Medicare Part B: Enrollment and Premiums
June 15, 2021
Medicare is a federal insurance program that pays for covered health care services of
most individuals aged 65 and older and certain disabled persons. In calendar year 2021,
Patricia A. Davis
the program is expected to cover about 64 mil ion persons at a total cost of $922 bil ion.
Specialist in Health Care
Most individuals (or their spouses) aged 65 and older who have worked in covered
Financing
employment and paid Medicare payroll taxes for 40 quarters receive premium-free

Medicare Part A (Hospital Insurance). Those entitled to Medicare Part A (regardless of

whether they are eligible for premium-free Part A) have the option of enrolling in Part
B, which covers such things as physician and outpatient services and medical equipment.
Beneficiaries have a seven-month initial enrollment period, and those who enroll in Part B after this initial
enrollment period and/or reenroll after a termination of coverage may be subject to a late-enrollment penalty. This
penalty is equal to a 10% surcharge for each 12 months of delay in enrollment and/or reenrollment. Under c ertain
conditions, some beneficiaries are exempt from the late-enrollment penalty; these exempt beneficiaries include
working individuals (and their spouses) with group coverage through their current employment, some
international volunteers, and those granted “equitable relief.”
Whereas Part A is financed primarily by payroll taxes paid by current workers, Part B is financed through a
combination of beneficiary premiums and federal general revenues. The standard Part B premiums are set to
cover 25% of projected average per capita Part B program costs for the aged, with federal general revenues
accounting for the remaining amount. In general, if projected Part B costs increase or decrease, the premium rises
or fal s proportionately. However, some Part B enrol ees are protected by a provision in the Social Security Act
(the hold-harmless provision) that prevents their Medicare Part B premiums from increasing more than the annual
increase in their Social Security benefit payments. This protection does not apply to four main groups of
beneficiaries: low-income beneficiaries whose Part B premiums are paid by the Medicaid program; high-income
beneficiaries who are subject to income-related Part B premiums; those whose Medicare premiums are not
deducted from Social Security benefits; and new Medicare and Social Security enrollees.
Most Part B participants must pay monthly premiums, which do not vary with a beneficiary’s age, health status,
or place of residence. However, since 2007, higher-income enrollees pay higher premiums to cover a higher
percentage of Part B costs (“income-related monthly adjustment amounts” (IRMAA)). Additional y, certain low-
income beneficiaries may qualify for Medicare cost-sharing and/or premium assistance from Medicaid through a
Medicare Savings Program. The premiums of those receiving benefits through Social Security are deducted from
their monthly payments.
Each year, the Centers for Medicare & Medicaid Services (CMS) determines the Medicare Part B premiums for
the following year. The standard monthly Part B premium for 2021 is $148.50. However, in 2021, the hold-
harmless provision applies to about 2% of Part B enrollees, and these individuals pay lower premiums. (The
premiums of those held harmless vary depending on the dollar amount of the increase in their Social Security
benefits.) Higher-income beneficiaries, currently defined as individuals with incomes over $88,000 per year or
couples with incomes over $176,000 per year, pay $207.90, $297.00, $386.10, $475.20, or $504.90 per month,
depending on their income levels.
Current issues related to the Part B premium that may come before Congress include the amount of the premium
and its rate of increase (and the potential net impact on Social Security benefits), the impact of the hold-harmless
provision on those not held harmless, modifications to the late-enrollment penalty, and possible increases in
Medicare premiums as a means to reduce federal spending and deficits.
Congressional Research Service

Medicare Part B: Enrollment and Premiums

Introduction
Medicare is a federal insurance program that pays for covered health care services of most
individuals aged 65 and older and certain disabled persons. Medicare serves approximately one in
six Americans and virtual y al of the population aged 65 and over. In calendar year (CY) 2021,
the program is expected to cover about 64 mil ion persons at a total cost of about $922 bil ion,
accounting for approximately 4% of gross domestic product.1 The Medicare program is
administered by the Centers for Medicare & Medicaid Services (CMS) within the Department of
Health and Human Services (HHS), and individuals enroll in Medicare through the Social
Security Administration (SSA).
Medicare consists of four parts—Parts A through D. Part A covers hospital services, skil ed
nursing facility services, home health visits, and hospice services. Part B covers a broad range of
medical services and supplies, including physician services, laboratory services, durable medical
equipment, and outpatient hospital services. Enrollment in Part B is voluntary; however, most
Medicare beneficiaries (about 91%) are enrolled in Part B. Part C (Medicare Advantage) provides
private plan options, such as managed care, for beneficiaries who are enrolled in both Part A and
Part B. Part D provides optional outpatient prescription drug coverage.2
Each part of Medicare is funded differently.3 Part A is financed primarily through payroll taxes
imposed on current workers (2.9% of earnings, shared equal y between employers and workers),
which are credited to the Hospital Insurance (HI) Trust Fund. Beginning in 2013, workers with
annual wages over $200,000 for single tax filers or $250,000 for joint filers pay an additional
0.9%.4 Beneficiaries general y do not pay premiums for Part A. In 2021, total Part A expenditures
are expected to reach about $372 bil ion, representing about 40% of program costs.5 Parts B and
D, the voluntary portions, are funded through the Supplementary Medical Insurance (SMI) Trust
Fund, which is financed primarily by general revenues (transfers from the U.S. Treasury) and
premiums paid by enrollees. In 2021, about $2.8 bil ion in fees on manufacturers and importers of
brand-name prescription drugs also wil be used to supplement the SMI Trust Fund.6 In 2021, Part
B expenditures are expected to reach about $434 bil ion, and Part D expenditures are expected to
reach about $116 bil ion, representing about 47% and 13% of program costs, respectively. (Part C
is financed proportionately through the HI and SMI Trust Funds; expenditures for Parts A and B
services provided under Part C are included in the above expenditure figures.)

1 Expenditure estimates from Boards of T rustees, Federal Hospital Insurance and Federal Supplementary Medical
Insurance T rust Funds, 2020 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal
Supplem entary Medical Insurance Trust Funds, April 22, 2020, at https://www.cms.gov/Research-Statistics-Data-and-
Systems/Statistics-T rends-and-Reports/ReportsTrustFunds/index.html. (Hereinafter, 2020 Medicare T rustees Report.)
T hese projections do not take into account the potential effects of the Coronavirus Disease 2019 (COVID-19) public
health emergency.
2 For additional information on the Medicare program, see CRS Report R40425, Medicare Primer.
3 See CRS Report R43122, Medicare Financial Status: In Brief.
4 See Internal Revenue Service, Questions and Answers for the Additional Medicare Tax, at http://www.irs.gov/
Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-T ax.
5 All expenditure data are from the 2020 Medicare T rustees Report. T he estimates do not reflect the potential impact of
the COVID-19 pandemic on Medicare spending or the impact of related legislation enacted since the time of that
report.
6 Centers for Medicare & Medicaid Services (CMS), “Medicare Program: Medicare Part B Monthly Actuarial Rates,
Premium Rate, and Annual Deductible Beginning January 1, 2021,” 85 Federal Register 71904, November 12, 2020.
Congressional Research Service

1

link to page 51 link to page 21 link to page 27 link to page 29 link to page 29 Medicare Part B: Enrollment and Premiums

Part B beneficiary premiums are normal y set at a rate each year equal to 25% of average
expected per capita Part B program costs for the aged for the year.7 Higher-income enrollees pay
higher premiums set to cover a greater percentage of Part B costs,8 while those with low incomes
may qualify for premium assistance through one of several Medicare Savings Programs
administered by Medicaid.9 Individuals who receive Social Security or Railroad Retirement
Board (RRB) retirement or disability benefits have their Part B premiums automatical y deducted
from their benefit checks. Part B premiums are general y announced in the fal prior to the year
that they are in effect (e.g., the 2021 Part B premiums were announced in November 2020).10 In
2021, the standard monthly Part B premium is $148.50.11 However, in 2021, about 2% of Part B
enrollees are protected by a hold-harmless provision in the Social Security Act that prevents their
Medicare Part B premiums from increasing more than the annual dollar amount of the increase in
their Social Security benefit payments. These individuals pay premiums of less than $148.50.12
2021 Medicare Part B Premiums
Beneficiaries Who File an
Beneficiaries Who File a
Individual Tax Return with
Joint Tax Return with
Monthly
Income:
Income:
Premium
Less than or equal to $88,000
Less than or equal to $176,000
$148.50
Greater than $88,000 and less than or
Greater than $176,000 and less
equal to $111,000
than or equal to $222,000
207.90
Greater than $111,000 and less than
Greater than $222,000 and less
or equal to $138,000
than or equal to $276,000
297.00
Greater than $138,000 and less than
Greater than $276,000 and less
or equal to $165,000
than or equal to $330,000
386.10
Greater than $165,000 and less than
Greater than $330,000 and less
$500,000
than $750,000
475.20
Greater than or equal to
Greater than or equal to $500,000
$750,000
504.90
Source: Centers for Medicare & Medicaid Services (CMS), Fact Sheet, “2021 Medicare Parts A & B
Premiums and Deductibles,” November 6, 2020.
In addition to premiums, Part B beneficiaries may pay other out-of-pocket costs when they use
services. The annual deductible for Part B services is $203.00 in 2021.13 After the annual

7 In 2021, beneficiary premiums are expected to cover about 15.0% of the costs of “traditional” Medicare (Parts A and
B combined), 14.5% from Part B premiums, and 0.6% from voluntary Part A premiums. See Appe ndix E for
information on Part A premiums.
8 Depending on their income, beneficiaries subject to income-related monthly adjustments pay a total monthly premium
of 35%, 50%, 65%, 80%, or 85% of expected per capita Part B costs for the aged. See “ Income-Related Premium.”
9 See “Premium Assistance for Low-Income Beneficiaries.”
10 CMS, Fact Sheet, “2021 Medicare Parts A & B Premiums and Deductibles,” November 6, 2020, at
https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles.
11 CMS, “Medicare Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible
Beginning January 1, 2021,” 85 Federal Register 71904, November 12, 2020, at https://www.federalregister.gov/
documents/2020/11/12/2020-25029/medicare-program-medicare-part-b-monthly-actuarial-rates-premium-rates-and-
annual-deductible.
12 Data provided by CMS, May 2021. T he premiums of those held harmless vary depending on the dollar amount of the
increase in their Social Security benefits. See “ Protection of Social Security Benefits from Increases in Medicare Part B
Premiums.”
13 Annual increases in the deductibles are not protected by the hold-harmless provision.
Congressional Research Service

2

link to page 51 Medicare Part B: Enrollment and Premiums

deductible is met, beneficiaries are responsible for coinsurance costs, which are general y 20% of
Medicare-approved Part B expenses.
This report provides an overview of Medicare Part B premiums, including information on Part B
eligibility and enrollment, late-enrollment penalties, collection of premiums, determination of
annual premium amounts, premiums for high-income enrol ees, premium assistance for low-
income enrollees, protections for Social Security recipients from rising Part B premiums, and
historical Medicare Part B premium trends. This report also provides a summary of various
premium-related issues that may be of interest to Congress. Specific Medicare and Social
Security publications and other resources for beneficiaries, and those who provide assistance to
them, are cited where appropriate.
Medicare Part B Eligibility and Enrollment
An individual (or the spouse of an individual) who has worked in covered employment and paid
Medicare payroll taxes for 40 quarters is entitled to receive premium-free Medicare Part A
benefits upon reaching the age of 65.14 Those who have paid in for fewer than 40 quarters may
enroll in Medicare Part A by paying a premium.15 Al persons entitled to Part A (regardless of
whether they are eligible for premium-free Part A) are also entitled to enroll in Part B. An aged
person not entitled to Part A may enroll in Part B if he or she is aged 65 or over and either a U.S.
citizen or an alien lawfully admitted for permanent residence who has resided in the United States
continuously for the immediately preceding five years.
Those who are receiving Social Security or RRB benefits are automatical y enrolled in Medicare,
and coverage begins the first day of the month they turn 65.16 These individuals wil receive a
Medicare card and a “Welcome to Medicare” package about three months before their 65th
birthday.17 Those who are automatical y enrolled in Medicare Part A also are automatical y
enrolled in Part B.18 However, because beneficiaries must pay a premium for Part B coverage,
they have the option of turning it down.19 Disabled persons who have received cash payments for

14 See CMS, “ Original Medicare (Part A and B) Eligibility and Enrollment ,” at https://www.cms.gov/Medicare/
Eligibility-and-Enrollment/OrigMedicarePartABEligEnrol.
15 For additional information on Part A premiums, see Appendix E.
16 For additional information on enrolling in Medicare Parts A and B, see Medicare publication “Enrolling in Medicare
Part A & Part B,” at https://www.medicare.gov/Pubs/pdf/11036-Enrolling-Medicare-Part-A-Part-B.pdf.
17 See “‘Welcome to Medicare’ package (automatically enrolled),” at https://www.medicare.gov/forms-help-resources/
mail-you-get-about-medicare/welcome-to-medicare-package-automatically-enrolled. When first becoming eligible for
Medicare, beneficiaries need to make a number of choices regarding the benefits they wish to sign up for and how they
wish to receive them. For example, new enrollees need to decide whether they wish to remain in traditional Medicare
(Parts A and B, the default option) or if they would like to receive their A and B benefits through a private Medicare
Advantage Plan (Part C). Additionally, beneficiaries need to decide whether they would like to sign up for an outpatient
prescription drug plan (Part D). T hese opt ions are described in the “ Welcome to Medicare” package. For free
personalized health insurance counseling, beneficiaries may contact their local State Health Insurance Assistance
Programs (SHIPs); contact information may be found at http://www.medicare.gov/contacts/ and https://acl.gov/
programs/connecting-people-services/state-health-insurance-assistance-program-ship.
18 T hose who live in Puerto Rico are not automatically enrolled in Medicare Part B. T hey need to sign up for Part B
during the initial enrollment period or possibly be subject to a penalty. See archived CRS Report R44275, Puerto Rico
and Health Care Finance: Frequently Asked Questions, and Social Security Administration (SSA) Publication
“Medicare in Puerto Rico,” at http://www.socialsecurity.gov/pubs/EN-05-10521.pdf. T he following bills, introduced in
the 116th Congress, would have extended this automatic enrollment to residents of Puert o Rico: the Fairness in
Medicare Part B Enrollment Act of 2019 (H.R. 2310), and the T erritories Health Equity Act of 2019 (H.R. 1354 and S.
1773).
19 Should a beneficiary decline Part B coverage, a new Medicare card will be issued that indicates that the beneficiary
Congressional Research Service

3

link to page 9 link to page 12 link to page 12 Medicare Part B: Enrollment and Premiums

24 months under the Social Security or RRB disability programs also automatical y receive a
Medicare card and are enrolled in Part B unless they specifical y decline such coverage.20 Those
who choose to receive coverage through a Medicare Advantage plan (Part C) must enroll in
Part B.
Those who are not receiving Social Security or RRB benefits, for example because they are stil
working21 or have chosen to defer enrollment because they have not yet reached their full
retirement benefit eligibility age,22 must file an application with the SSA or RRB for Medicare
benefits.23 There are two kinds of enrollment periods, one that occurs when individuals are
initial y eligible for Medicare and one annual general enrollment period for those who missed
signing up during their initial enrollment period. A beneficiary may drop Part B enrollment and
reenroll an unlimited number of times; however, premium penalties may be incurred.
Initial Enrollment Periods
Those who are not automatical y enrolled in Medicare may sign up during a certain period when
they first become eligible. The initial enrollment period is seven months long and begins three
months before the month in which the individual first turns 65. (See Table 1.) Beneficiaries who
do not file an application for Medicare benefits during their initial enrollment period could be
subject to the Part B late-enrollment penalty. (See “Late-Enrollment Premium Penalty and
Exemptions.”) If an individual accepts the automatic enrollment in Medicare Part B, or enrolls in
Medicare Part B during the first three months of the initial enrollment period, coverage wil start
with the month in which an individual is first eligible, that is, the month of the individual’s 65th
birthday. Those who enroll during the last four months wil have their coverage start date delayed
from one to three months after enrollment.24 The initial enrollment period of those eligible for

has Part A coverage only. (In the 117th Congress, H.R. 1826 would eliminate Part B late-enrollment penalties for
Puerto Rico residents who enroll within five years of becoming entitled to Part A.)
20 Individuals with Amyotrophic Lateral Sclerosis are not subject to the 24 -month waiting period; for these individuals
Medicare coverage begins the first day of the month during which disability benefits st art. Additionally, the Medicare
coverage period for persons diagnosed with end-stage renal disease generally begins in the third month after the month
when dialysis begins.
21 For additional information, see CMS, “Employer Community: Information about Medicare Enrollment,” at
https://www.cms.gov/Outreach-and-Education/Find-Your-Provider-T ype/Employers-and-Unions/Employer-
community.html.
22 In the past, individuals generally were eligible to receive both full Social Security retirement benefits and Medicare
coverage starting at the age of 65. However, the age to receive full retirement benefits has changed for some people,
depending on the year they were born. For example, those turning 65 in 2021 will not be eligible for full Social
Security benefits until the age of 66 and 4 months. See https://www.ssa.gov/benefits/retirement/planner/
agereduction.html.
23 T o apply, individuals can call or visit their local Social Security office or call Social Security at 1-800-772-1213.
Some people also may apply online if they meet certain rules, at https://www.ssa.gov/benefits/medicare/. For Railroad
Retirement Board (RRB) retirees, application information may be found at https://www.rrb.gov/Benefits/Medicare. See
also SSA, “Apply Online For Medicare In Less T han 10 Minutes—Even If You Are Not Ready T o Retire,” at
http://www.socialsecurity.gov/pubs/EN-05-10530.pdf, and SSA, “ How to Apply Online for Medicare Only,” at
http://www.socialsecurity.gov/pubs/EN-05-10531.pdf.
24 An eligibility, enrollment date, and premium calculator may be found on the Medicare.gov website at
https://www.medicare.gov/eligibilitypremiumcalc/. T he Consolidated Appropriations Act, 2021 (P.L. 116-260;
Division CC, §102) eliminates these delays starting in 2023. For initial enrollment periods occurring in 2023 and
subsequent years, coverage will begin the first day of the month after the month of enrollment for enrollments
occurring during any of the seven months of the initial enrollment period.
Congressional Research Service

4

link to page 9 link to page 9 Medicare Part B: Enrollment and Premiums

Medicare based on disability or permanent kidney failure is linked to the date the disability or
treatment began.25
Table 1. Initial Enrollment Period
(month of enrol ment and ef ective dates)
Up to 3 Months After
3 Months Before the
The Month During
the Month One Turns

Month One Turns 65
Which One Turns 65
65a
Effective Dates
If one signs up during the
If one enrol s during one’s
The start date would be
first 3 months of one’s
birthday month, the start
delayed if one enrol s
initial enrol ment period,
date wil be the 1st day of
during the last 3 months
Part B coverage starts the the next month.
of the initial enrol ment
1st day of one’s birthday
period.
month.b

If one signs up in the
month after the
month one turns 65,
coverage starts 2
months after
enrol ment.

If one signs up 2 or 3
months after the
month one turns 65,
coverage starts 3
months after
enrol ment.
Example for Someone
If one enrol s in March,
If one enrol s in June,

If one enrol s in July,
Turning 65 During the
April, or May, coverage
coverage begins July 1.
coverage begins
Month of June
begins June 1.
September 1.
(The seven-month initial

If one enrol s in
enrol ment period would
August, coverage
run from March 1
begins November 1.
through September 30.)

