Medicare Part B Premiums Announced for 2017

Last week, the Centers for Medicare & Medicaid Services (CMS) announced the Medicare Part B premiums for 2017. Starting January 1, most people with Medicare will see a small increase in their Part B premium, from $104.90 to an average of $109.00 per month. But about 30 percent of people covered by Medicare will see a minimum Part B premium of $134.00, a 10 percent increase from the minimum 2016 premium of $121.80.

This difference in premium amounts is due to a federal law which is commonly called the “hold harmless” provision. This provision prevents about 70 percent of beneficiaries from seeing major increases in Medicare Part B premiums when Social Security cost of living adjustments (COLAs) are nonexistent or very small. The announced COLA for 2017 is very small, 0.3 percent, triggering the hold harmless provision.

Those who are held harmless will not see their Part B premium increase by an amount that is greater than the dollar amount of their COLA increase. Because the COLA is a percentage of a person’s Social Security benefits, the exact dollar amount of the increase, and the premium, will vary. For example, someone who has a premium of 104.90 deducted from their full Social Security benefits of $1,000 in 2016 will see a COLA of $3 and will have $107.90 deducted from their check for the Part B premium in 2017. Someone who gets 2,000 in Social Security benefits, will see a COLA of $6 and will have a Part B premium of $110.90.

Not everyone is protected by the hold harmless provision. Because the protection is tied to Social Security benefits, people with Medicare who do not receive Social Security or do not have premiums deducted from their Social Security checks are not covered. Those people who are new to the Medicare program in 2017, those who pay income-adjusted premiums, and those whose premiums are paid by their states are also not covered.

While announcing the new premiums, CMS vowed that its parent agency, the Department of Health and Human Services (HHS), “will work with Congress as it explores budget-neutral solutions to challenges created by the ‘hold harmless’ provision.” Last year, the Medicare program faced an even larger premium increase for those not held harmless because the COLA for 2016 was zero. In response, Congress acted to reduce the increase in premiums for those not held harmless to the level that premiums would have gone up had the hold harmless provision not gone into effect.

In addition to the updated premium amounts, CMS announced an increase in the Medicare Part B annual deductible, from $166 in 2016 to $183 in 2017.

Read the CMS announcement.