As expected, the Social
Security Administration (SSA) has announced that there will not be a
cost of living adjustment (COLA) in 2011 for the 54 million
recipients of Social Security benefits. The COLA is an increase to
help Social Security beneficiaries keep pace with the rise in
inflation. There will be no COLA in 2011 because there has been no
increase in inflation thus far during the tracking period. Although
the COLA is not a raise, many Social Security recipients think of it
While the lack of a COLA
for 2011 may seem unfair to many, the SSA announcement is in keeping
with the statutory calculation of the COLA.
The "Hold Harmless"
A hold harmless provision
in the Social Security Act disallows an increase in the Medicare
Part B premium for qualifying Social Security recipients if their
COLA is not large enough to cover the increase in the Part B
premium. Although the Centers for Medicare & Medicaid Services
(CMS) has not yet announced the Part B premium for 2011, the
principles of hold harmless will apply regardless of the amount.
To be protected by the
hold harmless provision, a beneficiary must:
Be entitled to Social
Security benefits for November and December of the preceding
year. (For the next cycle, November 2010 and December 2010)
Have the Medicare
Part B premium deducted from Social Security benefits in
December of the preceding year and January of the current year.
(For the next cycle, December 2010 and January 2011) (The
discrepancy between months of entitlement and months of check is
due to the program design that has the beneficiary receiving the
check for last month's benefits in the current month, e.g.
December's benefits come in January.)
Not receive a COLA
that is greater than the Part B premium increase. (For the next
cycle, no one will receive a COLA.)
Not have a modified
adjusted gross income over a certain amount. ($85,000 for an
individual and $170,000 for a couple in 2011.)
Because of the hold
harmless provision, most Social Security recipients will not see an
increase in their Part B premiums in 2011.
Who Will Face a
Most Social Security
recipients will be protected by the hold harmless provision. A
significant number (last year it was about one quarter of all
recipients), however, will see an increase in Part B premiums
because they do not qualify for the hold harmless provision. Those
affected fall primarily into three groups.
These three groups are:
beneficiaries (modified adjusted gross income greater than
$85,000 for individuals and $170,000 for couples in 2011); and
Part B premiums are paid by the state through one of the
Medicare Savings Programs (MSPs).
Beneficiaries new to
Medicare in 2011, even if they received Social Security benefits in
November and December, will not have had Medicare premiums deducted
from their checks in both December 2010 and January 2011. Because
they were not paying Part B premiums for the last two months of
2010, they will not have experienced a decrease in benefits in 2011
that is due to the increase in the Part B premium.
Next, beneficiaries who,
because their incomes exceed a threshold set in the law, are
required to pay a higher, income-related Part B premium are
explicitly excluded from the hold harmless provision.
Third, the roughly
seventeen percent of Medicare Part B beneficiaries who are dually
eligibles for Medicare and Medicaid and whose Part B premiums are
paid by the state, usually through one of the Medicare Savings
are not subject to the hold harmless provision. Dual eligibles are
not protected by the hold harmless clause because their Part B
premiums are not deducted from their Social Security checks. Dual
eligibles are not directly affected, however, as the increased
premium will be paid by their state Medicaid program.
A subset of the dually
eligible group consists of those who will not qualify for an MSP for
all of 2011. When they lose MSP coverage, they will have to pay the
higher Part B premium since their premiums were not being taken from
their checks at a time when they could have qualified for the hold
harmless provision. Not only will they suddenly have to pay the
Part B premium themselves, but they will have to pay an increased
premium. Unless something is done legislatively to change the
situation, those who lose their MSPs in 2011 will be forced to pay
the 2011 Part B premium increase. Last year, when a similar
situation existed, legislation was not enacted protecting this group
Lastly, there is a small
group of former Social Security Disability Insurance (SSDI)
recipients who still qualify for Medicare even though they no longer
They pay their Part B premiums out of pocket directly to Social
The hold harmless provision states that one must receive monthly
social security benefits and have the Part B premium deducted from
those benefits in order to qualify for protection.
