You probably know that your Medicare Part B premium can change each year. Do you know why? Or how the amount is calculated? Or why it may increase?
Medicare costs, including Part B premiums, deductibles and copays, are adjusted based on the Social Security Act. And in recent years Part B costs have risen. Why? According to CMS.gov, “The increase in the Part B premiums and deductible is largely due to rising spending on physician-administered drugs. These higher costs have a ripple effect and result in higher Part B premiums and deductible.”1
Part B Premiums for 2021
The standard Part B premium for 2021 is $148.50 to $504.90 per month depending on your income. However, some people may pay less than this amount because of the “hold harmless” rule. The rule states that the Part B premium may not increase more than the Social Security Cost of Living Adjustment (COLA) increase in any given year. In short, this provision prevents your Social Security checks from declining year-over-year and caps Medicare Part B premium increases to be no more than the amount of your COLA.2
For people who are not “held harmless” the Part B premiums can increase as much as necessary until the standard rate is reached for the given year. You will have to pay this increased amount if any one of the following applies to you:
- You are new to Medicare
- You don’t get Social Security benefits
- You pay higher premiums due to having a higher income
Additionally, people with higher incomes may pay more than the standard Part B premium amount due to an “income-related monthly adjustment.” The adjustment is based on adjusted gross income reported 2 years prior.
The table below shows 2021 Part B premium amounts. Look for your tax filing status, individual or joint, and find your 2019 income in that column. Follow the row across to see what you will pay for Part B in 2021.3