If one enrol s in
September, coverage
begins December 1.
Source: Table prepared by CRS based on Social Security Administration, “Medicare,” Publication No. 05-10043,
at https://www.ssa.gov/pubs/EN-05-10043.pdf.
a. Starting in 2023, per changes made by the Consolidated Appropriations Act, 2021 ( P.L. 116-260; Division
CC, §102), the coverage delays for enrol ment during the last three months of the initial enrol ment period
wil be eliminated, and coverage wil be effective the first day of the month fol owing the month of
enrol ment for enrol ments during any of the last four months of the initial enrol ment period.
b. If one’s birthday fal s on the 1st of the month, then the enrol ment period starts a month earlier and
coverage may begin on the 1st day of the month prior to one’s birthday month.
General Enrollment Period
An individual who does not sign up for Medicare during the initial enrollment period must wait
until the next general enrollment period. In addition, persons who decline Part B coverage when
first eligible, or terminate Part B coverage, must also wait until the next general enrollment period

25 For additional information on Medicare eligibility for the disabled, see CRS Report RS22195, Social Security
Disability Insurance (SSDI) and Medicare: The 24-Month Waiting Period for SSDI Beneficiaries Under Age 65 .
Congressional Research Service

5

link to page 12 Medicare Part B: Enrollment and Premiums

to enroll or reenroll. The general enrollment period lasts for three months from January 1 to
March 31 of each year, with coverage beginning on July 1 of that year.26 A late-enrollment
penalty may apply.27 (See “Late-Enrollment Premium Penalty and Exemptions” below.)
Special Enrollment Periods
Certain individuals may be eligible to enroll in Medicare Part B during specific timeframes
outside of their initial enrollment period or the annual general enrollment period. For example, a
working individual and/or the spouse of a working individual may be able to delay enrollment in
Medicare Part B and enroll during a special enrollment period (SEP) without being subject to the
late-enrollment penalty. Delayed enrollment is permitted when an individual aged 65 or older has
group health insurance coverage based on the individual’s (or spouse’s) current employment
(with an employer with 20 or more employees). (In 2020, about 2.2 mil ion of the 3.8 mil ion
working aged population were enrolled in Part A only, with most of the rest enrolled in both Parts
A and B.)28 Delayed enrollment is also permitted for certain disabled persons who have group
health insurance coverage based on their own or a family member’s current employment with a
large group health plan. For the disabled, a large group health plan is defined as one that covers
100 or more employees.
Specifical y, persons permitted to delay coverage without penalty are those persons whose
Medicare benefits are determined under the Medicare Secondary Payer program.29 Under
Medicare Secondary Payer rules, an employer (with 20 or more employees) is required to offer
workers aged 65 and over (and workers’ spouses aged 65 and over) the same group health
insurance coverage that is made available to other employees.30 The worker has the option of
accepting or rejecting the employer’s coverage. If he or she accepts the coverage, the employer
plan is primary (i.e., pays benefits first) for the worker and/or spouse aged 65 or over, and
Medicare becomes the secondary payer (i.e., fil s in the gaps in the employer plan, up to the limits
of Medicare’s coverage). Similarly, a group health plan offered by an employer with 100 or more
employees is the primary payer for its employees under 65 years of age, or their dependents, who
are entitled to Medicare because of disability.31

26 Starting with the 2023 general enrollment period, coverage will begin the first day of the month after the month of
enrollment, per the Consolidated Appropriations Act, 2021 (P.L. 116-260; Division CC, §102).
27 T he Part B general enrollment period is different from the Medicare Advantage and Part D annual enrollment period
which runs from October 15 to December 7 each year, with coverage effective the following January.
28 2019 Medicare Working-Aged Beneficiary Counts from CMS 100% Unloaded Enrollment Database. Data provided
by CMS, May 2021.
29 Social Security Act §1837(i) and 42 C.F.R. §407.20. See Medicare Publication “Medicare and Other Health Benefits:
Your Guide to Who Pays First,” https://www.medicare.gov/Pubs/pdf/02179-Medicare-Coordination-Benefits-
Payer.pdf, and CMS, “ Medicare Secondary Payer,” at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-
Recovery/Coordination-of-Benefits-and-Recovery-Overview/Medicare-Secondary-Payer/Medicare-Secondary-
Payer.html. Also see CRS Report RL33587, Medicare Secondary Payer: Coordination of Benefits.
30 T he requirement that large employers’ coverage pays primary for Medicare-eligible employees was created by the
T ax Equity and Fiscal Responsibility Act of 1982 (P.L. 97-248) and amended by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA; P.L. 99-272).
31 For Medicare-eligible beneficiaries employed by organizations with fewer than 20 employees (or fewer than 100
employees for the disabled), Medicare generally pays primary and the employer group health plan generally pays
secondary. However, those who are covered under group health plans from employers of any size, based on their own
or their spouse’s current employment, will not be subject to the enrollment limitations or late-enrollment penalties for
the period of time in which they have group health plan coverage. See SSA, Program Operations Manual System
(POMS), HI 00805.751, “ SEP and Premium Surcharge Requirements for the Aged Effective 8/86 ,” at
https://secure.ssa.gov/apps10/poms.nsf/lnx/0600805751. Organizations with fewer than 20 employees are not,
Congressional Research Service

6

link to page 12 link to page 12 Medicare Part B: Enrollment and Premiums

Such individuals may sign up for Medicare Part B (or Part A)32 anytime that they (or their spouse)
are stil working, and they are covered by a group health plan through the employer or union
based on that work.33 Additional y, those who qualify for Medicare based on age may sign up
during the eight-month period after retirement or the ending of group health plan coverage,
whichever happens first. (If an individual’s group health plan coverage, or the employment on
which it is based, ends during the initial enrollment period, that individual would not qualify for a
SEP.)34 Disabled individuals whose group plan is involuntarily terminated have six months to
enroll without penalty.35
For those enrolling during an employment-related SEP, coverage general y begins the first of the
month following the month of enrollment, and late-enrollment penalties would not apply.36 Those
who qualify for a SEP based on coverage through current employment must provide proof of that
coverage and employment when applying.37
Certain international volunteers and individuals eligible for “equitable relief” may also qualify for
a SEP and an exemption from the late-enrollment penalty. See “Late-Enrollment Premium
Penalty and Exemptions” below for additional detail on these circumstances. Additional y,
beginning in 2023, the Consolidated Appropriations Act, 2021 (P.L. 116-260; Division CC,
Section 102) provides the Secretary of HHS the authority to establish special enrollment periods
for beneficiaries who meet “exceptional conditions” that are to be defined by the Secretary.

however, required to offer the same group health insurance to their Medicare-eligible employees that they offer to their
other employees. In such cases, small employers may choose to instead offer coverage that wraps around the Medicare
benefit or not provide any coverage, and their Medicare-eligible employees may need to enroll in Medicare Part s A and
B when first eligible to avoid potential late-enrollment penalties and/or gaps in coverage. Individuals who are turning
65 and still working should check with their employers’ benefit administrator to learn how their employer health
coverage works with Medicare.
32 T hose who have a Health Savings Account (HSA) with a high -deductible health plan through one’s own or one’s
spouse’s current employment may need to stop contributing to the HSA at least six months prior to applying for Part A
in order to avoid a tax penalty. See CRS In Focus IF11425, Health Savings Accounts (HSAs) and Medicare.
33 See Social Security publication “How to Apply for Medicare Part B during Your Special Enrollment Period,” at
https://www.ssa.gov/pubs/EN-05-10012.pdf.
34 See “Special Enrollment Period” section of Social Security web page. SSA, “ Retirement Planner: Applying for
Medicare Only,” at https://www.ssa.gov/benefits/medicare/.
35 T he Balanced Budget Act of 1997 (BBA; P.L. 105-33) added this exception to the penalty. This exception is for
disabled persons (a) who, at the time they first become eligible for Part B, are enrolled in a group health plan
(regardless of size) by virtue of their current or former employment and (b) whose continuous enrollment under the
plan is involuntarily terminated at a time when their enrollment in the plan is by virtue of their or their spouse’ s former
(i.e., not current) employment. These individuals have a special six-month enrollment period beginning on the first day
of the month in which the termination occurs.
36 For those who apply while still employed or during the first month of the SEP, coverage may begin the month of
enrollment. See SSA publication “Medicare” at https://www.ssa.gov/pubs/EN-05-10043.pdf.
37 T o sign up for Part B while employed or during the 8 months after employment ends, one must complete an
“Application for Enrollment in Part B” (CMS-40B) and a “Request for Employment Information” (CMS-L564). Form
CMS-40B and instructions for submission may be accessed at https://www.cms.gov/Medicare/CMS-Forms/CMS-
Forms/CMS-Forms-Items/CMS017339, and form CMS-L564 and instructions for submission may be found at
https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CM S-Forms-Items/CMS009718. Under certain
circumstances where individuals are unable to obtain evidence from the employer or health plan, alternative
documentation may be accepted. For example, see January 28, 2021, question at SSA.gov, Social Security and
Coronavirus Disease (COVID-19), “ Can I enroll in Medicare?” at https://www.ssa.gov/coronavirus/.
Congressional Research Service

7

link to page 13 link to page 14 Medicare Part B: Enrollment and Premiums

Late-Enrollment Premium Penalty and Exemptions
Beneficiaries who do not sign up for Part B when first eligible, or who drop it and then sign up
again later, may have to pay a late-enrollment penalty for as long as they are enrolled in Part B.38
Monthly premiums for Part B may go up 10% for each full 12-month period that one could have
had Part B but did not sign up for it. (See “Calculation of Penalty.”) Some may be exempt from
paying a late-enrollment penalty if they meet certain conditions that al ow them to sign up for
Part B during a SEP. (See “Penalty Exemptions.”) In 2020, about 1.4% of Part B enrollees (about
776,200) paid this penalty.39 On average, their total premiums (standard premium plus penalty)
were about 27% higher than what they would have been had they not been subject to the penalty.
Those who receive premium assistance through a Medicare Savings Program do not pay the late-
enrollment penalty.40 Additional y, for those disabled persons under the age of 65 subject to a
premium penalty, once the individual reaches the age of 65, he or she qualifies for a new
enrollment period and no longer pays a penalty.
The penalty provision was included in the original Medicare legislation enacted in 1965 to help
prevent adverse selection by creating a strong incentive for al eligible beneficiaries to enroll in
Part B.41 Adverse selection occurs when only those persons who think they need the benefits
actual y enroll in the program. When this happens, per capita costs are driven up and premiums
go up, causing more enrollees (presumably the healthier and less costly ones) to drop out of the
program.42 With most eligible persons over the age of 65 enrolled in Part B, the costs are spread
over the majority of this population and per capita costs are less than would be the case if adverse
selection had occurred.
As the Part B late-enrollment penalty is tied to Medicare eligibility and not to access to covered
services, individuals who live in areas where Medicare benefits are general y not provided, such
as outside of the United States or in prison, could stil be subject to the Part B late-enrollment
penalty if they do not sign up for (or if they drop) Part B when eligible.43 To il ustrate, if a retired

38 For more information, see Medicare.gov “Part B Late Enrollment Penalty,” at https://www.medicare.gov/your-
medicare-costs/part-b-costs/part-b-late-enrollment-penalty.
39 Figures provided by CMS, May 2021.
40 T he state pays the standard premium regardless of the date the beneficiary first became eligible for Medicare Part B.
See SSA, Program Operations Manual System (POMS), Section HI 00815.001, “ State Buy-In Program General
Description,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0600815001; and Ibid., Section HI 00815.039, “Effect of
Buy-In on the Individual,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0600815039.
41 Social Security Act §1839(b).
42 Specifically, adverse selection occurs when beneficiaries, who generally have more information than insurers about
their own health status and expected health care needs, make insurance purchasing decisions based on their expect ed
use of the insurance benefit. T heir decision to purchase insurance is based on a comparison of the value of the
insurance coverage, given their expected use, and the cost of the insurance. Should only (or disproportionately) persons
who are high health care users enroll in the program, per capita costs would increase, thereby making the health
insurance purchase decision less attractive for healthier, and presumably less costly, beneficiaries who then , in turn,
might drop out of the program. Subsequent iterations of this cycle would drive premium costs higher and higher for a
smaller and smaller subset of ever sicker and costlier beneficiaries.
43 By comparison, to be eligible for the outpatient prescription drug benefit under Part D, a Medicare beneficiary must
reside in a geographic area where a Part D plan is available. Individuals who are incarcerated or who live outside the
United States are therefore not eligible to enroll in (or continue enrollment in) Part D. Because the Part D penalty is
based on periods when one is eligible but not enrolled, periods of incarceration or extended residence outside of the
United States would not be included in that calculation. For example, an individual living outside of the country during
his or her initial enrollment period would be given a special enrollment period (SEP) upon returning to the United
States and would be able to sign up for Part D at that time without penalty. See SSA, Program Operations Manual
Congressional Research Service

8

Medicare Part B: Enrollment and Premiums

Medicare-eligible individual stopped paying Part B premiums while living overseas for a three-
year period and reenrolled when returning to the United States, he or she would not be entitled to
a SEP. This individual would instead need to enroll during the general enrollment period and
could also be subject to late-enrollment penalties based on that three-year lapse in coverage.
Additional y, Part B does not have a “creditable” coverage exemption similar to that under the
Part D outpatient prescription drug benefit.44 Except for certain circumstances discussed below,
having equivalent coverage does not entitle one to a SEP should one decide to enroll in Part B
later. For example, an individual who has retiree coverage similar to Part B and therefore decides
not to enroll in Part B when first eligible could be subject to late-enrollment penalties if he or she
enrolls in Part B at a later time (for example, because the retiree coverage was discontinued).
Calculation of Penalty
The late-enrollment penalty is equal to a 10% premium surcharge for each full 12 months of
delay in enrollment and/or reenrollment during which the beneficiary was eligible for Medicare.45
The period of the delay is equal to (1) the number of months that elapse between the end of the
initial enrollment period and the end of the enrollment period in which the individual actual y
enrolls or (2) for a person who reenrolls, the months that elapse between the termination of
coverage and the close of the enrollment period in which the individual enrolls.
General y, individuals who do not enroll in Part B within a year of the end of their initial
enrollment period would be subject to the premium penalty. For example, if an individual’s initial
enrollment period ended in September 2018 and the individual subsequently enrolled during the
2019 general enrol ment period (January 1 through March 31), the delay would be less than 12
months and the individual would not be subject to a penalty. However, if that individual delayed
enrolling until the 2021 general enrollment period, the premium penalty would be 20% of that
year’s standard premium. (Although the elapsed time covers a total of 30 months of delayed
enrollment, the episode includes only two full 12-month periods.) An individual who waits 10
years to enroll in Part B could pay twice the standard premium amount.
The late-enrollment surcharge is calculated as a percentage of the monthly standard premium
amount (e.g., $148.50 in 2021),46 and that amount is added to the beneficiary’s premium each
month. The hold-harmless provision does not provide protection from increases in the penalty
amounts.47

System (POMS), Section HI 03001.001, “ Description of the Medicare Part D Prescription Drug Program,” at
https://secure.ssa.gov/poms.nsf/lnx/0603001001, and CMS Publication, “ Understanding Medicare Part C & D
Enrollment Periods,” at https://www.medicare.gov/Pubs/pdf/11219-Understanding-Medicare-Part-C-D.pdf.
44 Under Part D, individuals who have maintained drug coverage equivalent to Medicare’s standard prescription drug
coverage prior t o enrolling in Part D are not subject to a late-enrollment penalty. Examples of “ creditable” Part D drug
coverage include drug coverage from a former employer or union, T RICARE, the Department of Veteran s Affairs
(VA), the Federal Employees Health Benefits Program (FEHBP), or the Indian Health Service. As an illustration, if an
individual did not sign up for Part D when first becoming eligible because he or she already had equivalent coverage
through a former employer, the individual could sign up for Part D at any time wit hout penalty during the time he or
she maintained creditable coverage. Should that coverage end, the individual would be entitled to a special enrollment
period and could enroll in Part D without penalty . Beneficiaries who have a break in creditable prescription drug
coverage usually have 63 consecutive days to enroll in Part D during a SEP.
45 Social Security Act §1839(b).
46 SSA, Program Operations Manual System (POMS), Section HI 01001.010, “Premium Increase for Late Enrollment,”
at https://secure.ssa.gov/poms.nsf/lnx/0601001010.
47 Although those who are held harmless pay reduced premiums, any late-enrollment penalties are calculated as a
percentage of the premium for that year (e.g., in 2021, a percentage of $148.50).
Congressional Research Service

9

link to page 21 Medicare Part B: Enrollment and Premiums

Using the example above in which an individual is subject to a 20% premium penalty, the total
monthly premium in 2021 would be calculated as follows (see text box):
Calculation of Late-Enrollment Penalty

Premium Penalty = Standard Premium × Applicable Percentage

Penalty-Adjusted Premium = Monthly Premium + Premium Penalty

Example of a 20% penalty in 2021:

Premium Penalty = $148.50 × 20% = $29.70
Penalty-Adjusted Premium = $148.50 + $29.70 = $178.20

*Premium amounts are rounded to the nearest 10 cents.
For those subject to the high-income premium (see “Income-Related Premiums”), the late-
enrollment surcharge applies only to the standard monthly premium amount and not to the higher-
income adjustment portion of their premiums. Using the example of a 20% penalty for a
beneficiary with an income of between $88,000 and $111,000, the applicable income-related
adjustment of $59.40 would be added on to the penalty-adjusted premium of $178.20 ($148.50 +
$29.70 penalty), for a total monthly premium of $237.60.48
There is no upper limit on the amount of the surcharge that may apply, and the penalty continues
to apply for the entire time the individual is enrolled in Part B. Each year, the surcharge is
calculated using the standard premium amount for that particular year. Therefore, if premiums
increase in a given year, the dollar value of the surcharge wil increase as wel .
Penalty Exemptions
Under certain conditions, select beneficiaries may be exempt from the late-enrollment penalty.
Beneficiaries who are exempt include working individuals (and their spouses) with group
coverage, some international volunteers, and those who based their nonenrollment decision on
incorrect information provided by a federal representative. Individuals who are permitted to delay
enrollment have their own SEPs.
Current Workers
As described above (see “Special Enrollment Periods”), some individuals (or their spouse) who
are stil working and receiving employer-provided health insurance through that employment may
qualify for a SEP and not be subject to late-enrollment penalties. Those who fail to enroll during
this special enrollment period are considered to have delayed enrollment and thus could be
subject to the penalty.49 For example, even though an individual may have continued health

48 T hose who pay the high-income premiums are not protected by the hold-harmless provision. For additional
information, see SSA, Program s Operation Manual, Section HI 01101.031, “How IRMAA is Calculated and How
IRMAA Affects the T otal Medicare Premium,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0601101031.
49 T hose who are covered under group health plans from employers of any size, based on their own or their spouse’s
current employment, will not be subject to the enrollment limitations or late-enrollment penalties for the period of time
Congressional Research Service

10

Medicare Part B: Enrollment and Premiums

coverage through the former employer after retirement or have COBRA coverage,50 he or she
must sign up for Part B within eight months of retiring to avoid paying a Part B penalty if he or
she eventual y enrolls. Individuals who return to work and receive health care coverage through
that employment may be able to drop Part B coverage, qualify for a new special enrollment
period upon leaving that employment, and reenroll in Part B without penalty as long as
enrollment is completed within the specified time frame.
International Volunteers
Some international volunteers may also be exempt from the Part B late-enrollment penalty. The
Deficit Reduction Act of 2005 (P.L. 109-171) permits certain individuals to delay enrollment in
Part B without a late-enrollment penalty if they volunteered outside of the United States for at
least 12 months through a program sponsored by a tax-exempt organization defined under Section
501(c)(3) of the Internal Revenue Code.51 These individuals must demonstrate that they had
health insurance coverage while serving in the international program.52 Individuals permitted to
delay enrollment have a six-month SEP, which begins on the first day of the first month they no
longer qualify under this provision.
Equitable Relief
Under certain circumstances, a SEP may be created and/or late-enrollment penalties may be
waived if a Medicare beneficiary can establish that an error, misrepresentation, or inaction of a
federal worker or an agent of the federal government (such as an employee of the Social Security
Administration, CMS, or a Medicare administrative contractor) resulted in late Part B
enrollment.53 To qualify for an exception under these conditions, the beneficiary must provide
documentary evidence of the error, which “can be in the form of statements from employees,
agents, or persons in authority that the al eged misinformation, misadvice, misrepresentation,
inaction, or erroneous action actual y occurred.”54
Time-limited equitable relief also may be granted for certain categories of individuals. For
example, CMS may provide a special enrollment period to those affected by a weather-related
emergency or a major disaster.55 As described below, during the Coronavirus Disease 2019
(COVID-19) public health emergency, certain individuals who were not able to enroll in Part B in
a timely manner were al owed additional time to enroll under equitable relief (through June 17,
2020). Additional y, CMS determined that it did not provide adequate information regarding Part

in which they have group health plan coverage. See SSA, Program Operations Manual System (POMS), HI 00805.751,
“SEP and Premium Surcharge Requirements for the Aged Effective 8/86,” at https://secure.ssa.gov/apps10/poms.nsf
/lnx/0600805751.
50 For a description of COBRA, see CRS Report R40142, Health Insurance Continuation Coverage Under COBRA.
51 Social Security Act §1837(k) and 42 C.F.R. §407.21.
52 See SSA, Program Operations Manual System (POMS), Section HI 00805.355, “Evidentiary Requirements for the
SEP or Premium-Surcharge Rollback for International Volunteers,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/
0600805355.
53 Social Security Act §1837(h) and 42 C.F.R. §407.32.
54 For additional information, see SSA, Program Operations Manual System (POMS), Section HI 00805.170,
“Conditions for Providing Equitable Relief,” at https://secure.ssa.gov/poms.nsf/lnx/0600805170, and Ibid, Section HI
00805.175, “Evidence of Government Error or Delay ,” at https://secure.ssa.gov/poms.nsf/lnx/0600805175.
55 See SSA, Program Operations Manual System (POMS), Section HI 00805.324, “Equitable Relief for Enrollment
Request Affected by Major Disasters,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0600805324.
Congressional Research Service

