For many, Medicare costs offset Social Security raise - Albuquerque Journal

For many, Medicare costs offset Social Security raise

Copyright © 2017 Albuquerque Journal

When Albuquerque resident Paul Martinez opened his most recent Social Security benefits letter, he found something he wasn’t expecting.

Like all other Social Security recipients, he received a 2 percent cost-of-living increase for 2018, in his case an extra $30 a month. But his Medicare premiums, which are deducted from Social Security, jumped 23 percent, or $25, leaving him with only a $5-a-month increase. His wife’s Social Security check won’t increase at all as a result of the premium increase.

“I wasn’t shocked, but I was disappointed,” he said. “We live comfortably enough, but my property taxes go up by 3 percent each year, and this increase won’t even cover that.”

Martinez and his wife are part of a group of about 46 million Americans who will have a much-anticipated Social Security cost-of-living increase offset by rising Medicare costs, according to estimates by the Senior Citizens League, a nonpartisan senior advocacy group.

For the past two years, small or nonexistent cost-of-living adjustments have kept certain Medicare premiums flat through a Social Security provision known as “hold harmless.” Increases in premiums for Medicare Part B, which covers doctor visits and other outpatient care, can’t be more than recipients’ Social Security cost-of-living increases.

But the 2018 Social Security adjustment of 2 percent is the largest in a decade, and a significant bump from 2017’s 0.3 percent increase. For the average beneficiary, the 2 percent equates to an extra $25 a month.

As a result, some Medicare users who had been paying below the standard premium rate for Medicare Part B will have their premiums rise in 2018. Most recipients currently pay $110 per month or less for Part B, according to the Senior Citizens League. Now, they will pay $134 or more, depending on their income. That’s a difference of $24 before calculating any other premium increases on other Medicare programs.

Mary Johnson, a policy analyst at the Senior Citizens League, said beneficiaries could also see increases in premiums for Medicare Part D, which covers prescription drugs, or Advantage plans, which provide extra coverage for vision, dental and other health care needs. Such increases could outweigh the cost-of-living increase, according to Johnson.

Johnson said it was difficult to estimate how many New Mexicans would see their Social Security adjustments offset by Medicare increases. There were 400,022 Medicare enrollees in New Mexico as of October, according to the Center for Medicare and Medicaid Services. League data show that nationally, about 70 percent of Medicare recipients are likely to see increases in their Social Security adjustment affected by Medicare premium jumps.

People with average Social Security benefits – $1,264 a month – will not see any increase in their monthly Social Security checks after the deduction of the Part B premium, said Johnson.

In a statement, Johnson said the Senior Citizens League is working for legislative changes that would tie annual Social Security increases to the Bureau of Labor Statistics’ Consumer Price Index for the Elderly, “which more closely tracks the changes in costs experienced by people over the age of 65.”

As for Martinez, he said he’s fortunate that he and his wife aren’t among the seniors for whom a few dollars a month significantly affects quality of life. Still, he said they won’t be “planning any spending sprees anytime soon.”

“It slows you down a little bit,” he said.

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