Social Security Administration

THE TAX ATTIC with Jerry Coon

November 10, 2011 // 0 Comments

Increases in benefits Last week, the Department of Health and Human Services announced how much Medicare premiums would increase for 2012. It was previously announced by the Social Security Administration that Social Security recipients would enjoy a 3.6% increase in benefits beginning in January 2012. Exactly how much of that 3.6% the recipients would get to keep would be dependent upon how much Medicare premiums would also increase. It is interesting to know how the Social Security benefits and Medicare premiums interact. There is a provision in Social Security law, a hold-harmless provision that says a recipient’s Social Security check cannot be decreased due to an increase in Medicare premiums. As you remember, for the last two years Social Security checks have not increased. This means that although Medicare premiums have actually increased from $96.40 in 2009 to $99.90 in 2010 to $115.40 in 2011, none of these increases were applied to the approximately 73% of all recipients who were already receiving benefits in 2009. Their premiums stayed at $96.40 because their Social Security benefit could not be decreased. Those who signed up for Social Security in 2010 and 2011 paid the higher premium amount. One of the biggest surprises to come out of Washington lately has the 2012 Medicare premium decreasing from the $115.40 2011 amount down to $99.90—a 13.43% decrease. Since the states seem to be saying their Medicare costs are increasing exponentially, I fail to see how Medicare premiums could go down by 13.43%. I’m not holding my breath for my health insurance premiums to go down by 13.43%. In fact, I would be happy to see them only go up 13.43% next year. It almost makes one wonder if there is some funny government accounting going on here. The decrease down to $99.90 still means that Social Security benefits will be decreased by $3.50 per month. Recipients were paying $96.40 and now will be paying $99.90—the $3.50 increase. So, the overall decrease in Medicare premiums still results in an increase, but that’s a whole lot better than what it could have been. People who signed up for Medicare in 2010 and 2011 will also be paying the reduced amount of $99.90 in 2012. Another group of taxpayers will also receive an […]