11

Medicare Part B: Enrollment and Premiums

B enrollment to certain individuals with exchange coverage who enrolled in Medicare Part A and
al owed equitable relief to these individuals (through June 2020).
Limited Time Medicare Enrollment Equitable Relief During the COVID-19
Pandemic-Related National Emergency
Beneficiaries who were not able to enroll in Part B in a timely manner as a result of local Social
Security field office closures during the COVID-19 public health emergency were granted certain
enrollment flexibilities under equitable relief.56 Specifical y, CMS granted equitable relief in the
form of additional time to enroll during one’s initial enrollment period, during the annual general
enrollment period, or during a special enrollment period (SEP), such as the 8-month period when
a beneficiary’s employer coverage based on current employment ends. Beneficiaries were eligible
for this equitable relief only if they had an initial enrollment period, general enrollment period, or
SEP during the period from March 17, 2020 through June 17, 2020, and the beneficiary did not
apply for Part B during that enrollment period. Eligible beneficiaries who wanted to use this
equitable relief to enroll in Part B needed to file their enrollment request by June 17, 2020.
Coverage was effective the month that would have been applicable had the application been filed
at the time of the individual’s original (but missed) initial, general, or special enrollment period.
Limited Time Equitable Relief for Individuals with Medicare Part A and
Exchange Coverage
CMS general y encourages those who have coverage through an individual exchange (also known
as marketplace) plan, and subsequently become eligible for Medicare, to drop the exchange
coverage and enroll in Medicare during their initial enrollment period. After an individual has
become eligible for Medicare Part A, any tax credits and cost-sharing reductions that that
individual receives through an exchange plan ends.57 CMS recognized that “these individuals did
not receive the information necessary at the time of their Medicare [initial enrollment period],
Part B SEP for the working aged or disabled, or initial enrollment in the Exchange to make an
informed decision regarding their Part B enrollment.”58 This may have resulted in these
individuals not enrolling in Part B, or enrolling in Part B late and being subject to a late
enrollment penalty.
CMS thus offered time-limited equitable relief through June 30, 2020, for certain individuals
enrolled in both premium-free Medicare Part A and in a plan provided through the health
insurance exchanges.59 Specifical y, those who had been enrolled in an exchange plan and in
premium-free Medicare Part A, and had a Part A entitlement date that began on or after July 1,
2013 (or a Part B SEP that ended on or after October 1, 2013) could enroll in Part B without

56 See CMS, “Enrollment Issues for COVID-19 Pandemic-Related National Emergency, Questions and Answers for
Medicare Beneficiaries,” at https://www.cms.gov/files/document/enrollment-issues-covid-ab-faqs.pdf.
57 CMS indicates that in this instance, the individual should contact the marketplace at least 15 days before the date one
wants the coverage to end.
58 CMS Factsheet, “Assistance for Individuals with Medicare Part A and Exchange Coverage Infor mation for SHIPs
and Exchange Assisters,” October 2019, https://www.cms.gov/Medicare/Eligibility-and-Enrollment/Medicare-and-the-
Marketplace/Downloads/SHIP-Navigator-Fact-Sheet -2019.pdf.
59 Individuals who paid a premium for Medicare Part A were not eligible for this equitable relief, as they are required to
enroll in Part B in order to enroll in Part A. T hose enrolled in a Marketplace Small Business Health Options Program
(SHOP) plan were also not eligible for this equitable relief, as such plans are considered employer sponsored plans and,
as described earlier, these individuals already qualify for a special enrollment period once that coverage ends.
Congressional Research Service

12

link to page 27 link to page 27 Medicare Part B: Enrollment and Premiums

penalty through June 30, 2020. Additional y, the Part B late enrollment penalties of those who had
both Part A and exchange coverage and signed up for Part B outside of their initial enrollment
period could have been reduced or eliminated.
Collection of the Part B Premium
Part B premiums may be paid in a variety of ways.60 If an enrollee is receiving Social Security or
Railroad Retirement benefits,61 the Part B premiums must, by law, be deducted from these
benefits. Additional y, Part B premiums are deducted from the benefits of those receiving a
Federal Civil Service Retirement annuity.62 The purpose of collecting premiums by deducting
them from benefits is to keep premium collection costs at minimum. This withholding does not
apply to those beneficiaries receiving state public assistance through a Medicare Savings Program
because their premiums are paid by their state Medicaid program. (See “Premium Assistance for
Low-Income Beneficiaries.”)
Part B enrollees who do not receive monthly Social Security, Railroad Retirement, or Civil
Service Retirement benefits, or assistance through a Medicare Savings Program, pay premiums
directly to CMS.63
Deduction of Part B Premiums from Social Security Checks
By law, a Social Security beneficiary who is enrolled in Medicare Part B must have the Part B
premium automatical y deducted from his or her Social Security benefits.64 Automatic deduction
from the Social Security benefit check also applies to Medicare Advantage participants who are
enrolled in private health care plans in lieu of traditional Medicare.65 In instances in which a
beneficiary’s monthly Social Security benefit is not sufficient to cover the entire Part B premium
amount, Medicare may bil the beneficiary for the balance.66 In 2020, about 68% of Medicare Part
B enrollees (41.7 mil ion) had their Part B premiums deducted from their Social Security benefit
checks.67
Social Security beneficiaries who do not pay Medicare Part B premiums include those who are
under the age of 65 and do not yet qualify for Medicare (e.g., began receiving Social Security

60 SSA, Program Operations Manual System (POMS), Section HI 01001.020, “ Collection of Premiums,” at
https://secure.ssa.gov/poms.nsf/lnx/0601001020.
61 Social Security Act §1840(a)(1) and §1840(b)(1). See CRS Report R42035, Social Security Primer, and CRS Report
RS22350, Railroad Retirem ent Board: Retirem ent, Survivor, Disability, Unem ploym ent, and Sickness Benefits.
62 See CRS Report 98-810, Federal Employees’ Retirement System: Benefits and Financing .
63 42 C.F.R. §408.60.
64 Social Security Act §1840(a)(1).
65 Beneficiaries who receive their Parts A and B benefits through Medicare Advantage (MA, Part C), must still pay the
monthly Part B premium, but may pay different amounts. For example, some MA plans may offer an additional benefit
by reducing t he amount one pays for the Part B premium. Alternatively, some MA plans may be more expensive than
traditional Medicare, for example because they provide benefits beyond what is provided under traditional Medicare,
and may charge a premium in addition to t he Part B premium. T he Social Security Administration has in place a
“safety net” to prevent the deduction of more than $300 of Part C and Part D plan premiums from a single Social
Security check. For amounts over $300, the enrollee may be billed directly.
66 SSA, Program Operations Manual System (POMS), Section HI 01001.041, “Collection from Beneficiaries When the
Amount of the Benefit Payment is Less than the Amount of the Premium ,” at https://secure.ssa.gov/apps10/poms.nsf/
lnx/0601001041.
67 Figures provided by CMS, May 2021.
Congressional Research Service

13

link to page 29 link to page 29 Medicare Part B: Enrollment and Premiums

benefits at the age of 62); receive low-income assistance from Medicaid to pay the Part B
premium; have started to receive Social Security disability insurance (SSDI) but are not eligible
for Medicare Part B because they have not received SSDI for 24 months; or chose not to enroll in
Medicare Part B.
The amount of an individual’s Social Security benefits cannot go down from one year to the next
as a result of the annual Part B premium increase, except in the case of higher-income individuals
subject to income-related premiums. (See “Protection of Social Security Benefits from Increases
in Medicare Part B Premiums.”) For those beneficiaries “held harmless,” the dollar amount of
their Part B premium increases would be held below or equal to the amount of the increase in
their monthly Social Security benefits.
Part B Enrollees Who Do Not Receive Social Security Benefits
A smal percentage of Medicare Part B enrollees do not receive Social Security benefits. For
example, some individuals aged 65 and older may have deferred signing up for Social Security
for various reasons, for instance if they have not yet reached their full Social Security retirement
age68 or are stil working. Additional y, certain persons who spent their careers in employment
that was not covered by Social Security—including certain federal, state, or local government
workers and certain other categories of workers—do not receive Social Security benefits but may
stil qualify for Medicare. For those who receive benefit payments from the RRB69 or the Civil
Service Retirement System (CSRS),70 Part B premiums are deducted from the enrollees’ monthly
benefit payments. While RRB retirement benefit amounts are protected by the hold-harmless
provision, CSRS benefits are not held harmless from annual increases in the Part B premium.
For those who do not receive these types of benefit payments, Medicare wil general y bil
directly for their premiums every three months.71 The enrollee who is being bil ed does not
necessarily have to pay his or her own premiums; premiums may be paid by the enrollee, a
relative, friend, organization, or anyone else.72 In cases where an organization wants to be bil ed
for the Part B premiums of a number of Medicare beneficiaries, it may enter into a formal group-
bil ing arrangement with CMS.73 Those approved as group bil ers include such entities as city and
county governments, state teacher retirement systems, and certain religious orders.

68 See CRS Report R44670, The Social Security Retirement Age.
69 Social Security Act §1840(b)(1).
70 Generally, employees of the federal government hired before 1984 are covered by the Civil Service Retirement
System (CSRS) and are not covered by Social Security. Most federal workers first hired into federal service on or after
January 1984 participate in the Federal Employees’ Retirement System (FERS), which includes Social Security
coverage. However, the T ax Equity and Fiscal Responsibility Act (P.L. 97-248) enabled federal workers to be eligible
for Medicare based on their federal employment . See CRS Report R42741, Laws Affecting the Federal Em ployees
Health Benefits (FEHB) Program .
71 Payment may be made by check, money order, or credit card; alternatively, one may schedule a payment to be
automatically deducted from one’s bank account. Premium billing form and information may be found at
https://www.medicare.gov/forms-help-resources/mail-you-get-about -medicare/medicare-premium-bill-cms-500.
72 SSA, Program Operations Manual System (POMS), Section HI 01001.225, “When Premium Notices May Be Sent to
an Individual Other T han an Enrollee,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0601001225.
73 SSA, Program Operations Manual System (POMS), Section HI 01001.230, “Group Collection-General,” at
https://secure.ssa.gov/poms.nsf/lnx/0601001230.
Congressional Research Service

14

link to page 21 link to page 12 link to page 12 link to page 21 link to page 29 link to page 29 link to page 40 Medicare Part B: Enrollment and Premiums

Nonpayment of premiums results in termination of enrollment in the Part B program, although a
grace period (through the last day of the third month following the month of the due date) is
al owed for beneficiaries who are bil ed and pay directly.74
Determining the Part B Premium
Each year, the CMS actuaries estimate total per capita Part B costs for beneficiaries aged 65 and
older over for the following year and set the Part B premium to cover 25% of expected Part B
expenditures.75 However, because prospective estimates may differ from the actual spending for
the year, contingency margin adjustments are made to ensure sufficient income to accommodate
potential variation in actual expenditures during the year. (See “Contingency Margin.”) The Part
B premium is a single national amount that does not vary with a beneficiary’s age, health status,
or place of residence. Premiums may be adjusted upward for late enrollment (see “Late-
Enrollment Premium Penalty and Exemptions”) and for beneficiaries with high incomes (see
“Income-Related Premiums”), or they may be adjusted downward for those protected by the hold-
harmless provision (see “Protection of Social Security Benefits from Increases in Medicare Part B
Premiums”).
Monthly Part B premiums are based on the estimated amount that would be needed to finance
Part B expenditures on an incurred basis during the year. In estimating needed income and to
account for potential variation, CMS takes into consideration the difference in prior years of
estimated and actual program costs, the likelihood and potential impact of potential legislation
affecting Part B in the coming year, and the expected relationship between incurred and cash
expenditures (e.g., payments for some services provided during a particular year may not be paid
until the following year). Once the premium has been set for a year, it wil not be changed during
that year.
While both aged and disabled Medicare beneficiaries may enroll in Part B, the statute provides
that Part B premiums are to be based only on the expected program costs—that is, the monthly
actuarial rate—for the aged (those 65 years of age and older).76 The actuarial rate for the aged is
defined as one-half of the expected average monthly per capita program costs for the aged plus
any contingency margin adjustments. Standard Part B premiums are one-half of that actuarial
rate. (See Appendix A for a history of the premium methodology.) Part B costs not covered by
premiums are paid for through transfers from the General Fund of the Treasury. The monthly
actuarial rates for both aged and disabled enrollees are used to determine the needed amount of
matching general revenue funding.77
Starting in 2016, a $3.00 per month surcharge has been added onto the standard premium (higher
amounts for high-income individuals). To mitigate the expected large premium increases for those

74 T his grace period may be extended for up to an additional three months if the enrollee can establish that nonpayment
was due to circumstances beyond his or her control, such as being physically or mentally incapable of making premium
payments or due to an administrative error. T here is no financial hardship exemption, although those with sufficiently
low income may qualify for premium assistance from a state Medicaid program.
75 Part B premium announcements are generally made in the fall prior to the effective year.
76 Social Security Act §1839(a).
77 T he actuarial rate for the disabled is defined as one-half of the expected average monthly cost per disabled enrollee.
Average per capita costs for the disabled are generally higher than those for the aged; therefore, were these average
costs included in the premium determination, all Part B enrollees could pay higher premiums. As general revenue
funding is determined using both the average costs of the aged and the disabled, this funding is sufficient to compensate
for the reduction in premium revenues due to not including the costs of the disabled in determining the premium
amount.
Congressional Research Service

15

link to page 49 link to page 49 link to page 23 link to page 21 Medicare Part B: Enrollment and Premiums

not held harmless in 2016, the Bipartisan Budget Act of 2015 (BBA 15; P.L. 114-74) required that
2016 Medicare Part B premiums be set as if the hold-harmless rule were not in effect—in other
words, to calculate premiums as if al enrollees were paying the same annual inflation-adjusted
standard premium. (For additional information on the changes made by BBA 15, see Appendix
D.) Additional y, as described below, the Continuing Appropriations Act, 2021 and Other
Extensions Act (P.L. 116-159) extended the imposition of this surcharge.
To compensate for the lost premium revenue (below the required 25%) and to ensure that the SMI
Trust Fund had adequate income to cover payments for Part B benefits in 2016, BBA 15 al owed
for additional transfers from the General Fund of the Treasury to the SMI Trust Fund. To offset
the approximately $9 bil ion in increased federal spending in 2016 resulting from the reduction in
standard premiums for those not held harmless, a $3.00 surcharge was added to the monthly
premium in 2016, and wil continue to be applied in subsequent years until the additional federal
costs are fully offset.78 For those who pay high-income premiums, this surcharge increases on a
sliding scale up to $9.60. (See “Income Categories and Premium Adjustments.”) It was estimated
that the surcharge would be applied to premiums through 2021.79
Similarly, the Continuing Appropriations Act, 2021 and Other Extensions Act limited the growth
in the Part B premium for 2021 (see “Premium Calculation for 2021” for details on the premium
calculation methodology). To ensure that the SMI trust fund is adequately financed in 2021,
additional general revenue transfers are being made to replace the lost premium income.80 The
$3.00 surcharge, and applicable high-income surcharges, wil continue to be applied until those
amounts are repaid. It is estimated that this surcharge wil be applied to premiums through
FY2026.81
Premium Calculation for 2021
To determine the 2021 monthly Part B premium amount,82 CMS first estimated the monthly
actuarial rate for enrollees aged 65 and older using actual per-enrollee costs by type of service
from program data through 2020 and projected these costs for subsequent years. CMS estimated
that the monthly amount needed to cover one-half of the total benefit and administration costs for
the aged in 2021 would be $307.52. Because of expected variations between projected and actual
costs, a contingency adjustment of $8.17 was added to this amount. (See “Contingency Margin,”

78 T he $9 billion consists of about $7.4 billion in increased federal spending due to the reduced standard premiums and
about $1.6 billion in lost revenues due to the reduction in high -income adjustments. T he $3.00 standard premium
surcharge “pays for” the increased general revenue transfers in 2016, while the additional high -income surcharge
adjustments are used to offset the reduction in the income-related adjustment amounts. CMS, “ Medicare Program:
Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 2016,” 80
Federal Register 70811, November 16, 2015.
79 2020 Medicare T rustees Report, p. 84. In the final year of the repayment adjustments, the surcharge may be set at
less than $3.00 to avoid overpayment.
80 CMS estimates that the increase in the balance due in 2021 will be about $8.8 billion, which consists of $946 million
in forgone income-related premium income plus the additional transfer amount of about $7.9 billion. CMS, “ Medicare
Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1,
2021,” 85 Federal Register 71904, November 12, 2020.
81 CBO, “ Estimate for H.R. 8337, the Continuing Appropriations Act, 2021 and Other E xtensions Act, as Passed by the
House of Representatives on September 22, 2020 ,” September 23, 2020, T able 2, at https://www.cbo.gov/publication
/56629.
82 CMS, “Medicare Program: Medicare Part B Monthly Act uarial Rates, Premium Rate, and Annual Deductible
Beginning January 1, 2021,” 85 Federal Register 71904, November 12, 2020.
Congressional Research Service

16

Medicare Part B: Enrollment and Premiums

below.) After a reduction of $1.39 to account for expected interest on trust fund assets, the
preliminary monthly actuarial rate for the aged for 2021 was determined to be $314.30.
However, due to adjustments mandated by the Continuing Appropriations Act, 2021 and Other
Extensions Act (P.L. 116-159), the monthly actuarial rate for 2021 was reduced to $291.00.83 The
Part B standard premium would normal y be calculated as one-half of the actuarial rate (i.e., half
of $291.00, or $145.50 per month);84 however, the BBA 15/P.L. 116-159 repayment surcharge of
$3.00 was then added onto that amount for a total monthly premium of $148.50.
Contingency Margin
The contingency margin is the amount set aside to cover an appropriate degree of potential
variation between actual and projected costs in a given year. For example, in some years,
legislation that resulted in increased Medicare Part B expenditures for the year was enacted after
the premium for the year had been set. The Medicare actuaries consider a contingency reserve
ratio—net assets at the end of a year in the Part B account of the SMI Trust Fund compared to the
following year’s expected expenditures—in the amount of 15% to 20% to be adequate, and
normal y aim for a 17% ratio when determining Part B financing for the upcoming year. The
contingency margin for 2021 reflects financing rates set above the normal target due to the
higher-than-usual uncertainty in spending estimates.
The contingency margin in 2021 is affected by a number of factors. For example, the contingency
margin was adjusted upward to account for the uncertainty and potential impact of the COVID-19
pandemic.85 Additional y, starting in 2011, manufacturers and importers of brand-name drugs
began paying a fee that is al ocated to the SMI Trust Fund. The contingency margin was thus
reduced to account for this additional revenue. Further, certain payment incentives to encourage
the development and use of health information technology (HIT) by Medicare physicians are
excluded from premium determinations. (HIT bonuses or penalties are directly offset through
transfers of general funds from the Treasury.) The 2021 contingency margin adjustment of $8.17
reflects the expected net effects of al of the above factors.
Income-Related Premiums
For the first 41 years of the Medicare program, al Part B enrollees paid the same Part B
premium, regardless of their income. However, the Medicare Modernization Act of 2003 (MMA;

83 Section 2401 of the Continuing Appropriations Act, 2021 and Other Extensions Act ( P.L. 116-159) specifies that the
2021 monthly actuarial rate for enrollees aged 65 and older be determined as the sum of the 2020 monthly actuarial rate
for enrollees aged 65 and older and one-fourth of the difference between the 2020 monthly actuarial rate and the
preliminary 2021 monthly actuarial rate (as determined by the Secretary of HHS) for such enrollees. T he monthly
actuarial rate for 2021 was thus calculated as follows: $283.20 (the actual actuarial rate for 202 0) + (0.25 x ($314.30
(the unadjusted monthly actuarial rate for 2021) - $283.20)) = $291.00 (rounded to the nearest dime).
84 Rounded to the nearest dime.
85 Although about $43 billion was paid out of the Part B account of the SMI trust fund in 2020 as part of the
Accelerated and Advanced Payment (AAP) programs, and full repayments are not expected until 2021, the Continuing
Appropriations Act, 2021 and Other Extensions Act required that a transfer be made from the T reasury to the SMI trust
fund to restore t he AAP payments paid out and specifies that any future AAP provider repayments be transferred to the
T reasury. Because the CMS 2021 Part B financing projections assume that roughly $43 billion would be transferred
from the T reasury to Part B before the end of CY2020, the AAP payments did not affect the 2021 Part B premium
contingency margin. For additional information on the AAP program, see CRS Report R46698, Medicare Accelerated
and Advance Paym ents and COVID-19: Frequently Asked Questions.
Congressional Research Service

