Most Social Security recipients won’t be seeing much, if any, of the 2% cost-of-living adjustment (COLA) on Social Security benefits announced for 2018.
All or most of the increase, which is roughly $25 for the typical recipient receiving an average $1,250 monthly benefit, will be eaten up by an the increase in Medicare Part B, according to The Senior Citizens League.
Any day now, the Centers for Medicare & Medicaid Services is expected to announce the Medicare Part B premiums for 2018. Medicare’s Board of Trustees has indicated that Part B premiums, which cover outpatient medical care such as doctor visits and lab tests, will likely remain stable at about $134 a month next year, but that monthly premium is actually substantially higher than what many Medicare recipients currently pay. Due to a provision in the law, most retirees are “held harmless” from increases in Part B premiums if the increase would reduce their Social Security benefits.
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Since Social Security benefits did not rise at all in 2016 and increased just 0.3% in 2017, 70% of Medicare recipients — those with a modified adjusted gross income of less than $85,000 for individuals and $170,000 for couples who have their Medicare premiums deducted from their Social Security benefits — did not pay the $134 a month for Part B. They’ve been paying about $109 per month on average this year, according to Mary Johnson, Social Security and Medicare policy analyst and consultant for The Senior Citizens League.
She provided ThinkAdvisor two examples showing how the Medicare Part B premium increase will eat into Social Security benefits in 2018, dating back to 2016.
(Related: 2018 Social Security COLA Is Biggest in Years)