Also yesterday, the federal government announced that changes in the CPI-W will produce small 0.03% cost of living adjustments for federal annuitants and Social Security beneficiaries. The Washington Post offers a good perspective on these announcements here. The Wall Street Journal adds
The hold-harmless provision of the Social Security Act says Medicare can pass along only up to the dollar increase in the cost-of-living adjustment to the estimated 70% of all beneficiaries who will qualify for hold-harmless treatment in 2017.NARFE explains that federal annuitants in the legacy CSRS retirement program also fall outside the group protected by the hold harmless clause because their Medicare premiums are withheld from the federal annuities, not from Social Security benefits. Federal annuitants participating in the current FERS program do have hold harmless protection unless they fall in the "high earner" subgroup.
Because a 0.3% increase in the cost-of-living adjustment would translate into a $4 raise in the average Social Security payment, this would effectively cap the average Medicare Part B increase at $4, said Dan Adcock, policy director at the nonprofit National Committee to Preserve Social Security & Medicare. Medicare Part B covers doctor visits and other types of outpatient care.
This means that Medicare must spread much of the projected increase in its costs across the remaining 30% of beneficiaries who aren’t covered under hold harmless. This group includes not only high earners, but also those who receive Medicare, but have deferred or aren’t eligible for Social Security benefits, and those who are new to Medicare in 2017.
CMS will not announce Medicare Part B premiums until next month probably around the time that Congress returns from campaigning. Congress added a band-aid to the hold harmless clause last year and it likely will do so again this year.