Social Security: Ask Rusty
Hold Harmless Provision; Benefit Payment Schedule & Payment Method
By RUSSELL GLOOR,
May 21, 2017
Dear Confused: Yes, it might seem unfair, but the difference in your Medicare Part B premiums has to do with something called the "hold harmless provision" of the Social Security Act. This provision essentially states that a beneficiary's Social Security benefit payment cannot decrease due to an increase in Medicare's Part B premium.
This is an important provision because Medicare costs tend to rise annually often resulting in higher premiums. However to be protected by this provision, your premiums must be automatically deducted from your Social Security benefit payments. Since your friends' Part B premiums are deducted from their Social Security, they enjoy this "hold harmless" protection; since yours is not, you pay the standard Medicare Part B monthly premium.
About 70% of all Social Security beneficiaries enjoy this hold harmless" protection, which means that the other 30% (as well as others who are on Medicare but not collecting Social Security) bear the brunt of covering the total costs of the Federal Medicare program. Since your premium is $134 you are paying the "standard" premium that applies to anyone earning $85,000 per year or less. You may take some comfort in knowing that higher-earners can pay up to $428.60 per month for Medicare Part B coverage (these are 2017 numbers). When you eventually apply for your Social Security benefits and have your Medicare premiums deducted from your payments, you will automatically become protected against significant future Part B premium increases, because the hold harmless provision will prevent your Social Security benefit amount from going down. As a side note for awareness, it sometimes happens that when a Social Security Cost of Living Adjustment (COLA) is given, it is partially or entirely offset by an increase in the Medicare premium. So, even with hold harmless protection, while your Medicare premium may technically go up somewhat, your Social Security payment will remain the same.
A point of information: Any time you switch from one Social Security benefit type to another (e.g., from your own benefit to spousal benefits, from survivor's benefit to your own benefit, from spousal benefit to your own benefit, etc.), you are subject to your Medicare Part B premium amount being adjusted (increased) to the most current standard Part B premium amount.
Benefit Payment Schedule & Payment Method
Dear Rusty: I'm approaching my full retirement age and about to apply for my Social Security benefits, but I would like to time receipt of my payment to the first of the month when I make out my bills. I've asked a number of friends when they get their Social Security and each one seems to have a different answer, so I'm wondering if I can specify when I apply what date I want to get my payment. Also, though some of my friends get their payment by check, I'd really like to have mine deposited directly into my bank account. Can this be done? Signed: Newbie to Social Security
Those whose benefits started prior to May 1997 are grandfathered into their benefit payment date of the 3rd of each month. To somewhat complicate matters, people who receive both SSI (Supplemental Security Income) and OASDI benefits also receive their OASDI benefit payment on the 3rd day of every month and there are a few other obscure conditions which might cause OASDI payments to be made on the 3rd. So you can see why you may encounter people who receive their benefits at different times, but the normal is now based upon the day of the month you were born. It's important to also note that anytime a payment date falls on a weekend or Federal holiday, the benefit will be processed on the first business day preceding the weekend or holiday. To see the benefit payment schedule for 2017, go to https://www.ssa.gov/pubs/EN-05-10031-2017.pdf
Ex-spouse benefits - When you don't get
The benefit you are entitled to as an ex-spouse is 50% of either of your ex-husbands' Primary Insurance Amount (or PIA, the amount they were entitled to at their full retirement age). While both of your ex-husbands may be (or may have been) high-income professionals, they only paid Social Security FICA taxes on whatever the payroll tax limit was for each year in their respective careers ($127,200 in 2017 but less in preceding years). There is also a maximum PIA amount which beneficiaries can earn in retirement benefits. For 2017 that maximum is $2687, but it was less in previous years. So let's explore the possibilities:
Husband number 1 is now 79 years old, was a high-earner and was born in 1938. Assuming he contributed the maximum amount to Social Security over his career, his PIA at his full retirement age of 65 years and 2 months in 2003 could not have been higher than about $2,450. As his ex-spouse (or spouse) you would be entitled to 50% of his PIA, or about $1,225.
Husband number 2 is now 69 years old, also a high-earner, and was born in 1948. Again assuming he contributed the maximum amount to Social Security over his career, his PIA at his full retirement age of 66 in 2014 could not have been higher than $2,533. As his ex-spouse (or spouse) you would be entitled to 50% of his PIA, or about $1,266.
Since your Social Security monthly benefit on your own work record is $1,334, and since that is more than 50% of both ex-husbands' PIA, you cannot get a "spousal boost" from their Social Security record. The reason Social Security said that you cannot collect anything until one of your ex-husbands die is because as a surviving ex-spouse (or spouse) you are entitled to 100% of either the deceased PIA or, if they waited beyond their full retirement age to start benefits whatever they were collecting (or were eligible to collect) upon their death. And obviously 100% of either ex-spouse's benefit would be more than your benefit from your own work record.
The Foundation welcomes questions from readers regarding Social Security issues.
©2017 Russell Gloor, AMAC Certified Social Security Advisor http://amacfoundation.org
The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed in this article are the viewpoints of the AMAC Foundation's Social Security Advisory staff, trained and accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). NSSA, the AMAC Foundation, and the Foundation's Social Security Advisors are not affiliated with or endorsed by the United States Government, the Social Security Administration, or any other state government. Furthermore, the AMAC Foundation and its staff do not provide legal or accounting services.
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