"Unintended consequences". You have probably heard this term used from time to time when governmental policy, designed to provide a positive outcome, sometimes also creatives an unintended negative outcome. Well, such may be the case for some Medicare Part B enrollees in 2016 if no further governmental action is taken.
A little known and rarely used social security payment rule and it's connection to Medicare Part B premium increases has created quite an inequity in the application of Medicare Part B premium increases scheduled for 2016. Incredibly, Part B Medicare premiums are scheduled to increase by a whopping 52% for an estimated 25% of Medicare Part B recipients while the remaining 75% of recipients will see no increase in their premiums due to a "Hold Harmless" provision included in the social security rules and regulations.
The Social Security Administration recently announced that there would be no cost of living adjustment (COLA) for social security payments in 2016. This was bad news for retirees on social security struggling to keep pace with rising costs, especially as it relates to health care expenses. This is only the third time in the past 40 years that social security had a zero percent increase in COLA.
The COLA provision in social security benefits was designed, among other reasons, to offset any increases in Medicare Part B premiums. If you are receiving social security your Medicare premiums are deducted directly from your social security check. However, if there was a zero COLA for social security and Medicare premiums increased, your "net" social security check would be reduced. In this instance, in order to protect social security beneficiaries from receiving reduced benefits, the so called "Hold Harmless" provision was enacted. This provision ensured that one's social security "net benefit" would not be reduced if there was a Medicare Part B premium increase coupled with no increase in social security COLA.
However, the Hold Harmless Provision ended up protecting only 75% of Medicare enrollees. The remaining 25% of "unprotected" enrollees were not only unprotected but also had to bear the full brunt of these premium increases for ALL Medicare enrollees!
The three basic categories of "unprotected" enrollees subject to 2016 Medicare Part B premium increases include high income earners (about 5% of Medicare enrollees), "dual eligibles" (those on both Medicaid and Medicare) and finally those who, for one reason or another, were receiving 2015 benefits from only Medicare Part B or social security, or from neither program.
For these three groups, Medicare Part B premiums will increase from $104.90 to $159.30 per month. The exception is for the high income group whose premiums will spike to over $500 per month. The "dual eligibles" will essentially not be affected because their premium increases will be passed on to their state Medicaid agencies (who, by the way, are already under significant financial pressure).
Clearly, it is not fair or logical that the 25% of "unprotected enrollees " should bear the burden of the full cost of Medicare Part B premium increases applicable to all Medicare enrollees. The White House and some members of congress are already looking into possible remedies for these "unintended consequences" of the "Hold Harmless" provision in the social security rules. We can only hope that this issue is resolved before the 2016 Medicare premium spikes take place.
Ash Ahluwalia, NSSA, CCSCA, MBA