Good news, your Social Security check will be bigger in 2020.
On Thursday, the Social Security Administration (SSA) announced cost-of-living adjustments (COLA) for 2020. The increase is slated to be a 1.6% jump in benefits. Though this percentage is not as big as the past couple of years, it still comes in above the 1.4% average over the last ten years.
This will be an increase for almost 69 million Americans that will receive Social Security benefits in 2020.
On social media, we are hearing both excitement and disappointment over the percent increase. For many, every little bit helps. Just remember that in recent years (2010, 2011 and 2016) there was a 0% increase. You can see a full list of historic COLA statistics here.
So, what does this mean for you?
The SSA distributed multiple data points in their 2020 announcement to show beneficiaries an estimate of what they can expect:
What does this mean for 2020 Medicare premiums?
Many outlets are making predictions on what the 2020 Medicare Part B premiums will be. Though the official Medicare premium announcement has not been made, trustees are predicting an $8.80 increase for 2020 Part B premiums (from $135.50 to $144.30).
Depending on what the final numbers are, some experts are predicting that the increase in Medicare premiums could wipe out most of the COLA increase beneficiaries would see in their monthly Social Security checks.
With that said, many beneficiaries won’t be seeing less on their Social Security check after the 2020 Medicare Part B premium is announced, thanks to the hold harmless provision.
Medicare’s hold harmless provision
The hold harmless provision prevents Medicare premiums from decreasing the monthly amount paid to individuals on their Social Security checks year-over-year.
Thus, Medicare Part B premiums paid by those who are protected (see below on who is protected) by the hold harmless provision and receiving Social Security benefits, cannot see an increase to their premiums that comes to more than the annual COLA increase.
Who is protected by the hold harmless provision?
As of 2017, around 70% of Medicare beneficiaries enrolled in Part B were protected by the hold harmless provision.
To qualify, beneficiaries must be claiming Social Security benefits and have been paying for their Medicare Part B premiums from their Social Security for at least two months in the year before the increase.
Who is NOT protected by the hold harmless provision?
Accordingly, the other 30% of Medicare beneficiaries are not protected by this provision. Those who are not protected are:
- People with higher incomes are subject to higher premiums for Medicare Part B and D
- Medicare beneficiaries who haven’t yet claimed Social Security
- People who are brand new to Medicare
- People who are enrolled in a Medicare Savings program
Whether the 2020 COLA increase is more or less than what you anticipated, it is an increase, nonetheless.
These incremental increases are an ill-fated reminder that Social Security alone will never be enough to cover the real costs of healthcare and living expenses for American retirees.
Our team of licensed agents is committed to helping Medicare beneficiaries across the U.S. become fully educated on their Medicare options and get the right plan that fits into their budget.