Using the most recent projections by the Medicare and Social Security trustees, KFF released an updated brief examining the relationship between Social Security cost-of-living-adjustments (COLA) and Medicare Part B premiums. The brief explains that Part B premiums generally increase at a rate comparable to program spending growth; however, if there is no Social Security COLA, most Part B beneficiaries do not face premium increases because of a “hold harmless” provision intended to ensure that premium increases do not reduce social security income. Twenty-seven percent of Part B beneficiaries are not protected by the “hold harmless” provision, including dual eligibles, those who do not have Medicare premiums deducted from their Social Security benefits, new enrollees, and those earning over $85,000 as individuals or $170,000 as couples.

From the report:

For the second year in a row and only the second time in 35 years, Social Security recipients will receive a zero percent cost-of-living adjustment (COLA) in 2011. The absence of a COLA has direct financial implications for more than 50 million Social Security recipients, many of whom live on fixed incomes and rely on Social Security as their primary source of income. The absence of a COLA also affects the amount of the Medicare Part B premium charged to more than one in four Medicare beneficiaries. These premiums are paid by, or on behalf of, beneficiaries who are enrolled in the Supplementary Medical Insurance part of the Medicare program (Part B), which covers outpatient services, including physician visits. In 2011, the standard Part B premium is $115.40 per month. This policy brief explains the relationship between the Social Security COLA and the Medicare Part B premium, and the implications for those who are covered by both programs, based on the most recent projections of the Medicare and Social Security Trustees.

Full Report: The Social Security COLA and Medicare Part B Premium: Questions, Answers, and Issues (PDF | 1.15 MB)

Kaiser Family Foundation. (2010). The Social Security COLA and Medicare Part B premium: questions, answers, and issues.