 2018, the COLA increase of 2 percent means that Medicare B enrollees should be able to pay the full $134 premium without seeing a decrease in their Social Security benefits – but also without seeing much of an increase. For many people, the Medicare B premium will eat up the COLA increase.

To make a long, complicated story short, if you have your Medicare B premiums deducted from your Social Security benefits, and if you have been paying less than the standard $134 premium, don’t get too excited about the COLA increase. You probably won’t be seeing much, if any, of that money.

For those who don’t fall into this group, the 2 percent COLA increase really is good news.