17

link to page 29 link to page 29 Medicare Part B: Enrollment and Premiums

P.L. 108-173)86 required that, beginning in 2007, high-income enrollees pay higher premiums.87
About 7% of Medicare Part B enrollees are expected to pay these higher premiums in 2021.88
Adjustments, known as income-related monthly adjustment amounts (IRMAA), are made to the
standard Part B premiums for high-income beneficiaries, with the share of expenditures paid by
beneficiaries increasing with income. This share ranges from 35% to 85% of the value of Part B
coverage. In 2021, individuals whose incomes exceed $88,000 and couples whose combined
income exceeds $176,000 are subject to higher premium amounts.89 The hold-harmless provision
that prevents a beneficiary’s Social Security benefits from decreasing from one year to the next as
a result of the Part B premium increase does not apply to those subject to an income-related
increase in their Part B premiums. (See “Protection of Social Security Benefits from Increases in
Medicare Part B Premiums.”)
Determination of Income
To determine those subject to the high-income premium, Social Security uses the most recent
federal tax return provided by the Internal Revenue Service. In general, the taxable year used in
determining the premium is the second calendar year preceding the applicable year. For example,
the 2020 tax return (2019 income) was used to determine who would pay the 2021 high-income
premiums.90
The income definition on which the high-income premiums are based is modified adjusted gross
income (MAGI),91 which is different from gross income. Specifical y, gross income is al income
from al sources, minus certain statutory exclusions (e.g., nontaxable Social Security benefits). 92
From gross income, adjusted gross income (AGI)93 is calculated to reflect a number of
deductions, including trade and business deductions and losses from sale of property. MAGI is
defined as AGI plus certain foreign-earned income and tax-exempt interest.94

86 T he Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-173) would have
phased in the increase over five years; however, the Deficit Reduction Act of 2005 (DRA; P.L. 109-171) shortened the
phase-in period to three years.
87 At the time of enactment of the MMA, CBO estimated that 1.2 million persons (3% of beneficiaries) would pay
higher premiums in 2007 and that 2.8 million persons (6% of beneficiaries) would pay higher premiums in 2013. CBO
further estimated that the MMA provision would reduce federal outlays by $13. 3 billion over the 2007-2013 period.
CBO estimated that the DRA provision accelerating the phase-in would increase premium collections by $1.6 billion
over the 2007-2010 period. T he MMA estimate and the DRA estimate were made by CBO at the time of enactmen t of
each law. Both estimates were based on the CBO budget baseline in effect at the time. As is the case for all CBO
estimates, the earlier estimates are incorporated into subsequent CBO baselines. T herefore, the two savings estimates
cannot be added together.
88 CMS, Fact Sheet, “2021 Medicare Parts A & B Premiums and Deductibles,” November 6, 2020.
89 For additional information, see SSA, Program Operations Manual System (POMS), Section HI 01101.000,
“Medicare Income-Related Monthly Adjustment Amount ,” at https://secure.ssa.gov/apps10/poms.nsf/lnx/0601101000.
90 If an enrollee amended his or her tax return and doing so changed the income used to determine the high -income
adjustments, t he updated information may be provided to the Social Security Administration so that the administration
may correct or remove the income-related monthly adjustment amounts.
91 Defined at Social Security Act §1839(i)(4). See also SSA, Program Operations Manual System (POMS), Section HI
01101.010, “Modified Adjusted Gross Income (MAGI),” at https://secure.ssa.gov/poms.nsf/lnx/0601101010.
92 Internal Revenue Code §61.
93 Internal Revenue Code §62.
94 T he definition of MAGI for the income-related monthly adjustment amount (IRMAA) in Medicare is different from
the MAGI definition in certain ACA Medicaid provisions. See CRS Report R43861, The Use of Modified Adjusted
Gross Incom e (MAGI) in Federal Health Program s.
Congressional Research Service

18

Medicare Part B: Enrollment and Premiums

If a person had a one-time increase in taxable income in a particular year (such as from the sale of
income-producing property), that increase would be considered in determining the individual’s
total income for that year and thus his or her liability for the income-related premium two years
ahead. It would not be considered in the calculations for future years.
In the case of certain major life-changing events that result in a significant reduction in MAGI, an
individual may request to have the determination made for a more recent year than the second
preceding year.95 Major life-changing events include (1) death of a spouse; (2) marriage; (3)
divorce or annulment; (4) partial or full work stoppage for the individual or spouse; (5) loss by
individual or spouse of income from income-producing property when the loss is not at the
individual’s direction (such as in the case of a natural disaster); and (6) reduction or loss for
individual or spouse of pension income due to termination or reorganization of the plan or
scheduled cessation of the pension.96 Certain types of events, such as those that affect expenses
but not income or those that result in the loss of dividend income because of the ordinary risk of
investment, are not considered major life-changing events.97
If Medicare enrollees disagree with decisions regarding their IRMAAs, they may file an appeal
with Social Security.98 Enrollees may either submit a “Request for Reconsideration”99 or contact
their local Social Security office to file an appeal. (An enrollee does not need to file an appeal if
he or she is requesting a new decision based on a life-changing event described above or if the
enrollee has shown that Social Security used the wrong information to make the original
decision.)
Income Categories and Premium Adjustments
Depending on their level of income, Medicare beneficiaries may be classified into one of six
income categories.100 In 2021, individuals with incomes less than $88,000 a year ($176,000 for a
couple) pay the standard premium, which is based on 25% of the average Part B per capita cost.
Individuals with incomes over $88,000 per year and couples with combined income over
$176,000 per year pay a higher percentage of Part B costs. Depending on one’s level of income
over these threshold amounts, premiums may be adjusted to cover 35%, 50%, 65%, 80%, or 85%
of the value of Part B coverage (with the rest being subsidized through federal general
revenues).101 Additional y, high-income individuals pay surcharges ranging from $4.20 to $10.20
per month to offset increased federal spending in 2021 due to premium reductions under BBA 15
and the Continuing Appropriations Act, 2021 and Other Extensions Act (P.L. 116-159) (compared
to a $3.00 surcharge for those who pay the standard premium). (See “Determining the Part B
Premium.”) In 2021, total IRMAAs for the five high-income levels, including the additional BBA
15 surcharges, are $59.40, $148.50, $237.60, $326.70, and $356.40 respectively.

95 Social Security Form SSA-44, at https://www.ssa.gov/forms/ssa-44-ext.pdf.
96 20 C.F.R. §418.1205.
97 20 C.F.R. §418.1210.
98 See SSA publication, What You Can Do if You Think Your Medicare Income-Related Premium is Incorrect, at
https://www.ssa.gov/pubs/EN-05-10125.pdf.
99 Social Security Form SSA-561-U2, at http://www.ssa.gov/online/ssa-561.pdf.
100 Social Security Act §1839(i).
101 In 2020, approximately 4.6 million beneficiaries paid high-income premiums. About 36% of these were in the first
(lowest) income tier, 22% in the second, 12% in the third, about 2 4% in the fourth, and about 6% in the highest tier.
Figures provided by CMS, May 2021.
Congressional Research Service

19

link to page 24 link to page 24 link to page 24 link to page 25 Medicare Part B: Enrollment and Premiums

The income categories and associated premiums for 2021, including the applicable BBA 15
repayment surcharges, are shown below in Table 2. When both members of a couple are enrolled
in Part B, each pays the applicable premium amount.
Table 2. Monthly Medicare Part B Premiums for 2021
Income-
Levels of Premium
Beneficiaries
Related
Total
Adjustment and
Who File an
Beneficiaries
Monthly
Monthly
Percentage of
Individual Tax
Who File a Joint
Adjustment
Premium
Costs Covered by
Return with
Tax Return with
Amount
(premium +
Premiums
Income
Incomea
(IRMAA)b
surcharge)
Standard (25%)
Less than or equal
Less than or equal
n/a
$148.50
to $88,000
to $176,000
High Income

Level 1 (35%)
Greater than
Greater than
$59.40
207.90
$88,000 and less
$176,000 and less
than or equal to
than or equal to
$111,000
$222,000
Level 2 (50%)
Greater than
Greater than
148.50
297.00
$111,000 and less
$222,000 and less
than or equal to
than or equal to
$138,000
$276,000
Level 3 (65%)
Greater than
Greater than
237.60
386.10
$138,000 and less
$276,000 and less
than or equal to
than or equal to
$165,000
$330,000
Level 4 (80%)
Greater than
Greater than
326.70
475.20
$165,000 and less
$330,000 and less
than $500,000
than $750,000
Level 5 (85%)
Greater than or
Greater than or
356.40
504.90
equal to $500,000
equal to $750,000
Source: CMS, “Medicare Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual
Deductible Beginning January 1, 2021,” 85 Federal Register 71904, November 12, 2020.
Notes: The hold-harmless provision does not apply to individuals in the high-income categories. n/a = not
applicable. Income thresholds are based on a Medicare-specific definition of modified adjusted gross income
(MAGI).
a. Couples with a joint income of $176,000 or less could pay different premium amounts if one of them
qualified to be held harmless and the other did not. Members of a couple in the high-income categories both
pay the same applicable income-adjusted premium amount.
b. Total income-related monthly adjustment amounts (IRMAAs) are the amounts by which total monthly
premiums exceed the standard premium ($148.50).
Married persons who lived with their spouse at some point during the year but who filed separate
returns are subject to different premium amounts. Such individuals may pay higher premiums at
lower income thresholds compared with those married couples who file joint tax returns.102 The
income levels and premium amounts are shown in Table 3.

102 T he different methodology for setting Medicare premiums for married filing separately was in the originating
legislation that created the high-income premiums for Part B (§811 of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, P.L. 108-173, adding §1839(i)(3)(C)(iii) to the Social Security Act ). T he difference in
treatment between married filing jointly vs. married filing separately mirrors current IRS rules. T he IRS sets up tax
Congressional Research Service

20

link to page 25 link to page 26 Medicare Part B: Enrollment and Premiums

Table 3. Part B Premium Adjustment for Married Beneficiaries
Filing Separately for 2021
Beneficiaries Who Are Married
Income-Related
and Lived with Their Spouse at
Monthly
Total Monthly
Any Time During the Year but
Adjustment
Premium
File a Separate Tax Return from
Amount
(premium +
Their Spouse with Income
(IRMAA)a
surcharge)
Less Than or Equal to $88,000
n/a
$148.50

Greater Than $88,000 and less
$326.70
475.20
than $412,000
Greater than or equal to
356.40
504.90
$412,000
Source: CMS, “Medicare Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual
Deductible Beginning January 1, 2021,” 85 Federal Register 71904, November 12, 2020.
Notes: n/a = not applicable. Income thresholds are based on a Medicare-specific definition of modified adjusted
gross income (MAGI).
a. Total income-related monthly adjustment amounts (IRMAAs) are the amounts by which total monthly
premiums exceed the standard premium ($148.50).
Legislative Changes to Income Thresholds
The original provision establishing the Part B income-related premiums set the initial income
threshold and high-income-level ranges. Prior to 2010, annual adjustments to these levels were
based on annual changes in the consumer price index for urban consumers (CPI-U), rounded to
the nearest $1,000. However, Section 3402 of the Patient Protection and Affordable Care Act
(ACA; P.L. 111-148, as amended) froze the income thresholds and ranges at the 2010 level
through 2019 rather than al owing them to rise with inflation.103 As a result, as incomes have
increased with inflation, a greater share of Medicare enrollees have reached the high-income
thresholds and are paying the high-income premiums than would have been the case without this
freeze.
Additional y, beginning in 2018, the Medicare Access and CHIP Reauthorization Act of 2015
(MACRA; P.L. 114-10) changed the income thresholds of the top two income categories at that
time.104 Individuals with incomes between $133,500 and $160,000 per year were moved into the
65% applicable percentage category (which previously only applied to those with incomes
between $160,000 and $214,000 in 2010-2017). The income threshold for the highest category at
that time (80%) was changed to $160,000 (which previously applied to those earning $214,000 or
more in 2010-2017). The thresholds for the lower two income categories were not changed. (See
Table 4.)

brackets differently for married filing jointly and married filing separately; deductions and tax credits are also limited
for those filing separately.
103 ACA §3402. Because more beneficiaries are expected to pay this higher premium over time and therefore reduce the
amount of general revenues needed to fund Part B, CBO scored this provision as saving the federal government $25
billion over 10 years (FY2010-FY2019), at http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/113xx/doc11379/
amendreconprop.pdf.
104 MACRA §402. See CRS Report R43962, The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA;
P.L. 114-10).
Congressional Research Service

21

link to page 26 link to page 26 link to page 26 link to page 26 link to page 26 link to page 24 link to page 45 link to page 45 link to page 26 Medicare Part B: Enrollment and Premiums

Table 4. Changes to the Medicare High-Income Premium Thresholds: 2017 to 2020
Levels of Premium
Beneficiaries Who Filed Individual Tax
Beneficiaries Who Filed Joint Tax Returns
Adjustment and
Returns with Income:
with Income:
Percentage of Costs
Covered by
Premiums
2017
2018
2019
2020a
2017
2018
2019
2020a
Standard (25%)
Less than
Less than
Less than
Less than
Less than
Less than
Less than
or equal
or equal
or equal
Less than
or equal
or equal
or equal
or equal
to
to
to
or equal to
to
to
to
to
$85,000
$85,000
$85,000
$87,000
$170,000
$170,000
$170,000
$174,000
High Income

Level 1 (35%)
$85,001b-
$85,001-
$85,001-
$87,001-
$170,001-
$170,001-
$170,001-
$174,001-
$107,000
$107,000
$107,000
$109,000
$214,000
$214,000
$214,000
$218,000
Level 2 (50%)
$107,001-
$107,001-
$107,001-
$109,001-
$214,001-
$214,001-
$214,001-
$218,001-
$160,000
$133,500
$133,500
$136,000
$320,000
$267,000
$267,000
$272,000
Level 3 (65%)
$160,001-
$133,501-
$133,501-
$136,001-
$320,001-
$276,001-
$267,001-
$272,001-
$214,000
$160,000
$160,000
$163,000
$428,000
$320,000
$320,000
$326,000
Level 4 (80%)
More than
More than
$160,001-
$163,001-
More than More than
$320,001-
$326,001-
$214,000
$160,000
$499,999
$499,999
$428,000
$320,000
$749,999b
$749,999b
Level 5 (85%)
$500,000
$500,000
$750,000
$750,000
n/a
n/a
or more
or more
n/a
n/a
or more
or more
Source: CMS, Annual Notices, “Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rate,
and Annual Deductible,” for 2017, 2018, 2019, and 2020.
Notes: Income thresholds are based on a Medicare-specific definition of modified adjusted gross income
(MAGI). 2018 was the first applicable year of the income threshold changes made by the Medicare Access and
CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10); 2019 is the first year that the income category
changes made by the Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123) applied; 2020 is the first year since
2009 that the thresholds were adjusted for inflation.
a. Income thresholds for 2021 are shown in Table 2. Historical income thresholds may be found in Table B-
1 in Appendix B.
b. Bottom thresholds in Levels 1 through 4 rounded up to the nearest dol ar and upper threshold in 2019 and
2020 Level 4 rounded down to the nearest dol ar; n/a = not applicable.
With the exception of the addition of a new top threshold category described below, the 2019
income thresholds for the high-income categories were the same as in 2018. For years 2020 and
after, the thresholds are adjusted annual y for inflation based on the new (2018 and 2019)
threshold levels.105
Section 53114 of the Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123) added an additional
high-income category beginning in 2019 for individuals with annual income of $500,000 or more
or couples filing jointly with income of $750,000 or more. (See Table 4.) Enrollees with income
equal to or exceeding these thresholds pay premiums that cover 85% of the average per capita
cost of the Parts B and D benefits instead of 80%. The threshold for couples filing jointly in this
new income tier is calculated as 150% of the individual income level rather than 200% as in the

105 Under prior law (ACA §3402), in 2020 and subsequent years, the income thresholds were to be indexed to inflation
as if they had not been frozen between 2011 and 2019. In other words, the income thresholds would have revert ed to
the levels they would have reached had they been indexed for inflation since 2007, thereby reducing the proportion of
beneficiaries who would be subject to higher premiums. CBO est imated that MACRA §402 would save $34.3 billion
over 10 years. CBO, Cost Estim ate of H.R. 2, Medicare Access and CHIP Reauthorization Act of 2015 , March 25,
2015, https://www.cbo.gov/publication/50053.
Congressional Research Service

22

Medicare Part B: Enrollment and Premiums

other income tiers. This new top income threshold wil be frozen through 2027 and wil be
adjusted annual y for inflation starting in 2028 based on the CPI-U.106
Premium Assistance for Low-Income Beneficiaries
Medicare beneficiaries with limited incomes and resources may be able to qualify for assistance
with their premiums and other out-of-pocket expenses.107 About one in five Medicare
beneficiaries receives Part B premium subsidies.
Medicare beneficiaries who qualify for full Medicaid benefits (full dual-eligibles) have most of
their health care expenses paid for by either Medicare or Medicaid. For these individuals,
Medicaid covers the majority of Medicare premium and cost-sharing expenses, and it
supplements Medicare by providing coverage for services not covered under Medicare, such as
dental services and long-term services and supports. In cases where services are covered by both
Medicare and Medicaid, Medicare pays first and Medicaid picks up most of the remaining costs.
Each state has different rules about eligibility and applying for Medicaid.108
Beneficiaries who do not meet their respective state’s eligibility criteria for Medicaid may stil
qualify for assistance with Part B premiums if they have incomes of less than 135% of the federal
poverty level (FPL) and assets of less than $7,970 for an individual or $11,960 for a couple in
2021.109 These assistance programs are commonly referred to as Medicare Savings Programs
(MSPs).110 Three of these programs provide assistance with Part B premiums. The type of
assistance is based on a beneficiary’s level of income.
Qualified Medicare Beneficiaries
Aged or disabled persons with incomes at or below FPL may qualify for the Qualified Medicare
Beneficiary (QMB) program.111 In 2021, the QMB monthly qualifying income levels are $1,094

106 T hese threshold changes also apply to Part D income-related monthly adjustments. CBO estimated that the changes
in this provision would save approximately $1.6 billion from 2018 to 2027. CBO, “ Direct Spending and Revenue
Effects of Division E of Senate Amendment 1930, the Bipartisan Budget Act of 2018 ,” February 8, 2018, at
https://www.cbo.gov/publication/53557.
107 See Medicare.gov, “Medicare Savings Programs,” at http://www.medicare.gov/your-medicare-costs/help-paying-
costs/medicare-savings-program/medicare-savings-programs.html and Medicare Publication, “ Get Help with Your
Medicare Costs,” at https://www.medicare.gov/pubs/pdf/10126-Getting-Help-With-Your-Medicare-Costs.pdf.
Subsidies are also available for low-income beneficiaries enrolled in Part D, the outpatient prescription drug benefit.
T hose who are eligible for assistance with Part B premiums through their Medicaid programs are automatically eligible
to receive the Part D low-income subsidy. Other low-income beneficiaries with incomes below 150% of the federal
poverty level (FPL) and who meet the resource tests may also be eligible for the drug subsidy.
108 See CRS Report R43357, Medicaid: An Overview. In those states that have extended Medicaid coverage to
individuals 64 years of age and under with incomes of up to 138% of FPL, certain individuals at the higher income
levels may no longer qualify for Medicaid when they turn 65. In other words, traditional Medicaid categorical and
income eligibility (i.e., income and asset) rules will apply when an individual becomes eligible for Medicare.
109 Income and asset requirements may vary by state and change each year. T hese amounts do not include a burial-fund
allowance of $1,500 per person. Medicare.gov, “ Medicare Savings Programs,” at http://www.medicare.gov/your-
medicare-costs/help-paying-costs/medicare-savings-program/medicare-savings-programs.html.
110 For additional information about these programs and to learn whether a beneficiary might qualify for Medicare
premium assistance, contact the applicable State Medical Assistance (Medicaid) office. (As the names of these
programs may vary by state, one should specifically inquire about Medicare Savings Programs.) T he contact
information for state Medicaid offices may be obtained by calling 1 -800-MEDICARE (1-800-633-4227) or by visiting
the Medicare “ contacts” website at http://www.medicare.gov/contacts.
111 FPLs for 2021 are $12,880 per year for an individual and $17,420 for a couple. (T hese levels are slightly higher in
Congressional Research Service

