Millions of seniors get health coverage through Medicare, but that coverage comes at a cost. Not only are Medicare beneficiaries subject to deductibles, coinsurance, and copays, but Medicare itself is not free. Part B, which covers outpatient care, charges a premium that typically rises from year to year. Right now, the standard monthly premium for Part B is $144.60, though higher earners pay more due to a rule that imposes a surcharge. There are also costs associated with Medicare Part D, which covers prescription drugs, but unlike Part B, there's no standard premium -- the cost varies by plan.
Rising Medicare premiums are often a sore spot for seniors, many of whom already struggle to get by on a fixed income that consists largely of Social Security benefits. But as lawmakers work to provide a second round of COVID-19 relief, it looks like seniors on Medicare may get to benefit from a key provision in the latest Republican stimulus deal.
How the HEALS Act helps Medicare enrollees
This week, Republican lawmakers introduced the HEALS (Health, Economic, Assistance, Liability Protection, and Schools) Act, and among its most notable provisions are boosted unemployment, a follow-up round of direct stimulus payments, and the option for some struggling businesses to apply for a second PPP loan. But a less talked-about provision is the one that aims to keep Medicare Part B premiums at their current level for 2021.
Freezing Medicare premiums could result in major savings for seniors who are normally burdened by rising healthcare costs. And to be clear, that freeze applies to higher earners who are subject to Part B premium surcharge -- meaning, 2020's surcharges would apply to 2021 rather than increase.
Of course, to some extent, freezing Part B premiums isn't all that helpful to seniors who pay those premiums directly from their Social Security benefits. Thanks to what's known as the hold harmless provision, an increase in Part B premiums can't result in a lower Social Security benefit from one year to the next. Based on sluggish consumer spending, many financial experts are predicting that Social Security recipients won't get a cost-of-living adjustment (COLA) for 2021, since Social Security raises are tied to fluctuations in the cost of common goods and services. But when there's a year when a COLA can't cover a Part B increase, that increase is reduced or goes away completely. As such, current Social Security beneficiaries may be protected from a Part B increase next year anyway.
But not all seniors on Medicare collect Social Security. Those who don't are responsible for paying whatever Part B premium increases are imposed from year to year, so locking this year's rate in place would really help.
Right now, the HEALS Act is just a proposal; it has not been signed into law. But chances are, lawmakers will try to move it forward quickly given the number of Americans who are desperate for relief during the COVID-19 crisis. If it comes to pass, seniors on Medicare may get one less thing to worry about in the coming year.