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Social Security’s Hold Harmless Provision

When you receive Social Security Disability Insurance (SSDI) benefits or retirement benefits through Social Security, you also become eligible for health insurance through Medicare. The vast majority of people covered by Medicare elect to have their Medicare premiums automatically deducted from their monthly benefit payments. So, what happens when Medicare premiums increase?

Thanks to Social Security’s hold harmless provision, your monthly benefit amount will not decrease if your Medicare Part B premiums increase. Please note that the hold harmless provision does not apply to other parts of Medicare, specifically Medicare Part D, which covers prescription drugs.

Social Security Administration works with the Centers for Medicare and Medicaid Services (CMS) to make sure that your benefits do not decrease. Every year, CMS establishes a standard premium amount for Medicare Part B. In 2021, the Part B base premium is $148.50.

Each year, Social Security makes cost of living adjustments (COLA) to compensate for inflation. This way, disability and retirement benefit recipients can afford higher prices on consumer goods. Otherwise, every time inflation increased prices, beneficiaries would have less and less buying power with the benefit amounts leftover.

The hold harmless provision is particularly helpful to beneficiaries when Medicare Part B premiums increase, but there is little or no COLA that year. The provision effectively caps Part B increases to make sure they do not exceed your COLA.

Not everyone qualifies for the hold harmless provision. To qualify, you must receive or be entitled to receive Social Security benefits for November and December of the current year and have your Medicare Part B premiums for November and December automatically deducted from your monthly benefit payments. You do not qualify if you pay Part B premiums directly to Medicare.