23

link to page 29 Medicare Part B: Enrollment and Premiums

for individuals and $1,472 for a couple (annual income of about $13,128 and $17,664,
respectively).112 QMBs are entitled to have their Medicare Parts A and B cost-sharing charges,
including the Part B premium and al deductibles and coinsurance, paid by Medicaid.113 (See
Table 5.) For QMBs, Medicaid coverage is limited to the payment of Medicare premiums and
cost-sharing charges (i.e., the Medicare beneficiary is not entitled to coverage of Medicaid plan
services, unless the individual is otherwise entitled to Medicaid).
Specified Low-Income Medicare Beneficiaries
Individuals whose income is more than 100% but less than 120% of FPL may qualify for
assistance as a Specified Low-Income Medicare Beneficiary (SLMB). In 2021, the monthly
income limits are $1,308 for an individual and $1,762 for a couple (annual income of about
$15,696 and $21,144 respectively).114 Medicaid pays the Medicare Part B premiums for SLMBs,
but not other cost sharing.
Qualifying Individuals
Individuals whose income is between 120% and 135% of FPL may qualify for assistance as
Qualifying Individuals (QIs). In 2021, the monthly income limit for a QI is $1,469 for an
individual, and for a couple, it is $1,980 (annual income of about $17,628 and $23,760,
respectively). Medicaid protection for these individuals is limited to payment of the monthly
Medicare Part B premium. Expenditures under the QI program are, however, paid for (100%) by
the federal government from the Medicare SMI Trust Fund up to the state’s al ocation level.115 A
state is required to cover only the number of people that would bring the state’s spending on these
population groups in a year up to its al ocation level. Any expenditures beyond that level are
voluntary and paid entirely by the state.
Funding for the QI program was first made available by the Balanced Budget Act of 1997
(BBA97; P.L. 105-33).116 Subsequent legislation extended the program and the amounts available
through al ocation.117 MACRA permanently extended the QI program.118

Alaska and Hawaii.) See The 2021 HHS Poverty Guidelines at https://aspe.hhs.gov/poverty-guidelines.
112 T he qualifying levels are slightly higher than the monthly federal poverty level because, by law, $20 per month of
unearned income is disregarded in the calculation. See “ Medicare Savings Programs,” at https://www.medicare.gov/
your-medicare-costs/get-help-paying-costs/medicare-savings-programs.
113 T he Qualified Medicare Beneficiary (QMB) program does not provide assistance with drug costs. Low-income
beneficiaries who qualify for a Medicare Savings Program are automatically enrolled in Medicare Part D; their
premiums and most cost sharing are paid for by the Part D low-income subsidy, which is financed through Medicare.
States pay some of the costs for Part D low-income assistance through state transfer payments.
114 T he qualifying levels are calculated the same way as for the QMB program.
115 In general, Medicaid payments are shared between the federal government and the states according to matching
formulas.
116 §4732(c) of BBA 97 added §1933(c) of the Social Security Act.
117 See CRS Report R43958, Health Care-Related Expiring Provisions, First Session of the 114th Congress.
118 MACRA appropriated $535 million for the remainder of CY2015 (April 1, 2015, through December 31, 2015) and
$980 million for CY2016. T he amount of funding for CY2017 and subsequent calendar years is based on the product of
the following: (1) the previous year’s Qualifying Individuals (QI) allocation; (2) the increase from the previous year in
Medicare Part B premium; and (3) the estimated increase from the previous year in Part B en rollment. See CRS Report
R43962, The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114 -10).
Congressional Research Service

24

link to page 29 link to page 29 link to page 29 link to page 29 link to page 29 link to page 29 Medicare Part B: Enrollment and Premiums

Table 5. 2021 Medicare Savings Program Eligibility Standards

Monthly Incomea
Resourcesb
Benefits
Qualified Medicare
At or Below 100% FPLc
$7,970 (single)
Part B Premiumd
Beneficiary (QMB)
$1,094 (single)
$11,960 (couple)
Coverage of Parts A and B
$1,472 (couple)
Deductibles and Coinsurance
Specified Low-Income
Above 100% but Less Than
$7,970 (single)
Part B Premium
Medicare Beneficiary
120% FPLc
$11,960 (couple)
(SLMB)
$1,094-$1,308 (single)
$1,472-$1,762 (couple)
Qualifying Individual
At or Above 120% but Less
$7,970 (single)
Part B Premium
(QI)
Than 135% FPLc
$11,960 (couple)
$1,308-$1,469 (single)
$1,762-$1,980 (couple)
Source: Medicare.gov, “Medicare Savings Programs,” at https://www.medicare.gov/your-medicare-costs/get-
help-paying-costs/medicare-savings-programs.
a. These amounts include a $20 general income exclusion, under which $20 from any income is not counted
toward the income limits. CMS rounds up to the nearest dol ar when computing monthly income limits.
b. Resources include money in checking and savings accounts, stocks, bonds, mutual funds, and Individual
Retirement Accounts (IRAs). Resources do not include one’s primary residence, a life insurance policy
worth up to $1,500, one car, burial plots, up to $1,500 per person for burial ex penses, and household
items. Some states have no limits on resources.
c. Federal Poverty Levels (FPLs) are updated each year, usual y in January or February. Income levels are
higher for Hawai and Alaska and for those living with dependents.
d. Most people do not pay a premium for Part A because they have worked 40 or more quarters in covered
employment. For those without sufficient work history to qualify for premium-free Part A, Medicaid wil
also pay Part A premiums for QMBs.
Protection of Social Security Benefits from Increases
in Medicare Part B Premiums
After a person becomes eligible to receive Social Security benefits, his or her monthly benefit
amount is adjusted annual y to compensate for increases in the prices of goods and services over
time.119 Near the end of each year, the Social Security Administration announces the cost-of-
living adjustment (COLA) payable in January of the following year. The amount of the COLA is
based on inflation as measured by the Consumer Price Index-Urban Wage Earners and Clerical
Workers (CPI-W).120 If the CPI-W decreases, Social Security benefits stay the same—benefits are
not reduced during periods of deflation.
When the annual Social Security COLA is not sufficient to cover the standard Medicare Part B
premium increase, most Medicare beneficiaries are protected by a hold-harmless provision in the

119 For more information, see CRS Report R42035, Social Security Primer, and CRS Report 94-803, Social Security:
Cost-of-Living Adjustm ents.
120 T he Consumer Price Index-Urban Wage Earners and Clerical Workers (CPI-W) tracks the prices of a fixed market
basket of goods and services over time. Social Security’s cost-of-living adjustment (COLA) is calculated as the change
in the CPI-W from the third quarter of the prior calendar year to the third quarter of the current c alendar year. If the
CPI-W increases during this period, Social Security benefits for the next year increase proportionately.
Congressional Research Service

25

link to page 51 Medicare Part B: Enrollment and Premiums

Social Security Act.121 Specifical y, if in a given year the increase in the standard Part B premium
would cause a beneficiary’s Social Security check to be less, in dollar terms, than it was the year
before, then the Part B premium is reduced to ensure that the amount of the individual’s Social
Security check does not decline.122 This determination is made by the Social Security
Administration.
To be held harmless in a given year, a Social Security beneficiary must have received Social
Security benefit checks in both December of the previous year and January of the current year,
and the beneficiary must also have had Part B premiums deducted from both checks.123 The hold-
harmless provision operates by comparing the net dollar amounts of the two monthly benefit
payments; if the net Social Security benefit for January of the current year is lower than in
December of the previous year, then the hold-harmless provision applies to that person. Premiums
of those held harmless are then reduced to an amount that would not cause their Social Security
benefits to decline in the next year. The premium paid by those held harmless is cal ed the
Variable Supplementary Medical Insurance premium.124 Those not held harmless pay the standard
premium as determined for that year.
Typical y, the hold-harmless provision affects only a smal number of beneficiaries and has had
minimal impact on Part B financing.125 In most years, this rule primarily protects those with
relatively low Social Security payments. However, in years in which there is no or a very low
Social Security COLA, such as in 2010, 2011, 2016, and 2017, a large number of beneficiaries
may be protected by this provision. (See Appendix E.)
Some Beneficiaries Are Not Protected by the Hold-
Harmless Provision
Not al beneficiaries are protected by the hold-harmless provision and, under some circumstances,
may be subject to significantly higher premiums than those who are held harmless. Groups that
are not protected include the following:
 Higher-Income Beneficiaries. Higher-income beneficiaries who are required to
pay income-related Part B premiums are explicitly excluded by law from

121 Social Security Act §1839(f). T his provision was originally created by the Deficit Reduction Act of 1984 (P.L. 98-
369, Section 2302), extended by subsequent legislation, and made permanent by the Catastrophic Coverage Act of
1988 (P.L. 100-360, Section 211(b)) (this provision was not repealed when that law was repealed in 1989). T hose who
receive RRB benefits are also protected by this provision. T he hold-harmless provision was first implemented in
January 1987.
122 For more information on t he hold-harmless provision, see CRS Report R44224, Potential Impact of No Social
Security COLA on Medicare Part B Prem ium s in 2016 .
123 Note that Social Security benefit checks reflect benefit entitlements for the previous month, whereas Part B
premiums are deducted in advance. For example, a November Social Security benefit check is not received until
December, but it has December’s Part B premium deducted from it.
124 SSA, Program Operations Manual System (POMS), Section HI 01001.004, “The Variable Supplementary Medical
Insurance Premium,” at https://secure.ssa.gov/poms.nsf/lnx/0601001004.
125 T he hold-harmless provision is applied on a case-by-case basis. For example, in a given year a Social Security
COLA applied to most benefit levels may be sufficient to cover the dollar amount of a Part B premium increase for
most beneficiaries; however, it may not be sufficient to fully cover the increase for someone who receives a smaller
benefit amount, (i.e., the COLA percentage is applied to a smaller number, and the resulting dollar increase may not be
sufficient to fully cover the Part B premium increase). In such a case, the hold-harmless provision would apply to that
individual, and his or her Part B premiums may be lower than th ose paid by most beneficiaries in a given year. T hus,
the hold-harmless provision may apply to a small number of beneficiaries each year .
Congressional Research Service

26

link to page 21 link to page 21 link to page 27 link to page 27 Medicare Part B: Enrollment and Premiums

protection under the hold-harmless provision. They are required to pay the full
amount of any increase in their Part B premiums. (See “Income-Related
Premiums.”)
 Lower-Income Beneficiaries. Lower-income beneficiaries who receive premium
assistance from Medicaid are not held harmless as their premiums are not
deducted from their Social Security benefits. However, the Medicaid program
pays the full amount of any increase in their Part B premiums. (See “Premium
Assistance for Low-Income Beneficiaries.”)
 Those Who Do Not Receive Social Security. This group includes those who
have not yet signed up for Social Security for various reasons, for example
because they have deferred signing up because they have not reached full
retirement age126 or are stil working. It also includes disabled beneficiaries
whose Social Security Disability Insurance (SSDI) cash benefits have been
discontinued because they have returned to work but who are stil eligible for
Medicare.127 Additional y, those who receive benefits exclusively through a
different retirement plan are not held harmless.128 This group includes certain
federal retirees under the Civil Service Retirement System129 as wel as certain
state and local government workers—such as teachers, law-enforcement
personnel, and firefighters—who have their own pension programs.130
 Those Who Did Not Have Medicare Premiums Deducted from Their Social
Security Checks at the End of One Year and the Beginning of the Next. This
category includes those who enroll in Social Security or Medicare during the year
in which the hold-harmless provision is in effect, including SSDI recipients who
become eligible for Medicare that year after the 24-month waiting period.131 It
also includes those who had Medicare premiums paid on their behalf one year,
for example by Medicaid, but lost that coverage during the next year.

126 See CRS Report R44670, The Social Security Retirement Age.
127 See CRS Report R41934, Ticket to Work and Self-Sufficiency Program: Overview and Current Issues; SSA, “ T he
Redbook – A Guide to Work Incentives,” at https://www.ssa.gov/redbook/; and SSA, Disability Benefits For Wounded
Warriors, pp. 13-14, at http://www.ssa.gov/pubs/EN-05-10030.pdf. Disabled military personnel may be required to
enroll in Part B to maintain coverage under the Department of Defense health insurance, T RICARE. Some persons
with low incomes and limited resources may be eligible for state assistance with these costs under various Medicare
Savings Programs.
128 A person who is entitled to Social Security spousal benefits, based on a spouse’s work record instead of his or her
own work record, may or may not be covered by the hold-harmless provision. If the government pension offset (GPO)
were to reduce spousal benefits to zero, then the individual would not meet the hold-harmless provision’s requirement
of having benefit checks for December of the previous year and January of the current year. T her efore, this person
would not be held harmless. If the person were to receive a Social Security spousal benefit for a positive dollar amount,
then he or she would be covered by the hold-harmless provision. For more on the GPO, see CRS Report RL32453,
Social Security: The Governm ent Pension Offset (GPO) .
129 Federal employees who exclusively worked under the Civil Service Retirement System (CSRS) are not eligible for
Social Security benefits based on their own work record. See CRS Report 98-810, Federal Em ployees’ Retirem ent
System : Benefits and Financing. T his program uses the same measuring period and formula for determining its COLAs
as Social Security. See CRS Report 94-834, Cost-of-Living Adjustm ents for Federal Civil Service Annuities.
130 SSA, “ How State and Local Government Employees Are Covered by Social Security and Medicare,” at
http://www.ssa.gov/pubs/EN-05-10051.pdf, and Social Security Administration, “ State and Local Government
Employers – Information,” at http://www.ssa.gov/slge/.
131 See CRS Report RS22195, Social Security Disability Insurance (SSDI) and Medicare: The 24 -Month Waiting
Period for SSDI Beneficiaries Under Age 65 .
Congressional Research Service

27

link to page 12 link to page 51 link to page 40 link to page 34 link to page 21 Medicare Part B: Enrollment and Premiums

Some people protected by the hold-harmless provision may stil see a decrease in their Social
Security checks due to an increase in Medicare Part D premiums. Part D premiums are not
covered by the hold-harmless provision, although beneficiaries with low-income subsidies would
not be affected.
Additional y, those who pay the late-enrollment penalty are not fully protected from the hold-
harmless rule. (See “Late-Enrollment Premium Penalty and Exemptions.”) In a year in which the
hold-harmless provision is in effect, the late-enrollment surcharges are calculated as a percentage
of the premiums of those not held harmless. These surcharges are considered “nonstandard”
premiums and thus are not limited by the hold-harmless provision.
Application of the Hold-Harmless Rule in 2021
In 2021, the growth in Medicare premiums was limited by the Continuing Appropriations Act,
2021 and Other Extensions Act (P.L. 116-159); therefore the 1.3% Social Security COLA for
2021 was large enough to cover the full $3.90 increase in Part B premiums (from $144.60 to
$148.50 per month) for most beneficiaries, and only 2% (about 1.2 mil ion)132 are being held
harmless in 2021.133 (A summary of how the hold-harmless provision has been applied in prior
years may be found in Appendix E.)
Potential Application of the Hold-Harmless Rule in 2022
The extent to which the hold-harmless rule may apply in 2022 depends on a number of factors
including expectations of growth in per capita Part B costs in 2022, the extent to which
contingency reserves in the SMI trust fund may need to be replenished,134 and the amount of the
2022 Social Security COLA. In their 2020 report (which does not reflect the potential effects of
the COVID-19 public health emergency),135 the Medicare trustees projected that 2022 Part B
premiums would be about $157.70 per month, an increase of $9.20 from the 2021 premium
amount ($148.50). Under this projection, in the event of no or a very smal 2022 Social Security
COLA, it is possible that a greater portion of Medicare Part B enrollees could be held harmless in
2022 than in 2021. Under such circumstance, similar to years such as 2010 and 2011 when the
hold-harmless provision was more broadly applicable, the approximately 30% of Part B enrollees
not protected by the hold-harmless provision could pay higher premiums than they would have
had the hold-harmless provision not been in effect.
Part B Premiums over Time
Part B premium changes over time general y reflect the growth in total Part B expenditures,
although the exact relationship between Part B expenditures covered by the Part B premium has
been changed by statute at various points. (See Appendix A.) The standard monthly Part B
premium has risen from $3.00 in 1966 to $148.50 in 2021. (See Figure 1.) For comparison,
during a similar time period, average annual Part B benefit costs per beneficiary have increased

132 Figures provided to CRS by CMS, May 2021.
133 T he average monthly Social Security payment for retirees in December 2020 prior to the application of the 2021
COLA was $1,544. At this payment level, a 1.3% COLA resulted in an increase of $20 per month, which more than
covered the $3.90 Part B premium increase. SSA, Social Security Basic Facts, as of December 2020, at
https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf.
134 See “Contingency Margin.”
135 See CRS Report R46219, Overview of U.S. Domestic Response to Coronavirus Disease 2019 (COVID-19).
Congressional Research Service

28

link to page 29 link to page 48 Medicare Part B: Enrollment and Premiums

from about $101.00 in 1970 (about $8.42 per month) to a projected $7,245 per beneficiary (about
$603.75 per month) in 2021.136
Prior to 2000, the Part B premium decreased from year to year twice. The first instance was from
1989 ($31.90) to 1990 ($28.60) as a result of the repeal of the Medicare Catastrophic Coverage
Act of 1988 (P.L. 100-360). The second was from 1995 ($46.10) to 1996 ($42.50) as a result of
the transition from a premium as determined by a fixed dollar amount under the Omnibus
Reconciliation Act of 1990 (P.L. 101-508) to 25% of costs as directed under the Omnibus Budget
Reconciliation Act of 1993 (P.L. 103-66).
Because of the absence of a Social Security COLA in 2010 and 2011, most beneficiaries were
held harmless and paid the 2009 premium of $96.40 per month during those years. The standard
2010 and 2011 premiums, paid by those who were not held harmless, were thus higher than they
would have been had the hold-harmless provision not been in effect. (See prior section
“Protection of Social Security Benefits from Increases in Medicare Part B Premiums” for
additional detail.) Similarly, due to no or low Social Security COLAs in 2016 and 2017, most Part
B enrollees were protected by the hold-harmless provision and paid lower premiums in those
years.
Since 2000, the standard Medicare Part B premium has more than tripled, from $45.50 in 2000 to
the current premium of $148.50 in 2021. This growth has been due to a number of factors that
have increased per capita Part B expenditures during that time, including the rising prices of
health care services and equipment, new technologies, and increased utilization of Medicare Part
B services.137 While Part B expenditure growth has slowed in recent years, the Medicare trustees
project faster benefit spending growth from 2020 to 2025 (an 8.2% Part B average annual growth
rate compared with a 6.9% growth rate over the prior five years).138
The Medicare trustees estimate that 2022 premiums wil increase to about $157.70 per month,
and that premiums wil increase thereafter at an average rate of about 5.8% per year through
2029.139 (For estimates of premiums in future years through 2029, see Appendix C.)

136 2020 Medicare T rustees Report, T able III.C5. For data on recent growth in specific Part B services, see the 2020
Medicare T rustees Report, pp. 125-136.
137 2020 Medicare T rustees Report, pp. 125-136.
138 2020 Medicare T rustees Report, p. 7 and T able III.C5 on p. 87. T hese p rojections do not incorporate assumptions
about the potential effects of the COVID-19 public health emergency. At this time, it is unclear what effect the
pandemic will have on future Medicare Part B spending and on 202 2 premiums.
139 CRS calculation of compound average growth rate based on premium projections in T able V.E2 of the 2020
Medicare T rustees Report.
Congressional Research Service

29

link to page 48

Medicare Part B: Enrollment and Premiums

Figure 1. Monthly Medicare Part B Premiums
(1966-2029)

Source: CRS figure, based on data from the 2020 Annual Report of the Boards of Trustees of the Federal Hospital
Insurance and Federal Supplementary Medical Insurance Trust Funds, April 22, 2020, Table V.E2 and CMS, “Medicare
Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1,
2021,” 85 Federal Register 71904, November 12, 2020.
Note: Premiums through 2021 are actual; premiums from 2022 to 2029 are estimates. The projections do not
reflect the potential impact of the COVID-19 pandemic or of related legislation enacted subsequent to the
issuance of the 2020 Medicare Trustees report.
Current Issues
Premium Amount and Annual Increases
The Medicare trustees estimate that Medicare Part B premiums wil increase from $148.50 per
month in 2021 to about $234.10 in 2029.140 (See Appendix C.) Rising Medicare premiums could
have a large effect on Social Security beneficiaries, particularly on those who rely on Social
Security as their primary source of income.141 For example, in 2017, Social Security benefits
represented about 33% of the income of Americans aged 65 and older. About 50% of married
couples and 70% of unmarried persons received more than half of their income from Social
Security, and 21% of married couples and 45% of unmarried persons received more than 90% of

140 T he projections do not reflect the potential effects of the COVID-19 public health emergency. At this time, it is
unclear what effect the pandemic will have on future Medicare Part B spending and premiums.
141 Other sources of income may include earnings from employment, employer -sponsored pension benefits, and
investment earnings. In addition, retirees may draw down on their accumulated assets to supp lement their income.
Congressional Research Service

30

link to page 45 link to page 48 Medicare Part B: Enrollment and Premiums

their income from Social Security.142 Some of these beneficiaries may see a decline in their
standard of living as their Medicare premiums rise.
Once a person receives Social Security, his or her benefit is indexed to inflation and thereafter
grows with annual Social Security COLAs.143 However, Medicare premiums are based on the per
capita cost growth of Part B benefits, which reflects the growth in the cost of medical care and in
the utilization and intensity of services used by beneficiaries, factors that have historical y grown
faster than CPI-W. Additional y, as there has been a continuing shift from providing care in
inpatient (Part A) to outpatient settings (Part B), a greater portion of Medicare spending is
expected to be covered by beneficiary premiums.144 This means that, over time, Medicare
premiums are expected to represent a growing proportion of most beneficiaries’ Social Security
income.145 Since 2000, Social Security’s annual COLA has resulted in a cumulative benefit
increase of about 55%,146 significantly less than the Part B premium growth of over 226%. The
Medicare trustees estimate that average Part B plus Part D premiums wil represent close to 12%
of the average Social Security benefit in 2020 and wil increase to an estimated 19% in 2094.147
(See Appendix B and Appendix C for historical, current, and projected Part B premiums.)
Additional y, while the hold-harmless provision provides protection against increases in the Part
B premium, the rule does not apply to Part D premiums or to late-enrollment penalties. Therefore,
even in a year with a 0% or a very low Social Security COLA, beneficiaries may stil see a
decline in benefits as a result of increases in Part D premiums and/or any applicable late-
enrollment penalties.
Impact of the Hold-Harmless Provision on Those Not Held
Harmless
The law does not specify how Medicare Part B financing (premiums and general revenues)
should be established in years in which the hold-harmless provision applies to a large number of
Medicare beneficiaries. Under current law, the only way to generate enough premium revenue to
cover 25% of Part B costs is to have those not held harmless shoulder the entire beneficiary share
of any increase in premiums.148 Absent legislation, such as BBA 15, the premiums of those not
held harmless can therefore be significantly greater than if there were no hold-harmless provision.

