GOP’s HEALS Act may magnify coronavirus stimulus checks for retirees
Negotiations are still ongoing for the final stimulus package after the introduction of the HEALS Act last week. The GOP’s HEALS Act makes an attempt to provide benefits to all categories of people, including retirees. For retirees, in fact, the HEALS Act offers more than just coronavirus stimulus checks, but also by freezing Medicare Part B premiums.
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More coronavirus stimulus checks for retirees?
The Medicare Part B program, which mostly covers the elderly (age 65 or older), is not free of cost. Those covered under the program need to pay premiums, as well as cover deductibles to get the insurance coverage. The standard premium paid by most seniors in 2020 is $144.60 a month, notes a report from Motley Fool.
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It must be noted that premiums for Medicare Part B have increased every year since 1966. From 2019 to 2020, the premium increased by $9.10. The HEALS Act, however, has a provision that freezes premiums or deductibles from rising next year, i.e. in 2021.
Every year the premiums related to Medicare are recalculated. The new premium takes effect every January. Freezing of premiums and deductibles means the Medicare beneficiaries “would avoid substantial increases to both premiums and deductibles that are expected to result from the economic conditions coronavirus caused,” the Motley Fool report says.
The beneficiaries, however, need to pay $3 per month more until the shortfall from keeping the premiums the same is recovered. This $3 extra would be less costly than the expected increase in the premium and deductible.
How does this benefit retirees?
One obvious benefit is that the retirees and other beneficiaries now won’t have to pay for an increase in premiums. This, in a way, increases coronavirus stimulus checks for retirees. There is another indirect benefit that may be available to the Social Security retirees next year.
Next year, they may get a small cost-of-living adjustment (COLA) or no COLA at all because of the impact of the coronavirus on the economy, the report says. COLA is an adjustment for social security beneficiaries that raises the benefits to keep pace with inflation.
Assume a likely scenario where Medicare premiums go up more than the retirement income. In such a case, the hold harmless provisions would ensure that Social Security benefits don’t drop for most retirees.
For example, consider if the Social Security benefits were to increase by $9, but Medicare premiums rise by $10. Now, your monthly checks won’t drop by $1, rather your COLA would cover $9 of the $10 extra premium.
A point to remember is that the hold harmless provision doesn’t permanently reduce your monthly Medicare premiums. Going forward, if the raise you get is more than the increase in Medicare costs, then you will have to make up for the current shortfall. Moreover, those not covered by hold harmless provisions could see a significant rise in their Medicare Part B premium next year.
The HEALS Act, however, is only a proposal for now. There is no surety if it will be approved, or if all of its provisions would be passed.