Please ensure Javascript is enabled for purposes of website accessibility

A Medicare Glitch Could Leave Seniors Scrambling

By Maurie Backman - Jun 21, 2019 at 5:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Talk about unwanted stress.

Many seniors who are on Medicare and Social Security at the same time have their Medicare premiums deducted from their Social Security benefits directly. Doing so ensures that they aren't late with their payments and makes the whole process more convenient.

Not only that, but seniors who pay Medicare Part B premiums directly from their Social Security benefits are protected from a loss in income in the event that Medicare premium increases outweigh their Social Security cost-of-living adjustments, or COLAs. It's a provision known as hold harmless, and it basically guarantees that a given senior's Social Security benefits won't take a tip because of a Medicare hike alone.

Older woman seated at table, holding her head with serious expression

Image source: Getty Images.

But while this setup is meant to benefit seniors, a recent glitch could leave many thousands on the hook for unexpected Medicare premium bills. The Social Security Administration recently announced that it did not properly deduct Medicare premium payments from some retirees' benefits earlier this year. As such, those recipients should be on the lookout for bills to make up that difference.

Compounding the problem is that many seniors may not have realized that their Medicare premiums weren't being paid. As such, they may have already spent the extra money in their Social Security benefits, leaving them with no easy way of paying their past-due Medicare premiums once billed for them.

Another tricky aspect of this glitch is that it impacted premium payments earmarked for Medicare Advantage plans and Part D drug plans. As such, seniors who didn't have their premiums paid will need to work with their plan providers individually to come up with a means of making them whole. All in all, it's a tough situation for seniors to be in, and it underscores the need for adequate savings during retirement.

Covering unplanned bills

Working Americans and retirees alike need emergency savings to cover unanticipated expenses -- and a string of Medicare premium bills most definitely falls into this category. Now one might argue that the bills in question don't qualify as unexpected, since seniors on Medicare are aware that they need to be paying for their plans on a monthly basis. But the fact that they thought those premiums were being paid, and are now potentially stuck with a number of overdue premiums bunched together, highlights the importance of having extra money on hand for the unexpected.

At a minimum, it's best to have three months' worth of living expenses available in a savings account. Six months' worth buys additional protection. Seniors with ample savings who now face a large Medicare bill are apt to be less stressed over paying it than those with little to no money in the bank, and little leeway in their monthly budgets.

The good news in this situation is that the aforementioned glitch has since been fixed, and that all Medicare plans are required to offer enrollees a grace period for paying missed premiums before canceling their coverage. Still, this hiccup should serve as a very important lesson: to have savings on hand at all times, and at any age.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.