SOCIAL SECURITY (cont.)

increase. But, if the COLA increase to your SS benefit isn’t big enough to cover the entire Medicare premium increase, your net SS benefit stays the same and your Medicare premium amount becomes whatever level your COLA increase brings it to (up to the base premium for that year).

That means that your Medicare premium could be lower than the standard Medicare Part B premium for the year.

Since the dollar value of a COLA increase varies according to the size of your Social Security benefit, those with a higher benefit may receive a COLA increase which more than covers the Medicare premium increase and the remainder is given as additional SS benefit. But those with a lower SS benefit will get a smaller COLA, which may not be enough to cover the increase in the Medicare premium. In that event, the Social Security benefit stays the same and the COLA is used to bring the Medicare premium up to, or closer to, the base premium amount. If the COLA doesn’t cover the entire Medicare premium increase, the premium stays at a lower-than-base number. And this recurs every year, which results in many people, especially those with a smaller SS benefit amount, paying a different (smaller than base) Medicare premium amount. Here’s an example: If your husband’s SS benefit is $1200/month, he got a $19.20 COLA increase for 2020 (1.6%). The Medicare premium for 2020 went up by $9.10, which was taken from his COLA increase.

The remaining $10.10 of his COLA increase was added to his SS benefit amount.

If your benefit is $388 your COLA increase was $6.20 (1.6%). That $6.20 COLA wasn’t enough to cover the $9.10 Medicare premium increase, but it was applied to your previous Medicare premium amount to bring you to a Medicare premium of $139.60. Your net SS payment stayed the same because your current SS benefit cannot be used to pay for the rest of the premium increase. But $5 of any COLA increase you get next year will go toward bringing you up to the base Medicare premium amount. While this may not fit your idea of “rhyme or reason” it is, nevertheless, based upon a well-intentioned “hold harmless” rule which protects your Social Security benefit from decreasing.

This article is intended for information purposes only and does not represent legal or financial guidance.

It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/ social-security-advisory) or email us at ssadvisor@ amacfoundation.org.

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