142 SSA, “Social Security Basic Facts,” as of December 2020, at https://www.ssa.gov/news/press/factsheets/basicfact-
alt.pdf.
143 T he COLA increases the benefit s paid to current beneficiaries. In contrast, average Social Security benefits (those
paid to new and current beneficiaries) have risen at a faster rate than the annual COLA, because the formula for
calculating initial Social Security benefits is linked to wage growth, whereas the COLA is based on price growth.
Generally, wages rise faster than prices.
144 In 2000, the ratio of Part A expenditures to Part B expenditures was 59:41. T his ratio decreased to 50:50 in 2014 and
is expected to drop to 42:58 in 2029. T his means that over time, the proportion of Medicare expenditures covered under
Part B is expected to increase. While providing more services on an outpatient basis may be more cost -effective for the
program as a whole, it also means that beneficiaries will be expected to bear a larger portion of program costs over
time. See CRS Report R43122, Medicare Financial Status: In Brief.
145 T he hold-harmless provision caps the annual Part B premium increase (but not the Part D increase) at the dollar
amount of a beneficiary’s COLA.
146 CRS calculations based on SSA, Office of the Chief Actuary, “Cost -of-Living Adjustments,” at
https://www.ssa.gov/oact/COLA/colaseries.html.
147 Similarly, average Medicare cost sharing is estimated to be about 12% of the Social Security benefit in 2020, and it
is expected to increase to approximately 18% in 2094. 2020 Medicare T rustees Report, p. 36.
148 T he law does not specify that this method be used, but it also does not prohibit it.
Congressional Research Service

31

Medicare Part B: Enrollment and Premiums

As the Medicare trustees pointed out in their 2010 annual report, “(t)his approach to preventing
exhaustion of the Part B trust fund account is the only one available under current law,” despite
the “serious equity issues” that this method raises.149
In years in which there has been both a 0% or a very low Social Security COLA and a Medicare
premium increase, concerns have been raised about the potential financial impact of the premium
increases on those not held harmless as wel as on the state Medicaid agencies that pay Part B
premiums on behalf of low-income beneficiaries. For example, individuals in retirement systems
other than Social Security or RRB may also have not received a COLA but could face
significantly higher Medicare premiums than those who qualified for protection under the hold-
harmless provision.150 Some have proposed changes to the hold-harmless provision to avoid the
disproportionate impact of premium increases on those not held harmless, such as holding al Part
B enrollees harmless in years in which there is no Social Security COLA151 or al owing Social
Security checks to decline as a result of Medicare premium increases in some years.152 Others
have proposed linking the Social Security COLA to a measure of inflation that is based on
purchasing patterns of the elderly, such as the BLS’s Experimental Consumer Price Index for
Americans Aged 62 and Older (CPI-E)153 or requiring a minimum annual Social Security
COLA.154
Proposals to Modify the Late-Enrollment Penalty
Periodical y, proposals have been offered to modify or eliminate the Part B premium penalty
either for al enrollees or alternatively for a selected population group. As an increasing number
of new Medicare-eligible beneficiaries must actively sign up for Medicare because they are not
yet receiving Social Security benefits (e.g., their full retirement Social Security age exceeds the
Medicare age of eligibility), there is concern that more people could become subject to late-

149 Boards of T rustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2010
Annual Report of the Boards of Trustees of the Federal Hosp ital Insurance and Federal Supplem ental Medical
Insurance Trust Funds, August 5, 2010, pp. 97-98, at https://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-T rends-and-Reports/ReportsTrustFunds/downloads/tr2010.pdf.
150 For example, the annual increase in the CSRS benefits is tied to the same inflation measure as Social Security;
therefore, those under this system also received a 1.3% COLA in 2021.
151 For example, S. 2148, the Protecting Medicare Beneficiaries Act of 2015, and H.R. 3696, the Medicare Premium
Fairness Act, both introduced on October 7, 2015, would have kept the 2016 Part B premiums at the 2015 level for all
beneficiaries, including those with high incomes. Late-enrollment surcharges also would have been based on the 2015
standard premium. T he loss of income from holding premiums flat in 2016 would have been offset by increased
general revenue contributions. Note that these bills would have affected only premium determinations for 201 6 and
would not have made permanent changes to the hold-harmless provision.
152 Charles Blahous, “How Social Security’s COLA Politics Lead to Bad Policy,” Economic Policies for the 21 st
Century at the Manhattan Institute, November 22, 2015, at https://economics21.org/html/how-social-
security%E2%80%99s-cola-politics-lead-bad-policy-1522.html.
153 T he CPI-E grows faster than the CPI-W, on average, because a larger portion of spending by the elderly goes toward
health care expenditures and other items whose prices tend to rise more rapidly. As a result, switching to such a
measure is projected to result in larger COLAs and higher Social Security benefits. See CRS Report R43363,
Alternative Inflation Measures for the Social Security Cost-of-Living Adjustm ent (COLA). For example, introduced in
the 116th Congress, the CPI for Seniors Act of 2019 (H.R. 2787), the Social Security 2100 Act (H.R. 860 and S. 269),
and the Social Security Expansion Act (S. 478) would have required the use of the CPI-E in determining the Social
Security COLA.
154 For example, in the 116th Congress, S. 1923, the Guaranteed 3 Percent COLA for Seniors Act of 2019, would have
required a minimum 3% Social Security COLA each year. Also, in the 116 th Congress, H.R. 46, the Social Security
Safety Dividend Act of 2019, would have guaranteed a $250 increase in benefits for any year that no COLA is payable.
Congressional Research Service

32

link to page 51 Medicare Part B: Enrollment and Premiums

enrollment penalties. For example, the Medicare Rights Center reported a large number of cal s to
its hotline related to transitioning to Medicare. Their report notes that “(m)any individuals who
cal Medicare Rights are confused by Medicare enrollment rules, and specifical y by decision-
making related to taking or declining Part B” and that “Medicare-eligible people who do not
understand Part B enrollment rules and fail to enroll in Medicare when they first became eligible
may face late-enrollment penalties, gaps in coverage, and disruptions to access to needed care.”155
Some proposals have suggested modifying the penalty provision to limit both the amount and the
duration of the surcharge, as is the case for delayed Part A enrollment, which has a maximum
10% surcharge and a duration of twice the number of years that enrollment was delayed. (See
Appendix E for information on the Part A premium and late-enrollment penalty.)
Some have also suggested that Medicare Part B have a creditable-coverage exemption, similar to
that under Part D, that would al ow Medicare beneficiaries with equivalent coverage to postpone
enrollment in Part B without being subject to a penalty. For example, under the Part D
prescription drug benefit, individuals are not subject to a late-enrollment penalty if they have
maintained “creditable” prescription drug coverage prior to enrollment—that is, coverage that is
expected to pay at least as much as Medicare’s standard prescription drug coverage.156 Creditable
prescription drug coverage includes employer-based prescription drug coverage, qualified State
Pharmaceutical Assistance Programs, and military-related coverage (e.g., Veterans Affairs health
care system and TRICARE).157
Other suggestions include formal y training employers about Medicare coverage and interaction
with other insurance; improving education on Medicare, including late-enrollment penalties, for
those nearing Medicare-eligibility age; and expanding equitable relief to include remedies for
actions based on misinformation provided by entities in addition to an agent of the federal
government, such as an agent of state or local government, and/or an employer or insurer.
In recent Congresses, a number of bil s have been introduced that would address some of the
issues associated with the Part B late-enrollment penalty. For example, in the 117th Congress,
H.R. 480 would limit the penalty to 15% and twice the period of no enrollment, and would
exclude periods of COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, retiree,
and VA coverage when determining the late enrollment penalty. In the 116th Congress, H.R. 3417,
H.R. 2477 and S. 1280 would have required Medicare to provide advance notification to those
approaching Medicare eligibility.158 Also introduced in the 116th Congress, H.R. 2564 and H.R.
1657 would have established a special Medicare Part B enrollment period for individuals enrolled
in COBRA continuation coverage who elected not to enroll in Part B during their initial
enrollment period. In the 115th Congress, H.R. 2342 would have required that employers notify

155 Medicare Rights Center, “Medicare T rends and Recommendations: An Analysis of 2015 Call Data from the
Medicare Rights Center’s National Helpline,” March 2017, at https://www.medicarerights.org/pdf/2015-helpline-
trends-report.pdf. (Their April 2019 analysis of 2017 call data may be found at https://www.medicarerights.org/2017-
medicare-trends-recommendations.) The Medicare Rights Center also issued a related report entitled “ A Costly
Mistake: Missing Part B Enrollment,” April 2015, at http://www.medicarerights.org/pdf/medicare-snapshot-
040915.pdf.
156 See Medicare publication “Your Guide to Medicare Prescription Drug Coverage,” p.20, at
https://www.medicare.gov/Pubs/pdf/11109-Your-Guide-to-Medicare-Prescrip-Drug-Cov.pdf.
157 42 CFR §423.56. Employers or unions may also qualify for a federal subsidy to maintain prescription drug coverage
for their retirees. Such subsidies are generally less expensive to the federal government than providing full coverage to
such enrollees under Part D. 2020 Medicare T rustees Report , T able IV.B9.
158 T hese bills also would have restructured Medicare enrollment and coverage periods and expanded the eligibility for
special enrollment periods for those who met exceptional conditions as defined by the Secretary of HHS. T hose
changes were included in t he Consolidated Appropriations Act, 2021 (P.L. 116-260; Division CC, §102) and will be
effective in 2023.
Congressional Research Service

33

link to page 21 Medicare Part B: Enrollment and Premiums

employees about the availability of special enrollment periods to obtain marketplace coverage
and Medicare coverage upon termination or separation. Additional y, H.R. 707 would have,
among other changes, eliminated late-enrollment penalties for those between the ages of 65 and
70.
As introduced in the 112th Congress, in addition to creating a special enrollment period for those
with COBRA coverage, H.R. 1654 would have created a continuous enrollment period that would
have al owed Medicare-eligible beneficiaries to sign up for Part B outside of the general
enrollment period and to receive health coverage the following month. H.R. 1654 would have
also expanded eligibility for equitable relief to those who based enrollment decisions on incorrect
information provided by group health plans and plan sponsors, and it would have directed the
Government Accountability Office to study problems with Part B enrollment.
Deficit Reduction Proposals
As Medicare currently represents about 12% of federal spending,159 many proposals to reduce
federal deficits include suggestions to reduce Medicare program spending and/or increase
program income. For example, some proposals would increase Medicare premiums as a portion
of total program funding, whereas others would limit the amount of federal contributions.
Increasing Medicare Premiums
Certain proposals suggest limiting premium increases to high-income beneficiaries. For example,
the President’s FY2017 budget proposal would have increased the percentage of per capita
expenditures paid by high-income enrollees from 35% to 80% of expenditures to a range of
between 40% and 90%, and it would have increased the number of high-income brackets from
four to five.160 The proposal also would have continued the freeze on income thresholds until 25%
of beneficiaries were subject to the high-income premiums. (Subsequent to that proposal, the
BBA 18 added a fifth high-income bracket with premiums set at 85% of per capita expenditures.
See “Income-Related Premiums.”)
Other proposals suggest increasing premiums paid by al Part B enrollees. For example, a
proposal introduced in 2011 by then-Senators Lieberman and Coburn161 suggested raising the
standard Part B premium from the current 25% of program costs to 35% over five years.162
Impose a Part B Premium Surcharge for Beneficiaries in Medigap Plans with
Near First-Dollar Coverage
In 2018, about 34% of beneficiaries enrolled in traditional Medicare bought Medigap policies
from private insurance companies that cover some or al of Medicare’s cost sharing.163

159 T he federal spending amount is net of beneficiary premiums. CRS calculation based on data from CBO, Budget and
Econom ic Outlook: 2021 to 2031, February 2021.
160 See Department of Health and Human Services, Fiscal Year 2017 Budget in Brief, p. 76, at http://www.hhs.gov/
sites/default/files/fy2017-budget-in-brief.pdf.
161 A Bipartisan Plan to Save Medicare and Reduce Debt, June 28, 2011.
162 For additional information, see CBO, Options for Reducing the Deficit: 2021 to 2030, “Increase Premiums for Parts
B and D of Medicare,” December 9, 2020, at https://www.cbo.gov/budget-options/56831.
163 America’s Health Insurance Plans (AHIP), State of Medigap 2020, Trends in Enrollments and Demographics, p. 3,
July 7, 2020, at https://www.ahip.org/state-of-medigap-trends-in-enrollment-and-demographics/. Also see archived
CRS Report R42745, Medigap: A Prim er.
Congressional Research Service

34

Medicare Part B: Enrollment and Premiums

Individuals who purchase Medigap must pay a monthly premium, which is set by, and paid to, the
insurance company sel ing the policy. There are 10 standardized Medigap plans with varying
levels of coverage. Two of the 10 standardized plans cover Parts A and B deductibles and
coinsurance in full (i.e., offer first-dollar coverage). In 2018, 58% of al beneficiaries who
purchased Medigap insurance were covered by one of these two plans.164
Some are concerned that beneficiaries enrolled in Medigap plans with low cost-sharing
requirements may have less incentive to consider the cost of health care services and may thus
increase costs to the Medicare program. To address this, Section 401 of MACRA prohibits the
sale of Medigap policies that cover Part B deductibles to newly eligible Medicare beneficiaries
beginning in 2020.165 Some have also proposed imposing a Part B premium surcharge for
Medicare beneficiaries who purchase certain types of Medigap plans. For example, the
President’s FY2016 budget proposal166 suggested imposing a Part B premium surcharge of
approximately 15% of the average Medigap premium (about 30% of the Part B premium) for new
Medicare beneficiaries who enroll in a near first-dollar Medigap plan.
Limit Federal Subsidies
Final y, other proposals, such as that put forth in the FY2019 House Budget Resolution,167 would
place limits on the amount of the federal subsidy for Medicare, and premiums would vary
depending on the Medicare plan in which the beneficiary enrolled. In general, such premium
support proposals would limit federal spending by changing the current Medicare program from a
defined-benefit to a defined-contribution system.168 Most such proposals would limit the growth
in the annual federal premium subsidy. Depending on how such a proposal is designed, and
should Medicare costs grow more quickly than the limit, beneficiary premiums could increase
more rapidly than the amount of the premium subsidy.
Considerations
Some of the issues that would need to be addressed when evaluating these types of deficit
reduction proposals include (1) the ability of Medicare beneficiaries to absorb increased costs
given their current levels of income and assets, as wel as their other out-of-pocket expenditures
(both health and non-health related); (2) the wil ingness of high-income beneficiaries to continue
participating in Medicare Part B should their premiums be increased; and (3) the capacity of the
Medicaid program to continue providing premium assistance to low -income beneficiaries should
premiums increase.

164 America’s Health Insurance Plans (AHIP), State of Medigap 2020, Trends in Enrollments and Demographics, July
7, 2020, p. 8, Medigap Plans C and F.
165 For additional information, including the potential budgetary impact of further limiting Medigap coverage of
beneficiary out -of-pocket costs, see CBO, Options for Reducing the Deficit: 2021 to 2030 , “ Change the Cost -Sharing
Rules for Medicare and Restrict Medigap Insurance,” December 9, 2020 , at https://www.cbo.gov/budget-options/
56830.
166 See CRS Report R43934, President’s FY2016 Budget: Centers for Medicare & Medicaid Services (CMS)
Legislative Proposals. Subsequent Presidents’ budgets did not contain this proposal.
167 T he proposed FY2019 House Budget Resolution may be found at https://www.congress.gov/bill/115th-congress/
house-concurrent -resolution/128. The resolution was passed by the House Budget Committee on June 21 , 2018. See
CRS Report R43479, Overview of Health Care Changes in the FY2015 House Budget, for discussion of a similar
proposal.
168 Most premium support models combine Parts A and B benefits; the premium subsidy and beneficiary premiums
would apply to both of these parts of Medicare.
Congressional Research Service

35

link to page 42 Medicare Part B: Enrollment and Premiums

Appendix A. History of the Part B Premium
Statutory Policy and Legislative Authority
The basis for determining the Part B premium amount has changed several times since the
inception of the Medicare program, reflecting different legislative views of what share
beneficiaries should bear as expenditures have increased. When the Medicare program first went
into effect in July 1966, the Part B monthly premium was set at a level to cover 50% of Part B
program costs. Legislation enacted in 1972 limited the annual percentage increase in the premium
to the same percentage by which Social Security benefits were adjusted for changes in the cost-
of-living adjustments (i.e., COLAs). Under this formula, revenues from premiums soon dropped
from 50% to below 25% of program costs because Part B program costs increased much faster
than inflation as measured by the Consumer Price Index on which the Social Security COLA is
based (see Table A-1).
From the early 1980s, Congress regularly voted to set Part B premiums at a level to cover 25% of
program costs, in effect overriding the COLA limitation. The 25% provisions first became
effective January 1, 1984, with general revenues covering the remaining 75% of Part B program
costs. Premiums increased in 1989 as a result of the Medicare Catastrophic Coverage Act of 1988
(P.L. 100-360), which added a catastrophic coverage premium to the Part B premium. The act
was repealed in November 1989, and the Part B premium for 1990 fel as a result.
Congress returned to the general approach of having premiums cover 25% of program costs in the
Omnibus Budget Reconciliation Act of 1990 (OBRA 90; P.L. 101-508). However, OBRA 90 set
specific dollar figures, rather than a percentage, in law for Part B premiums for the years 1991-
1995. These dollar figures reflected Congressional Budget Office estimates of what 25% of
program costs would be over the five-year period. However, program costs grew more slowly
than anticipated, in part due to subsequent legislative changes. As a result, the 1995 premium of
$46.10 actual y represented 31.5% of Medicare Part B program costs.
The Omnibus Budget Reconciliation Act of 1993 (OBRA 93; P.L. 103-66) extended the policy of
setting the Part B premium at a level to cover 25% of program costs for the years 1996-1998. As
was the case prior to 1991, a percentage rather than a fixed dollar figure was used, which meant
that the 1996 premium ($42.50) and the 1997 premium ($43.80) were lower than the 1995
premium ($46.10). The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33) permanently set the
premium at 25% of program costs so that, general y speaking, premiums rise or fal with Part B
program costs.169
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-
173), as modified by the Deficit Reduction Act of 2005 (DRA; P.L. 109-171), required that
beginning in 2007, higher-income beneficiaries pay higher Part B premiums.170 The income

169 T he Balanced Budget Act of 1997 (BBA 97; P.L. 105-33) made a change that had the effect of increasing the Part B
premium over time. Prior to BBA 97, both Parts A and B of Medicare covered home health services. Payments were
made under Part A, except for those few persons who had no Part A coverage. T o extend the solvency of the Part A
(Hospital Insurance) T rust Fund, BBA 97 gradually transferred coverage of some home health visits from Part A to
Part B. Beginning January 1, 2003, Part A covers only post -institutional home health services for up to 100 visits,
except for those persons with Part A coverage only who are covered without regard to the post -institutional limitation.
Part B covers other home health services.
170 T he Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( MMA; P.L. 108-173) increased the
Part B premium percentage for high-income enrollees; the Deficit Reduction Act of 2005 (DRA; P.L. 109-171)
accelerated the phase-in period for such premiums.
Congressional Research Service

36

link to page 25 link to page 49 Medicare Part B: Enrollment and Premiums

thresholds used to determine eligibility for the high-income premium are to be adjusted each year
by the growth in the Consumer Price Index.171 The Patient Protection and Affordable Care Act
(ACA; P.L. 111-148, as amended, Section 3402), however, froze these thresholds for the period of
2011 through 2019 at the 2010 levels. In 2020, the thresholds were to return to the levels they
would have been had they been adjusted for inflation each year during the freeze and again
indexed to inflation each year. As this would have resulted in higher income thresholds, it would
have had the effect of reducing the number of beneficiaries who paid the high-income premiums
in 2020.
Section 402 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-
10) maintained the freeze on the income thresholds for al income categories through 2017 and on
the lower two high-income premium tiers through 2019. Beginning in 2018, MACRA reduces the
threshold levels for the two highest income tiers so that more beneficiaries wil fal into the higher
percentage categories. (See “Legislative Changes to Income Thresholds.”) Additional y, starting
in 2020, the income thresholds for al income categories are adjusted annual y for inflation based
on the 2019 income thresholds. This wil , in effect, maintain the proportion of beneficiaries who
pay the high-income premium.
Due to a 0% Social Security COLA coupled with an increase in Medicare premiums, a large
percentage of Medicare Part B enrollees were protected by the hold-harmless provision in 2016
and continued to pay the 2015 premium of $104.90 per month. The Medicare trustees estimated
that the standard premiums of those not held harmless in 2016 would therefore need to be
increased to approximately $159 per month for aggregate premiums to stil cover 25% of per
capita benefit costs. The Bipartisan Budget Act of 2015 (BBA 15; P.L. 114-74), however,
mitigated this sharp premium increase and required that the 2016 Part B standard premium be
calculated as if the hold-harmless rule were not in effect and the increased costs had been spread
across al beneficiaries. (See Appendix D.) Instead of having those not held harmless bear the
increase for al of the Part B enrollee population, the act al owed for the transfer of additional
general revenues to the SMI Trust Fund to make up for the shortfal in premium revenue. As a
result of this change, Part B enrollees not held harmless paid a standard monthly premium of
$121.80 in 2016. To offset the increased costs, a $3.00 surcharge was added to the monthly
premium in 2016 (the $121.80 premium amount included this surcharge), and wil continue to be
applied in subsequent years until the additional federal cost of about $9 bil ion is fully offset (the
surcharge increases on a sliding scale for those who pay high-income premiums, up to $9.60).
BBA 15 provided for similar premium adjustments in 2017 if there were a 0% Social Security
COLA again in that year. However, as there was a 0.3% 2017 Social Security COLA, this
provision was not applicable in 2017.
Section 53114 of the Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123) added an additional
high-income category beginning in 2019 for individuals with annual incomes of $500,000 or
more or couples filing jointly with incomes of $750,000 or more. Enrollees with income equal to
or exceeding these thresholds pay premiums that cover 85% of the average per capita cost of Part
B benefits instead of 80%. The threshold for couples filing jointly in this new income tier is
calculated as 150% of the individual income level rather than 200% as in the other income tiers.
The BBA 15 premium surcharge for this category is $10.20. This new top income threshold wil
be frozen through 2027 and wil be adjusted annual y for inflation starting in 2028 based on the
CPI-U.

