Important Update: Social Security COLA for 2021 and Medicare Part B
Social Security COLA for 2021 and Medicare Part B premiums
The Social Security Administration (SSA) announced on Oct. 13 that its 2021 annual cost-of-living adjustment (COLA) will be 1.3%, which represents an average increase in retirement benefits for active recipients of $20 per month starting in January. SSA’s 2021 COLA represents the smallest increase since 2017.
Of the more than 62 million Medicare beneficiaries, nearly 44 million have their premiums deducted directly from their monthly Social Security benefit. The expectation over the summer was that Medicare Part B premiums would increase by potentially $25 to $50/month in 2021 as a result of increased emergency Medicare spending resulting from the COVI-19 pandemic.
Under the federal “hold harmless” law, the majority of Social Security recipients have to pay a portion of Part B premium increases as long as it doesn’t result in their receiving a lower monthly Social Security payment. So you can’t end up with less, but it’s possible to have the entire COLA wiped out by increased Medicare Part B premiums.
As a result of a provision added to the most recent budget law currently keeping the federal government running until Dec. 11, the standard Medicare Part B premium increase for 2021 will not be as large as initially predicted. The law added enough money to Medicare so that Medicare Part B premiums for 2021 are projected to only increase by $4. This means that most Social Security recipients will see at least some of the 2021 COLA increase.
The 2021 monthly premium amounts for Medicare Part B and Part D, along with updated deductibles and co-payments and the inflation adjustment to Income Related Monthly Adjustment Amounts (IRMAA) will be announced in the next few weeks
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