It would seem that since former SSDI recipients do not currently
have a benefit to deduct a Part B premium from, they will not
qualify for hold harmless protection. Another group of SSDI
recipients facing the possibility of having to pay the higher
premium in 2011 comprises those beneficiaries who are receiving SSDI
benefits, but who will not become eligible for Medicare until 2011
because of the twenty-four month waiting period. These individuals
will also have to pay the premium increase.
The chart below
illustrates how different types of Part B beneficiaries are
Withheld from Social Security Check, Not Income-Related
Withheld, Pays Income-Related Premium
excluded from hold harmless provision.
Have not been
enrolled in Part B long enough
in an MSP
Yes, but the
premiums are not withheld from their Social Security
premium not withheld from their Social Security benefits
Status (Premium Not Withheld from Social Security Check)
premiums are not withheld from their Social Security
benefits (they don’t receive any)
Recipients Who Become Eligible for Medicare in 2011
premium not previously withheld from their Social
Further Effects on
Social Security Recipients: Part D Increase
Even those protected by
the hold harmless provision may still see a decrease in their Social
Security checks due to an increase in Medicare Part D premiums.
Medicare beneficiaries with the full low-income subsidies (LIS) do
not pay Part D premiums and will not be affected. However, more
than two million low-income beneficiaries are eligible for LIS
benefits, but are not receiving them.
According to a recent report by the Kaiser Family Foundation, Part D
premiums have increased by about fifty-seven percent since the
program went into effect in 2006.
Questions about the Hold Harmless Provision and about the
If I lose my Medicare
Savings Program during 2011, what amount of premium will I pay?
Because your state
paid your Part B premium and thus it was not deducted from your
Social Security checks for months that would qualify you for the
hold harmless provision, you are not among those who are held
harmless. You will have to pay the standard premium which has
not yet been announced by the Center for Medicare & Medicaid
I have both my Part D
premium and my Part B premium deducted from my Social Security
check. My Part D premium went up for 2011 and that full amount is
being deducted from my check. Isn't there a hold harmless provision
for Part D?
is not such a provision. The operation of the Part B hold
harmless provision only protects beneficiaries from a reduction
that would be caused by the Part B premium amount.
I have to pay a late
enrollment penalty, but my Part B premium was deducted from my
Social Security checks for November and December of 2010. Does that
mean my penalty is waived for 2011?
Your penalty is not
waived and it will be calculated on the standard premium (not
yet announced) for 2011.
The hold harmless provision protects an individual from an
increase in his/her Part B premium "to the extent that such
increase would reduce the amount of benefits payable to that
individual for that December below the amount of benefits
payable to that individual for that November."
This language suggests that you would not pay more than you did
in 2010. However, according to implementing regulations, a late
enrollment penalty is added to the so-called non-standard
premium and, since the late enrollment penalty is calculated on
the standard premium, it is likely to result in a higher premium
than you paid last year.
I have to pay more than
the standard Part B premium because I enrolled late into Part B and
did not have my premium taken from my check. Now my Part D premium
went up for this year, too. But my income is only about $1,000 a
month and I have almost nothing in the bank. I'm thinking of
dropping Part B because I can't afford the premiums anymore. I
might have to drop Part D, too, because I can't really afford it,
but I have lots of prescriptions and don't know what I would do if
I had to pay all of it myself.
You should not drop
Part B or Part D. You are probably eligible for a Medicare
Savings Program from your state, as well as for the Part D
Low-Income Subsidy (LIS). The Medicare Savings Program would
pay your entire Part B premium and you would be relieved of your
late enrollment penalty. The Part D Low Income Subsidy would
entitle you to a premium-free Part D plan and to very low
payments for each prescription. Contact your state Medicaid
program to apply for Medicare Savings Programs and Social
to apply for the Low Income Subsidy or find a State Health
Insurance Program (www.shiptalk.org)
near you to help you through the applications.
I'm confused. Some
things I read refer to November and December as being the months
that are relevant for qualifying for the hold harmless provision and
some refer to December and January. Which is right?