171 Social Security Act §1839(i)(5).
Congressional Research Service

37

Medicare Part B: Enrollment and Premiums

Due to potential impacts of the COVID-19 pandemic on Part B spending, Section 2401 of the
Continuing Appropriations Act, 2021, and Other Extensions Act limited the growth in the Part B
premium for 2021 (see “Premium Calculation for 2021”). Specifical y, the act required that the
2021 monthly actuarial rate for enrollees aged 65 and older be determined as the sum of the 2020
monthly actuarial rate for enrollees aged 65 and older and one-fourth of the difference between
the 2020 monthly actuarial rate and the preliminary 2021 monthly actuarial rate (as determined by
the Secretary of HHS) for such enrollees. The monthly actuarial rate for 2021 was thus calculated
as follows: $283.20 (the actual actuarial rate for 2020) + (0.25 x ($314.30 (the unadjusted
monthly actuarial rate for 2021) - $283.20)) = $291.00 (rounded to the nearest dime).
Table A-1. Monthly Part B Premiums, 1966-2020
Monthly
Effective
Year
Premium
Date
Governing Policy; Legislative Authority
1966
$3.00
7/1966
Fixed dol ar amount; Social Security Amendments (SSA) of 1965
1967
$3.00

Fixed dol ar amount; SSA of 1965
1968
$4.00
4/1968
Fixed dol ar amount through March; Medicare Enrol ment Act of 1967.
Beginning April: 50% of costs; SSA of 1965
1969
$4.00

50% of costs; SSA of 1967
1970
$5.30
7/1970
50% of costs; SSA of 1967
1971
$5.60
7/1971
50% of costs; SSA of 1967
1972
$5.80
7/1972
50% of costs; SSA of 1967
1973
$6.30
9/1973
50% of costs; SSA of 1967 (cost-of-living adjustment [COLA] limit,
added by SSA of 1972, could have applied, but was not needed).
Limitations imposed by Economic Stabilization program set 7/1973
amount at $5.80 and 8/73 amount at $6.10.
1974
$6.70
7/1974
50% of costs; SSA of 1967 (COLA limit, added by SSA of 1972, could
have applied, but was not needed)
1975
$6.70

Technical error in law prevented updating
1976
$7.20
7/1976
COLA limit; SSA of 1972
1977
$7.70
7/1977
COLA limit; SSA of 1972
1978
$8.20
7/1978
COLA limit; SSA of 1972
1979
$8.70
7/1979
COLA limit; SSA of 1972
1980
$9.60
7/1980
COLA limit; SSA of 1972
1981
$11.00
7/1981
COLA limit; SSA of 1972
1982
$12.20
7/1982
COLA limit; SSA of 1972
1983
$12.20

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) had set 25%
rule for updates in 7/1983 and 7/1984. However, SSA of 1983 froze
premiums 7/1983-12/1983 and changed future updates to January.
1984
$14.60
1/1984
25% of costs; TEFRA, as amended by SSA of 1983
1985
$15.50
1/1985
25% of costs; TEFRA, as amended by SSA of 1983
1986
$15.50
1/1986
25% of costs; Deficit Reduction Act (DEFRA) of 1984
1987
$17.90
1/1987
25% of costs; DEFRA of 1984
1988
$24.80
1/1988
25% of costs, Consolidated Omnibus Budget Reconciliation Act
(OBRA) of 1985
1989
$31.90
1/1989
25% of costs, OBRA 87, plus $4 catastrophic coverage premium added
by Medicare Catastrophic Coverage Act of 1988
Congressional Research Service

38

Medicare Part B: Enrollment and Premiums

Monthly
Effective
Year
Premium
Date
Governing Policy; Legislative Authority
1990
$28.60
1/1990
25% of costs; OBRA 89. Medicare Catastrophic Coverage Repeal Act
of 1989 repealed additional catastrophic coverage premium, effective
1/90
1991
$29.90
1/1991
Fixed dol ar amount; OBRA 90
1992
$31.80
1/1992
Fixed dol ar amount; OBRA 90
1993
$36.60
1/1993
Fixed dol ar amount; OBRA 90
1994
$41.10
1/1994
Fixed dol ar amount; OBRA 90
1995
$46.10
1/1995
Fixed dol ar amount; OBRA 90
1996
$42.50
1/1996
25% of costs; OBRA 93
1997
$43.80
1/1997
25% of costs; OBRA 93
1998
$43.80
1/1998
25% of costs; OBRA 93 and Balanced Budget Act (BBA) 97
1999
$45.50
1/1999
25% of costs; BBA 97
2000
$45.50
1/2000
25% of costs; BBA 97
2001
$50.00
1/2001
25% of costs; BBA 97
2002
$54.00
1/2002
25% of costs; BBA 97
2003
$58.70
1/2003
25% of costs; BBA 97
2004
$66.60
1/2004
25% of costs; BBA 97
2005
$78.20
1/2005
25% of costs; BBA 97
2006
$88.50
1/2006
25% of costs; BBA 97
2007
$93.50
1/2007
25% of costs; BBA 97 (Medicare Modernization Act of 2003 [MMA]
and Deficit Reduction Act of 2005 [DRA] authorize higher premiums
for high-income enrol ees: 1st year of 3-year phase-in)
2008
$96.40
1/2008
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees: 2nd year of 3-year phase-in)
2009
$96.40
1/2009
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees: 3rd year of 3-year phase-in)
2010
$110.50
1/2010
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees, ful y phased-in); hold-harmless provision applied
to most enrol ees who paid the 2009 rate of $96.40
2011
$115.40
1/2011
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees; the Patient Protection and Affordable Care Act
[ACA] freezes income thresholds at 2010 levels from 2011 through
2019); hold-harmless provision applied to most enrol ees who paid the
2009 rate of $96.40
2012
$99.90
1/2012
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees; ACA freezes income thresholds at 2010 levels
from 2011 through 2019)
2013
$104.90
1/2013
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees; ACA freezes income thresholds at 2010 levels
from 2011 through 2019)
2014
$104.90
1/2014
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees; ACA freezes income thresholds at 2010 levels
from 2011 through 2019)
2015
$104.90
1/2015
25% of costs; BBA 97 (MMA and DRA authorize higher premiums for
high-income enrol ees; ACA as modified by the Medicare Access and
CHIP Reauthorization Act of 2015 [MACRA] freezes income
thresholds at 2010 levels from 2011 through 2017)
Congressional Research Service

39

Medicare Part B: Enrollment and Premiums

Monthly
Effective
Year
Premium
Date
Governing Policy; Legislative Authority
2016
$121.80
1/2016
Less than 25% of costs; BBA 97 and BBA 15 (MMA and DRA authorize
higher premiums for high-income enrol ees; ACA as modified by
MACRA freezes income thresholds at 2010 levels from 2011 through
2017); hold-harmless provision held the premium at $104.90 for most
beneficiaries; for those not held harmless, BBA 15 required that 2016
premiums be determined as if the hold-harmless provision were not in
effect and al owed for additional federal general revenue transfers to
the SMI Trust Fund to cover the shortfal in premium revenues; to
offset the additional federal costs, a $3.00 repayment surcharge is
being added to monthly premiums and wil continue until the ful
amount is repaid
2017
$134.00
1/2017
25% of costs plus $3.00 BBA 15 surcharge; BBA 97 and BBA 15 (MMA
and DRA authorize higher premiums and surcharges for high-income
enrol ees; ACA as modified by MACRA freezes income thresholds at
2010 levels from 2011 through 2017); hold-harmless provision limited
the premium increase for about 70% of enrol ees who paid monthly
premiums of $109.00, on average
2018
$134.00
1/2018
25% of costs plus $3.00 BBA 15 surcharge; BBA 97 and BBA 15 (MMA
and DRA authorize higher premiums and surcharges for high-income
enrol ees; MACRA reduces the threshold levels for the two highest
income tiers and maintains the ACA freeze on the lower two tiers at
the 2010 levels); about 28% of beneficiaries were protected by the
hold-harmless provision and paid reduced premiums
2019
$135.50
1/2019
25% of costs plus $3.00 BBA 15 surcharge; BBA 97 and BBA 15 (MMA
and DRA authorize higher premiums and surcharges for high-income
enrol ees; MACRA maintains the 2018 income thresholds; BBA 18
adds an additional high-income tier for individuals earning $500,000
per year or more); about 3.5% of beneficiaries are protected by the
hold-harmless provision and pay reduced premiums
2020
$144.60
1/2020
25% of costs plus $3.00 BBA 15 surcharge; BBA 97 and BBA 15 (MMA
and DRA authorize higher premiums and surcharges for high-income
enrol ees; BBA 18 adds an additional high-income tier for individuals
earning $500,000 per year or more).
2021
$148.50
1/2021
25% of costs plus $3.00 BBA 15/P.L. 116-159 surcharge; BBA 97 and
BBA 15 (MMA and DRA authorize higher premiums and surcharges for
high-income enrol ees). 2021 premium increase was limited by P.L.
116-159.
Sources: Various annual Medicare Trustees reports and CMS, “Medicare Program: Medicare Part B Monthly
Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 20 21,” 85 Federal Register 71904,
November 12, 2020.

Congressional Research Service

40

link to page 46 link to page 46 link to page 46 link to page 46 link to page 46 link to page 46 link to page 46 link to page 46 link to page 46
Appendix B. Standard and High-Income Part B Premiums and Income
Thresholds: 2007-2021
Table B-1. Income Levels for Determining Part B Premium Adjustment and Per Person Premium Amounts, 2007-2021
(in nominal dol ars)
2013-

2007
2008
2009
2010
2011
2012
2015
2016
2017
2018
2019
2020
2021
Standard
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Premium or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to
$80,000
$82,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$87,000
$88,000
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to
$160,000
$164,000
$170,000
$170,000
$170,000
$170,000
$170,000
$170,000
$170,000
$170,000
$170,000
$174,000
$176,000
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
$93.50
$96.40
$96.40a
$110.50b
$115.40b
$99.90
$104.90
$121.80b
$134.00b
$134.00b
$135.50b
$144.60b
$148.50b
Level 1
$80,001-
$82,001-
$85,001-
$85,001-
$85,001-
$85,001-
$85,001-
$85,001-
$85,001-
$85,001-
$85,001-
$87,001-
$88,001-
$100,000
$102,000
$107,000
$107,000
$107,000
$107,000
$107,000
$107,000
$107,000
$107,000
$107,000
$109,000
$111,000
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
$160,001-
$164,001-
$170,001-
$170,001-
$170,001-
$170,001-
$170,001-
$170,001-
$170,001-
$170,001-
$170,001-
$174,001-
$176,001-
$200,000
$204,000
$214,000
$214,000
$214,000
$214,000
$214,000
$214,000
$214,000
$214,000
$214,000
$218,000
$222,000
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
$105.80
$122.20
$134.90
$154.70
$161.50
$139.90
$146.90
$170.50
$187.50
$187.50
$189.60
$202.40
$207.90
Level 2
$100,001-
$102,001-
$107,001-
$107,001-
$107,001-
$107,001-
$107,001-
$107,001-
$107,001-
$107,001-
$107,001-
$109,001-
$111,001-
$150,000
$153,000
$160,000
$160,000
$160,000
$160,000
$160,000
$160,000
$160,000
$133,500
$133,500
$136,000
$138,000
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
$200,001-
$204,001-
$214,001-
$214,001-
$214,001-
$214,001-
$214,001-
$214,001-
$214,001-
$214,001-
$214,001-
$218,001-
$222,001-
$300,000
$306,000
$320,000
$320,000
$320,000
$320,000
$320,000
$320,000
$320,000
$267,000
$267,000
$272,000
$276,000
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
$124.40
$160.90
$192.70
$221.00
$230.70
$199.80
$209.80
$243.60
$267.90
$267.90
$270.90
$289.20
$297.00
Level 3
$150,001-
$153,001-
$160,001-
$160,001-
$160,001-
$160,001-
$160,001-
$160,001-
$160,001-
$133,501-
$133,501-
$136,001-
$138,001-
$200,000
$205,000
$213,000
$214,000
$214,000
$214,000
$214,000
$214,000
$214,000
$160,000
$160,000
$163,000
$165,000
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
$300,001-
$306,001-
$320,001-
$320,001-
$320,001-
$320,001-
$320,001-
$320,001-
$320,001-
$267,001-
$267,001-
$272,001-
$276,001-
$400,000
$410,000
$426,000
$428,000
$428,000
$428,000
$428,000
$428,000
$428,000
$320,000
$320,000
$326,000
$330,000
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
$142.90
$199.70
$250.50
$287.30
$299.90
$259.70
$272.70
$316.70
$348.30
$348.30
$352.20
$376.00
$386.10
CRS-41

2013-

2007
2008
2009
2010
2011
2012
2015
2016
2017
2018
2019
2020
2021
Level 4
$200,000+
$205,000+
$213,000+
$214,000+
$214,000+
$214,000+
$214,000+
$214,000+
$214,000+
$160,000+
$160,001-
$163,001-
$165,001-
individual
individual
individual
individual
individual
individual
individual
individual
individual
individual
$499,999
$499,999
$499,999
$400,000+
$410,000+
$426,000+
$428,000+
$428,000+
$428,000+
$428,000+
$428,000+
$428,000+
$320,000+
individual
individual
individual
couple
couple
couple
couple
couple
couple
couple
couple
couple
couple
$320,001-
$326,001-
$330,001-
$161.40
$238.40
$308.30
$353.60
$369.10
$319.70
$335.70
$389.80
$428.60
$428.60
$749,999
$749,999
$749,999
couple
couple
couple
$433.40
$462.70
$475.20
Level 5
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$500,000
$500,000
$500,000
or more
or more
or more
individual
individual
individual
$750,000
$750,000
$750,000
or more
or more
or more
couple
couple
couple
$460.50
$491.60
$504.90
Sources: CMS, Annual Notices, “Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible,” 2007 through 20 20, and CMS,
“Medicare Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 20 21,” 84 Federal Register 71904, November 12,
2020.
Note: n/a = not applicable. When both are enrol ed in Part B, each person in a couple pays the same individual premium amount. Bottom thresholds in Levels 2 through
4 are rounded up to the nearest dol ar, and the upper threshold in Level 4 for 2019 through 2021 are rounded down to the nearest dol ar. Income thresholds are based
on a Medicare-specific definition of modified adjusted gross income (MAGI).
a. The standard Part B premium in 2009 was the same as that in 2008; however, the lack of change was not due to the hold -harmless provision. CMS determined that
2008 premiums and revenues were slightly higher than needed to cover costs in that year and that 2009 financing would be adequate at the same premium level.
b. Due to no Social Security COLA in 2010 and 2011, most Part B enrol ees were held harmless and paid the 2009 standard monthly premium of $96.40. Similarly, in
2016, those who were held harmless paid the 2015 premium of $104.90 per month, and those who were held harmless in 2017 paid, on averag e, $109.00 per
month. In 2018, about 28% of enrol ees were protected under the hold-harmless provision and paid premiums of less than $134.00 per month. In 2019, 2020, and
2021, a smal number of enrol ees were/are protected under the hold-harmless provision and paid/pay less than the standard monthly premium amount.
CRS-42

Table B-2. Income Levels for Determining Part B Premium Adjustment for Married Beneficiaries Filing Separately and
Associated Premiums, 2007-2021
(in nominal dol ars)
Income
2013-
Level
2007
2008
2009
2010
2011
2012
2015
2016
2017
2018
2019
2020
2021
Standard
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
Less than
or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to or equal to
$80,000
$82,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$87,000
$88,000
$93.50
$96.40
$96.40
$110.50
$115.40
$99.90
$104.90
$121.80
$134.00
$134.00
$135.50
$144.60
$148.50
Lower
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Not
Greater
Greater
Greater
Adjustment
than
than
than
than
than
than
than
than
than
applicable
than
than
than
Category
$80,000
$82,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$85,000
$87,000
$88,000
and less
and less
and less
and less
and less
and less
and less
and less
and less
and less
and less
and less
than or
than or
than or
than or
than or
than or
than or
than or
than or
than
than
than
equal to
equal to
equal to
equal to
equal to
equal to
equal to
equal to
equal to
$415,000
$413,000
$412,000
$120,000
$123,000
$128,000
$129,000
$129,000
$129,000
$129,000
$129,000
$129,000
$433.40
$462.70
$475.20
$142.90
$199.70
$250.50
$287.30
$299.90
$259.70
$272.70
$316.70
$348.30
Higher
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Greater
Adjustment
than
than
than
than
than
than
than
than
than
than
than or
than or
than or
Category
$120,000
$123,000
$128,000
$129,000
$129,000
$129,000
$129,000
$129,000
$129,000
$85,000
equal to
equal to
equal to
$161.40
$238.40
$308.30
$353.60
$369.10
$319.70
$335.70
$389.80
$428.60
$428.60
$415,000
$413,000
$412,000
$460.50
$491.60
$504.90
Sources: CMS, Annual Notices, “Medicare Program; Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible,” 2007 t hrough 2020, and CMS,
“Medicare Program: Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning Jan uary 1, 2021,” 85 Federal Register 71904, November 12,
2020.
Note: Income thresholds are based on a Medicare-specific definition of modified adjusted gross income (MAGI).

