Medicare Hold Harmless Provision

Key Takeaways

• The Medicare hold harmless provision caps the annual increase in Medicare Part B premiums for Social Security recipients.
• If the cost-of-living adjustment (COLA) is low, premium increases are limited accordingly.
• High-income earners and those who pay premiums directly do not qualify for this provision.
• To qualify, Part B premiums must be deducted from Social Security payments received in December of the prior year and January of the current year.
• The provision helps protect retirees' income by ensuring Social Security benefits do not decrease due to premium hikes.

What Is the Medicare Hold Harmless Provision?

The Medicare hold harmless provision prevents Social Security benefits from dropping when Medicare Part B premiums rise. For people whose Part B premiums are deducted from their Social Security checks, increases are limited to the year's cost-of-living adjustment, so the net payment does not fall. This helps retirees on fixed incomes manage rising healthcare costs.1

How the Medicare Hold Harmless Provision Safeguards Your Benefits

The Medicare hold harmless provision is a statutory restriction that prevents Medicare from raising most Social Security recipients’ Medicare Part B premiums by more than the cost-of-living adjustment (COLA) provided by Social Security in a given year.2

Meanwhile, the Centers for Medicare and Medicaid Services (CMS) sets the standard premium for Medicare Part B insurance annually.3

Important

By law, Medicare must collect a portion of its Part B costs from beneficiaries. Because low COLA increases may limit the share of the costs offset by the standard premium, they can impose an increased burden on the high earners not eligible for relief under the hold harmless provision.4

Eligibility Criteria for the Medicare Hold Harmless Provision

To qualify for protection under the Medicare hold harmless provision in a given year, you must have Part B premiums deducted from the Social Security payments you receive in December of the prior year as well as January of the current year. The Social Security Administration ensures that the monthly payout does not decline as a result of an increase in Party B premiums for those covered by the hold harmless provision.1

The provision does not apply to those who make payments for Part B insurance directly to Medicare and those who have premiums paid by Medicaid.15

Understanding Income-Related Adjustments and Their Impact

Also not eligible for the hold harmless provision are the approximately 7% of Part B participants who pay premium surcharges known as income-related monthly adjustments because their income exceeds a threshold set by Medicare.6

Important

Part B premium surcharges are based on modified adjusted gross income (MAGI) as reported on the beneficiary's federal tax return two years earlier. For example, 2026 income-related monthly adjustments would be based on 2024 MAGI.7

Important Considerations for Hold Harmless and Income Adjustments

By law, Social Security cost of living adjustments are based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). COLAs compensate beneficiaries for the loss of purchasing power due to inflation. That means COLAs are a crucial "hold harmless" safeguard in their own right.8

The Medicare hold harmless provision for Part B premiums only ensures Social Security benefits don't decline in nominal terms from one year to the next for most recipients as a result of increases in the premiums deducted from their monthly benefit checks. That means higher premiums can still erode the inflation protections afforded by COLAs, leaving retirees with less disposable income.

In years when the COLA falls to zero, as it did in 2015, the Medicare hold harmless provision shifts more of the cost-sharing burden to those ineligible for the provision’s protection.8

How Much Will My Medicare Costs Increase Each Year?

The Medicare Part B standard premium, a key medical expense for beneficiaries, is set annually by the Centers for Medicare and Medicaid Services to cover 25% of the program's costs in the next year, as projected by the agency's actuaries.9

Since program costs and projections fluctuate, the standard Medicare Part B premium does vary from year to year as well. In addition to premiums and deductibles, Medicare beneficiaries without Medigap coverage face out-of-pocket costs such as coinsurance and copayments.

How Can I Qualify for the Hold Harmless Provision?

In order to qualify, individuals must have their Medicare Part B premiums deducted from the Social Security payments they receive in December of the prior year and January of the current one. Those who pay Medicare premiums directly or pay higher premiums based on income do not qualify.1

Is There Any Other Help Available for Medicare Premiums?

Medicare savings programs provide financial assistance for premiums and other program costs to about 15% of Medicare beneficiaries.1011 To qualify, you must have income below certain limits, which can vary by state.12