Medicare Part B premium increase in 2012 likely to fully offset Social Security COLA projected at 1.2%. This is a good lesson for anyone planning on retiring.

27 Mar

According to the Trustees projections, Social Security recipients may see a 1.2% cost of living adjustment in their monthly benefit in 2012. However, that increase will quickly disappear thanks to growing Medicare premiums.

The “hold harmless” provision which states that the Social Security benefit can’t decrease as a result of a Part B premium increase assures that most Americans receiving Social Security will not see their benefit go down, but neither will the benefit increase, for the third year in a row.

Higher income beneficiaries are not protected by the hold harmless provision and will see an increase in Medicare premiums and a resulting decrease in their net Social Security benefit.

Those new to Social Security and Medicare in 2012 will see the effects of all Part B premium increases over the last three years.

If you would like to see a more detailed explanation of all this check out the Kaiser Family Foundation Report.

Individuals paying for Medigap coverage or for employer based Medicare supplemental coverage will see a further reduction in their net income as a result of increases in those premiums. 

There is a lesson to be learned here for those who are not yet retired.  Health care costs and premiums will continue to consume an ever-increasing portion of your retirement income and those costs are largely income insensitive meaning that if you have a retirement income of $30,000 or $300,000 your health care costs will be very much the same.  The time to plan for this is now, now, now!

October 4, 2011 Update


15 Responses to “Medicare Part B premium increase in 2012 likely to fully offset Social Security COLA projected at 1.2%. This is a good lesson for anyone planning on retiring.”

  1. Anonymous October 5, 2011 at 2:15 PM #

    I would like to know what has happened to all the money we as working public paid into social security???? I have worked for 50 yrs. and paid money into social security, now in my life time left, I will never get back half of what I paid in. Did the government steel the money? Shouldn’t that be a crime to use our money for other bills. The government gives immigrants money when they come into America. What about the people who worked and paid in to social security all their lives? Should that money go to support immigrants who has never worked in America or pay one penny into social security? Why doesn’t America take care of their own instead of giving our money to other Countries? I don’t see any other Countries helping America out…..I guess it is OK to let our seniors die of hunger? Their old, just get rid of them, is that what our government thinks? That is sure what it looks like.

  2. Anonymous September 2, 2011 at 8:18 PM #

    With the wars alone stoped. And being reinbursed for what other countrys owe us . And without the theives in the banking insd. We would have no problem helping out our own people. Every child in america eat , jobs would be booming here thus we would still be on top. Fire em all and send the goverment a clear message we arn,t going to take what them shove at us anymore. I ques they just like pissing all over there for fathers without taking
    any responsabilty to doing the right thing,

  3. Anonymous August 25, 2011 at 5:28 PM #

    Some people spent their lives working and saving for retirement but due to unexpected illness their savings is gone and all they have is social security retirement. No one can predict an illness that will wipe out their savings, but our government will give our tax dollars away to other countries before they take a good look in their on back yard. They need to help their own country before tossing so much money into others laps.

  4. Robert August 24, 2011 at 8:38 AM #

    I am retired. I would like to see our Government Senators, Congressmen and Representatives receive a 1.2% cola raise. That is a shame, a lot of people are only living on Social Security Benefits as a means of their only monthly income. For a person only receiving for example $1,000 a month social security benefits, they will receive a cola raise of $10.00 per month which will be eaten up and more of their benefits will be also consumed to pay for the Medicare Part B. Yet our government officiasl make a salary of $174,000 a year, have the best Health Care Plan in the world, and receive at least a 3% raise every year, if you do the math, our Senators, Congressmen and Represetatives that we have voted into office to work for us, get approxiamately a $5,000 a year raise. Our Government stoped the Cola raise in 2009, and have gotten their foot into the door, and they have the nerve to maybe give a COLA raise, of 1.2% percent in 2012, I would like to see them live on just a social security befefit of around $1,000 dollar a month, like alot of American’s have too. We as American’s have built this country, what it is today, Our government better start bringing back God into our country, and working for the American people first, instead of being Big Brother forthe rest of the world, take care of our own first then help the rest of the world. The American’s of this country are getting fed up with the way our elected government officials take good care of themselves and don’t care anything about the people who voted them into office. Start doing your job, and take care of our own. P.S. I also thing that it is ridculous that our Government Offiicials receive the same pension as their salary. A very discouraged conerned American.