Both references are
correct. The confusion lies in a disparity between Social
Security and Medicare law with respect to when benefits are paid
and premiums are deducted. Your Social Security check for
November is actually paid to you in December and the Part B
premium amount that is withheld from it is the payment for
December. Similarly, your December Social Security benefit is
paid in January and the Part B premium amount for January is
taken from that check. The hold harmless provision says that
the Part B premium amount should not result in the benefits due
for December (received in January) being lower than the benefits
due for November (received in December).
I am paying a Part B
income-related premium for 2010 based on my income of $96,000. If
my income goes down in 2011, will my premium continue to be
calculated on the standard $110.50 premium for 2010?
The short answer is
no, but a more complete answer is a little complicated. First,
each year's standard premium amount is based on projected
Medicare Part B costs for that year rather than on the previous
year's standard premium. And the Part B income-related premium
is based on the standard premium. So the premium amount for 2010
will not be a factor in determining either the standard or the
income-related premium amount for 2011. Second, the amount of
an individual's Part B income-related premium is first
determined by the Social Security Administration (SSA) based on
income tax returns from two years prior to the year for which
the premium is being determined. Your Part B income-related
premium for 2010 was calculated on your 2008 income. If your
modified adjusted gross income goes below the threshold for the
Part B income-based premium for an individual ($85,000) in 2011,
your premium will still be calculated by SSA on a prior year's
tax return, so may continue to reflect higher income. Should
that occur, you can appeal the SSA determination of your premium
amount by showing evidence of your actual income.
I am a retired high
school teacher who did not contribute to the Social Security
system. Nonetheless, I am entitled to a small Social Security
benefit but my government pension offset reduces my check to about
$90. For 2010, the entire Social Security benefit went to pay my
Part B premium and I paid the small difference by check. Medicare
tells me I must pay the higher standard premium for 2011. Is that
the application of the hold harmless provision do include
reference to benefit offsets due to government pensions, but it
is unclear if these regulations would protect you in the
situation you describe.
You should contact the Social Security Administration to see if
you qualify for relief based on these provisions.
Most Medicare Part B
beneficiaries will not have to pay the Part B premium increase
because there is no Social Security COLA in 2011. This means that
the beneficiaries who do will see a substantial increase in their
premiums. Since most of that group consists of dually eligible
people, the states will bear much of that cost. Even those who
qualify for the hold harmless provision could see a decrease in
their Social Security checks in 2011 because of Medicare Part D.
President Obama and
Speaker of the House of Representatives Nancy Pelosi both support a
one-time $250 payment to all Social Security recipients to
compensate for the lack of COLA. Speaker Pelosi has promised a vote
on legislation introduced by Congressman Earl Pomeroy (D. N.D.) as
the Senior Protection Act of 2010.
Senator Bernie Sanders (I-VT) has introduced similar legislation in
the Senate in S. 1685, The Emergency Senior Citizens Relief Act of
2009. Neither of these bills would change the "hold harmless"
provision of the Social Security Act to cover the groups not
currently protected by the hold harmless provision.
For more information,
contact Patricia Nemore in the Center for Medicare Advocacy's
Washington, DC office at (202) 293-5760 or
 42 U.S.C. §
 The three MSPs
are the Qualified Medicare Beneficiary (QMB), Specified
Low-Income Medicare Beneficiary (SLMB), and Qualified
Individual (QI) programs.
 Ticket to Work
and Work Incentives Improvement Act of 1999, 42 U.S.C.
 The number of
people in this group is so small that this group was not
does not appear in the Kaiser discussion of the twenty-five
percent of people who will be affected by the Part B premium
 Kaiser Family
Foundation Issue Brief, "The Social Security COLA and
Medicare Part B Premium: Questions, Answers, and Issues.
Page 4. www.kff.org.
 42 U.S.C.§§
1395r(f) and 1395s(a)(1) and (b)(1)
 42 C.F.R.§
408.20(e)(3) and (e)(4)(ii)(B)
 H.R. 5987,
introduced in July 2010. Although the bill is named Senior
Protection Act, it would, in fact, provide payments to all
54 million recipients of Social Security benefits, only
about 63% of recipients of Social Security benefits are
retirees age 62 or older. The rest are their spouses and
dependents, or people with disabilities and their spouses
and dependents, or surviving spouses and dependents of