    • rdquinn August 24, 2011 at 11:12 AM #

      You really should look at the facts. Congress hasnt had a raise in several years, their average raise over more than ten years has been less than 3%, their health plan is the same as millions of other government and private workers and no better than Medicare. Their pensions are less than 50% of pay after thirty years or so.

      Why after a lifetime of work should anyone be living only on Social Security. It was supposed to be a safety net, not ones sole retirement income.

      I would really like to hear more about your situation.

      • Ray September 27, 2011 at 9:53 AM #

        what did you smoke before posting this

      • rdquinn September 27, 2011 at 10:08 AM #

        At the time this was written (check date) these were the facts. Since then, inflation picked up considerable thus moving us to about a 3.5% COLA for 2012. For some people even that or most of the increase may be offset by the Part B premium increase.


        Richard D Quinn Editor

      • rdquinn September 27, 2011 at 10:12 AM #

        Not sure what you are referring to, but the facts are what they are even if they don’t match with preconceived notions or left or right rhetoric.


        Richard D Quinn Editor

    • Anonymous September 22, 2011 at 12:39 PM #

      I am agreement with you as so many other Americans are…I feel they should have to hold their seat for a much longer time in order to get a pension. The military has to do 20yrs to get a pension of small portions. So does any fireman, police.

    • Robert October 6, 2011 at 7:14 AM #

      I totally agree with this comment. The american people are having such a difficult time with the economy, jobs, health care, the housing market and the price of gas and etc. We are told that the increase prices of a gallon of gas are a speckulation of rising oil prices. The oil companies are prospering with millions and millions of dollars profit every quarter, and most americans are having such a hard time just getting by. Our process of determining the COLA raise is a joke. It is a crime to give someone a 1% raise on their social security benefits, some poor people will only get around $.10.00 a month and that will be eaten by the increase Medicare part B. Our elected officails should start doing their job for the betterment for our country and for the american poeple.

      • rdquinn October 6, 2011 at 9:05 AM #

        Why should people on Social Security receive any increase in monthly benefits at the expense of the younger generation which is the generation that is having the most difficult time as you note? Who will pay for an increase while the country goes deeper into debt. We all had a lifetime to plan for retirement, what right do we have to keep taking from our children’s and grandchildren’s futures?

        I am 68, I will take a COLA when it comes but I am not “entitled” to it or deserve it. I and you will receive every penny we put into Social Security back in benefits in less than seven years of collecting SS.

        Congress did a great disservice to the Country by putting the COLA on an automatic formula as opposed to evaluating it’s affordability when justified.


        Richard D Quinn Editor

  5. Robert Lindsey August 6, 2011 at 5:55 PM #


  6. Peggy McNabb June 5, 2011 at 6:12 AM #

    Whar are the Elderly and Disable going to do if they have to pay for insurance. if they do give them a Raise in 2012 something else goes up to take it. What is this WORLD coming too. Stealing jusat to feed there Family, wanting to be put in Jail so there Family will be feed, God take a hold on this put the Goverment in this place for one week and see what they can do no insurance, no food, no AFDC, Food Stamps and especially No Jobs available.

  7. Larry Becker March 27, 2011 at 11:27 AM #

    So commentators, including yourself say plan now. So tell us, more about how to plan.

    • rdquinn March 27, 2011 at 11:40 AM #

      First, forget what the experts say about the income replacement you will need in retirement. It’s not seventy, eighty or ninety percent it’s 100% plus the ability to cope with inflation. This means the ability to generate extra income beyond any fixed income. Second, recognize now that anywhere between $600 and $900 of your retirement income will go toward health care related costs. That means accumulate funds to deal with those costs, perhaps an HSA or set up an IRA that you designate for those expenses or ultimately delay retirement. The idea of early retirement is not valid for most people. Finally, don’t enter retirement blind to all the issues as many people do. I did retirement planning for thirty years and still there are a few things I did not catch, like the income adjusted Medicare premiums.

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