CRS-43

link to page 48 Medicare Part B: Enrollment and Premiums

Appendix C. Estimated Future Part B Premiums
Table C-1. Projected Part B Premiums

Percentage of Program Costs Represented by Premium
25%

(Standard)
35%
50%
65%
80%
85%a
Actual

2017
$134.00
$187.50
$267.90
$348.30
$428.60
—
2018
134.00
187.50
267.90
348.30
428.60
—
2019
135.50
189.60
270.90
352.20
433.40
$460.50
2020
144.60
202.40
289.20
376.00
462.70
491.60
2021
148.50
207.90
297.90
386.10
475.20
504.90
Projected

2022
157.70
220.70
315.30
409.90
504.50
536.00
2023
166.70
233.40
333.40
433.40
533.40
566.80
2024
176.60
247.20
353.20
459.20
565.10
600.40
2025
187.30
262.20
374.50
486.90
599.20
636.70
2026
197.90
277.10
395.80
514.50
633.30
672.90
2027
209.50
293.20
418.90
544.60
670.20
712.10
2028
221.50
310.10
443.00
575.90
708.80
753.10
2029
234.10
327.70
468.20
608.70
749.10
795.90
Sources: 2020 Medicare Trustees Report, Tables V.E2 and V.E3, and CMS, “Medicare Program: Medicare Part B
Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 2021,” 85 Federal Register
71904, November 12, 2020.
Notes: The figures beyond 2021 only represent estimates of future premiums. Actual premiums are determined
each year in the fal prior to the actual year the premium wil be in effect. The above projections do not take into
account the potential effects of the COVID-19 public health emergency. At this time, it is unclear what effect the
pandemic wil have on future Medicare Part B spending and premiums.
a. The Bipartisan Budget Act of 2018 (BBA 18; P.L. 115-123) added an additional income tier with premiums
set at 85% of per capita program costs starting in 2019.
Congressional Research Service

44

Medicare Part B: Enrollment and Premiums

Appendix D. Bipartisan Budget Act of 2015 Changes
to 2016 Part B Premiums
Under normal circumstances, standard Medicare Part B premiums are set at an amount to cover
25% of projected average per capita Part B expenditures plus an appropriate contingency margin.
Due to expected growth in the cost of Part B benefits, the Medicare trustees projected that in
order to cover 25% of benefit costs as wel as to build up adequate contingency reserves, the 2016
Part B premiums would need to be increased to about $121 per month from the 2015 amount of
$104.90.172 However, due to the absence of a Social Security COLA in 2016 and the resulting
widespread application of the hold-harmless provision, most Part B enrollees continued to pay the
2015 premium amount of $104.90 through 2016. With about 70% of enrollees continuing to pay
$104.90, the only way that premiums could cover 25% of per capita expenditures would have
been if those not held harmless (the remaining 30%) bore the entire cost increase (i.e., if the
aggregate increase in premiums were spread out over fewer people). The Medicare trustees
estimated that the premiums of those not held harmless would therefore need to be increased to
about $159 per month.173 The trustees also estimated that high-income beneficiaries (i.e., those
earning more than $85,000) would need to pay significantly higher monthly premiums of about
$223, $319, $414, or $510 depending on their level of income (compared to their respective 2015
premiums of $147, $210, $273, and $336 per month).
To mitigate the expected large premium increases for those not held harmless, the Bipartisan
Budget Act of 2015 (BBA 15; P.L. 114-74) required that 2016 Medicare Part B premiums be set
as if the hold-harmless rule were not in effect—in other words, to calculate premiums as if al
enrollees were paying the same annual inflation-adjusted standard premium (about $121 per
month). To compensate for the lost premium revenue (below the required 25%) and to ensure that
the Supplementary Medical Insurance (SMI) Trust Fund had adequate income to cover payments
for Part B benefits in 2016, the act al owed for additional transfers from the General Fund of the
Treasury to the SMI Trust Fund.
To offset the approximately $9 bil ion in increased federal spending in 2016 resulting from the
reduction in standard premiums for those not held harmless (i.e., the additional amounts
transferred from the General Fund), as wel as the loss of income due to reductions in the income-
related monthly adjustment for high-income enrollees, the law required that a $3.00 per month
surcharge be added to standard premiums in 2016, and each subsequent year, until the $9 bil ion
is fully offset.174 (For those who pay high-income premiums, the surcharge increases on a sliding
scale, up to $9.60.) It is expected that this surcharge wil be applied to premiums through 2021.175
The monthly repayment surcharge is paid only by those not held harmless.

172 2015 Medicare T rustees Report , p. 32.
173 See CRS Report R44224, Potential Impact of No Social Security COLA on Medicare Part B Premiums in 2016.
174 T he $9 billion consists of about $7.4 billion in increased federal spending due to the reduced standard premiums and
about $1.6 billion in lost revenues due to the reduction in high -income adjustments. T he $3.00 standard premium
surcharge “pays for” the increased general revenue transfers in 2016, while the additional high -income surcharge
adjustments are used to offset the reduction in the income-related adjustment amounts. CMS, “ Medicare Program:
Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 2016,” 80
Federal Register 70811, November 16, 2015.
175 2020 Medicare T rustees Report, p. 84. In the final year of the repayment adjustments, the surcharge may be set at
less than $3.00 to avoid overpayment.
Congressional Research Service

45

Medicare Part B: Enrollment and Premiums

Should there have been a 0% Social Security COLA in 2017, BBA 15 al owed for a similar
Medicare Part B premium setting mechanism for 2017. However, as there was a 0.3% COLA in
2017, this provision did not apply. BBA 15 did not al ow for similar adjustments beyond 2017.

Congressional Research Service

46

Medicare Part B: Enrollment and Premiums

Appendix E. Application of the Hold-Harmless
Provision in Years Prior to 2021
Application of the Hold-Harmless Rule in Years Prior to 2016
As described earlier, an individual’s Social Security COLA is determined by multiplying his or
her benefit amount by the inflation rate, the CPI-W. Part B premiums are determined by projected
Part B program costs. Thus, the number of people held harmless can vary widely from year to
year, depending on inflation rates and projected Part B costs. For most years, the hold-harmless
provision affected a relatively smal number of beneficiaries.176 However, due to low inflation, no
COLA adjustments were made to Social Security benefits in 2010 and 2011. Most Medicare
beneficiaries (about 73%) were protected by the hold-harmless provision and continued to pay the
2009 standard monthly premium of $96.40 in both 2010 and 2011.177 Because Part B
expenditures were stil expected to increase in those years, and because beneficiary premiums are
required to cover 25% of those costs, the premiums for those not held harmless (27% of
beneficiaries) were higher than they would have been had the rest of the beneficiaries not been
held harmless. The standard monthly premiums paid by those not held harmless were $110.50 in
2010 and $115.40 in 2011.178 In 2011, of the 27% who were not eligible to be held harmless,
about 3% were new Medicare enrollees, about 5% were high-income, about 17% had their
premiums paid for by Medicaid, and the remaining 2% did not have their premiums withheld
from Social Security benefit payments.
In 2012 and 2013, Social Security beneficiaries received a 3.6% and a 1.7% COLA, respectively,
which more than covered the Part B premium increases in those years; therefore, the hold-
harmless provision was not applicable for most beneficiaries. Similarly, in 2014 and 2015, with a
Social Security COLA increase of 1.5% and 1.7%, respectively, and no increase in Part B
premiums, the hold-harmless provision also was not broadly applicable in those years.179
Application of the Hold-Harmless Rule in 2016
In 2016, for a third time, there was no Social Security COLA increase, but there was a projected
increase in Medicare Part B premiums—from $104.90 per month in 2015 to about $121 per
month in 2016.180 Similar to its application in 2010 and 2011, the hold-harmless provision as

176 For additional information, see Actuarial Note No. 147, by Jacqueline A. Walsh and Burt M. Kestenbaum, March
2006, at http://www.ssa.gov/OACT /NOT ES/pdf_notes/note147.pdf.
177 T he standard Part B premium in 2009 was also the same as that in 2008, $96.40; however, the lack of change in
those years was not a result of the hold-harmless provision. At the end of 2008, it was determined that Part B premiums
and general revenue financing in recent years had been set at somewhat higher levels than otherwise would be required
to maintain an adequate contingency reserve, and that the level of assets in the Part B account of the SMI T rust Fund
were more than adequate. T herefore, it was estimated that an adequate level of assets could be maintained throughout
the next year, 2009, without an increase in premiums.
178 Most new enrollees in 2010 were eligible to be held harmless in the second year of no COLA (i.e., 2011); these
individuals cont inued to pay the 2010 standard premium of $110.50 in 2011.
179 SSA, “Cost-of-Living Adjustment (COLA),” at http://www.socialsecurity.gov/cola/, and SSA Fact Sheet, “2015
Social Security Changes,” at http://www.ssa.gov/news/press/factsheets/colafacts2015.html.
180 Boards of T rustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance T rust Funds, 2015
Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplem entary Medical
Insurance Trust Funds, July 22, 2015, p. 32, at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-
T rends-and-Reports/ReportsTrustFunds/index.html.
Congressional Research Service

47

link to page 49 Medicare Part B: Enrollment and Premiums

applied in 2016 protected some beneficiaries but not others. In 2016, about 70% of Part B
enrollees were held harmless and continued to pay the 2015 monthly premium amount of $104.90
through 2016. Those not held harmless included those eligible for premium assistance through
their state Medicaid programs (about 19%), those who paid the high-income premiums (about
6%), those who did not receive Social Security benefits (3%), and new enrollees in 2016 (5%).181
Absent legislation, the premiums of those not held harmless (the remaining 30%) would have
been higher than the premiums would have been had the hold-harmless provision not been in
effect.182 However, BBA 15 mitigated the expected large increases for those not held harmless
and required that their premiums be calculated as if the hold-harmless rule were not in effect.
BBA 15 also required that a monthly surcharge of $3.00 be added to standard premiums (more for
those with high incomes) until the increased cost to the federal government of reducing the
premiums is offset. (See Appendix D.) The total standard premium amount for those Part B
enrollees not held harmless in 2016, including the $3.00 per month surcharge, was $121.80.183
Application of the Hold-Harmless Rule in 2017
Should there have been a 0% Social Security COLA in 2017, BBA 15 would have al owed for a
similar Medicare Part B premium setting mechanism for 2017 as in 2016. However, as there was
a very smal (0.3%) Social Security COLA in 2017, this provision did not apply.
Because the Social Security COLA was not large enough to cover the full Medicare Part B
premium increase, about 70% of enrollees were held harmless in 2017. Those held harmless in
2017 paid, on average, about $109.00 per month for their Part B premiums. However, their actual
premiums varied depending on the dollar amount of the increase in their Social Security
benefit.184 Additional y, many of those not held harmless in 2016 because they were new to
Medicare in that year may have qualified to be held harmless in 2017. If they qualified, the
premiums for those individuals would have been equal to the 2016 premium of $121.80, plus the
dollar amount of the increase in their monthly Social Security benefit.
As the premiums of those not held harmless (the remaining 30% of enrollees) had to cover both
their share of the premium increases plus that of the 70% held harmless,185 the Medicare trustees
estimated that their 2017 Part B premiums could be as high as $149 per month.186 However, in

181 As there is some overlap in categories—for example, some individuals may pay the high-income premiums and not
yet receive Social Security benefits—these figures sum to more than 30%.
182 In the absence of BBA 15, the standard premiums of those not held harmless would have increased by about 52%,
compared with an increase of about 16% that would have been paid by all enrollees had the hold-harmless rule not been
in effect. For additional details on how premiums would have been set for those not held harmless absent the enactment
of BBA 15, see CRS Report R44224, Potential Im pact of No Social Security COLA on Medicare Part B Prem ium s in
2016.
183 T he CMS actuaries determined a 2016 standard premium of $118.80 per month. After the addition of the $3 per
month surcharge added by BBA 15, total 2016 standard premiums were $121.80 per month. CMS, “ Medicare Program:
Medicare Part B Monthly Actuarial Rates, Premium Rate, and Annual Deductible Beginning January 1, 2016,” 80
Federal Register 70811, November 16, 2015.
184 For example, for an average retired worker with a benefit of $1,370 per month, a 0.3% increase would have been
about $4.00. T hat person, therefore, would have seen a $4.00 increase in his or her Medicare Part B premium —from
$104.90 in 2016 to about $109.00 in 2017. Someone with a $6.00 Social Security benefit incr ease, by contrast , would
have seen a $6.00 increase in his or her 2017 premium (for a total premium of about $111.00).
185 T he distribution of the types of enrollees not held harmless in 2017 was similar to that in 2016.
186 Boards of T rustees, Federal Hospit al Insurance and Federal Supplementary Medical Insurance T rust Funds, 2016
Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplem entary Medical
Insurance Trust Funds, June 22, 2016, T able V.E2, at https://www.cms.gov/Research-Statistics-Data-and-Systems/
Congressional Research Service

48

Medicare Part B: Enrollment and Premiums

setting the 2017 premiums, the Secretary “exercised her statutory authority to mitigate projected
premium increases for these beneficiaries”187 by setting a lower-than-normal contingency reserve
ratio for the SMI Trust Fund in 2017. This had the effect of reducing premiums below what they
might have been had the ratio been set at a more conventional level.188 In 2017, those not held
harmless paid monthly premiums of $134.00.
Application of the Hold-Harmless Rule in 2018
In 2018, there was a 2.0% Social Security COLA and no increase in the 2018 Medicare Part B
premiums (i.e., the Part B premium was $134.00 per month in both 2017 and 2018).189 For many
Part B enrollees who were held harmless in 2017, the Social Security COLA was large enough to
cover the difference between the full Medicare premium of $134.00 and the reduced premium
amount they paid in 2017. Therefore, many of those held harmless in 2017 no longer saw reduced
premiums in 2018 and returned to paying the standard premium amounts (which include the
$3.00 BBA 15 surcharge).
To il ustrate, for someone receiving a Social Security benefit of $1,404.00 per month in 2017 (the
average amount for retired workers in that year),190 a 2.0% Social Security COLA would have
resulted in an increased benefit of about $28.00 per month in 2018. If that person had been held
harmless in 2017 and was paying a Medicare Part B premium of $109.00 per month, this Social
Security benefit increase would have been more than enough to cover the $25.00 difference
between that individual’s reduced Part B 2017 premium amount of $109.00 and the 2018
premium of $134.00. Therefore, that person’s Medicare Part B premiums could have increased up
to the full premium amount of $134.00 in 2018.
CMS estimated that about 72% of Part B enrollees were not held harmless in 2018.191 About 42%
of enrollees were held harmless in 2017 but no longer qualified for reduced premiums in 2018
because they did not meet the requirement that their Social Security benefits would decrease as a
result of the increase in their Part B premiums. The remaining 30% included those who normal y
do not qualify to be held harmless, for instance, because they paid high-income premiums, had
their premiums paid on their behalf by Medicaid, or did not receive Social Security benefits.
About 28% of Part B enrollees did not receive a large enough increase in their Social Security
COLAs to cover the full amount of the Part B premium and thus qualified to be held harmless and
paid reduced premiums in 2018. Their premiums could have increased from the premium amount
they paid in 2017, plus the dollar amount of the increase in their monthly 2018 Social Security
benefit. For example, for someone with a monthly Social Security benefit of $600.00 in 2017, the
2.0% 2018 COLA would have provided an increase of about $12.00. If that individual had been
paying $109.00 per month for Medicare premiums in 2017, the $12.00 increase would not have

Statistics-T rends-and-Reports/ReportsTrustFunds/index.html.
187 CMS, “ 2017 Medicare Parts A & B Premiums and Deductibles Announced,” press release, November 10, 2016, at
https://www.cms.gov/newsroom/press-releases/2017-medicare-parts-b-premiums-and-deductibles-announced.
188 Contingency reserve ratios are normally set at an amount between 15% and 20% of end-of-year assets compared
with the following year’s expenditures, with a usual target of 17%. In 2017, the reserve ratio was set at 13%.
189 SSA, “ Social Security Announces 2.0 Percent Benefit Increase for 2018 ,” press release, October 13, 2017, at
https://www.ssa.gov/news/press/releases/2017/#10-2017-1; 2018 Medicare T rustees Report, T able V.E2.
190 SSA, Fast Facts & Figures About Social Security, 2018, p. 16, at https://www.ssa.gov/policy/docs/chartbooks/
fast_facts/2018/fast_facts18.pdf.
191 CMS, “2018 Medicare Parts A & B Premiums and Deductibles,” fact sheet, November 17, 2017, at
https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet -items/2017-11-17.html.
Congressional Research Service

49

Medicare Part B: Enrollment and Premiums

been sufficient to cover the full $134.00 per month. In this example, the individual would have
paid $109.00 plus $12.00 ($121.00) per month in 2018.
Application of the Hold-Harmless Rule in 2019 and 2020
The 2019 Social Security COLA of 2.8% was large enough to increase the benefits of most of
those who were held harmless in 2018 to levels sufficient to cover the difference between the
amount of the (reduced) premiums they paid in 2018 and the 2019 premiums of $135.50. In 2019,
only about 3.5% of beneficiaries (about 2 mil ion) were held harmless and paid premiums lower
than the 2019 premium of $135.50.
Similarly, the 2020 Social Security COLA of 1.6%, was, on average, large enough to cover the
full Part B premium increase of $9.10 (from $135.50 in 2019 to $144.60 in 2020) for most
beneficiaries. However, the 2020 Social Security COLA’s was not sufficient to fully cover the
premium increase for about 3% of Part B enrollees (about 1.7 mil ion),192 and those individuals
paid monthly premiums of less than $144.60 in 2020.
For information on 2021 and potential 2022 hold-harmless rule impacts, see “Protection of Social
Security Benefits from Increases in Medicare Part B Premiums.”

192 Figures provided to CRS by SSA, February 2020.
Congressional Research Service

50

link to page 7 link to page 7 Medicare Part B: Enrollment and Premiums

Appendix F. Part A Premiums
The vast majority of persons turning the age of 65 are automatical y entitled to Medicare Part A
based on their own or their spouse’s work in covered employment. However, individuals aged 65
and older who are not otherwise eligible for Medicare Part A benefits and certain disabled
individuals who have exhausted other entitlement may voluntarily purchase Part A coverage.193 In
most cases, persons who voluntarily purchase Part A must also purchase Part B. The periods
during which one can enroll are the same as those for Part B (see “Medicare Part B Eligibility and
Enrollment”).
The monthly Part A premium is equal to the full average per capita value of the Part A benefit
($471.00 per month in 2021). Persons who have at least 30 quarters of covered employment (or
are married to someone who has such coverage) pay a premium that is 45% less than the full Part
A premium ($259.00 per month in 2021).194 CMS estimates that in 2021, about 706,000
individuals wil voluntarily enroll in Part A by paying the full premium. (About 90% of those
subject to the full premium amount are enrolled in the QMB program, and their Part A premiums
are paid for by Medicaid). CMS also estimates that about 84,000 enrollees wil pay the reduced
premium.195
Similar to Part B, a penalty is imposed for persons who delay Part A enrollment beyond their
initial enrollment period (which is the same seven-month period applicable for enrollment in Part
B).196 However, both the amount of the penalty and the duration of the penalty are different than
under Part B. Persons who delay Part A enrollment for at least 12 months beyond their initial
enrollment period are subject to a 10% premium surcharge.197 The surcharge is 10% regardless of
the length of the delay. Further the surcharge only applies for a period equal to twice the number
of years (i.e., 12-month periods) during which an individual delays enrollment. Thus, an
individual who delays enrollment for three years under Part A would be subject to a 10% penalty
for six years, whereas a person who delays enrollment for the same three-year period under Part
B would be subject to a permanent 30% penalty.198

193 An individual eligible to enroll must be a resident of the United States. Further, the individual must either be a
citizen or an alien lawfully admitted for permanent residence who has resided in the United States continuously for the
immediately preceding five years. T he Social Security Act , §1818A provides for voluntary enrollment in Medicare Part
A for certain disabled individuals who were entitled to coverage due to their receipt of disability benefits, but who have
lost those benefits because they have returned to work and their incomes exceed the level of “ substantial gainful
activity.” For additional information on Part A benefits for the disabled returning to work, see Social Security,
“Working While Disabled,” at http://www.socialsecurity.gov/pubs/10095.html.
194 T he hold-harmless provision does not apply to Part A premiums.
195 “Medicare Program; CY 2021 Part A Premiums for the Uninsured Aged and for Certain Disabled Individuals Who
Have Exhausted Other Entitlement,” 85 Federal Register 71913, November 12, 2020, at https://www.govinfo.gov/
content/pkg/FR-2020-11-12/pdf/2020-25028.pdf.
196 T he Consolidated Appropriations Act of 2001 (P.L. 106-554) exempts certain state and local retirees, retiring prior
to January 1, 2002, from the Part A late-enrollment penalty. T hese are groups of persons for whom the state or local
government elects to pay the Part A late-enrollment penalty for life. T he amount of the penalty , which would otherwise
be assessed is to be reduced by an amount equal to the total amount of Medicare payroll taxes paid by the employee
and the employer on behalf of the employee. T he provision applies to premiums beginning January 2002.
197 Similar to Part B, if one qualifies for and signs up during a special enrollment period (e.g., within eight months of
retiring, one may not be subject to a penalty ).
198 Prior to enactment of COBRA (P.L. 99-272), there was no upper limit on the amount of the Part A surcharge or
duration of the surcharge. COBRA limited the amount of the Part A surcharge to 10% and the duration to twice the
period of delayed enrollment. Introduced in the 117 th Congress, t he Medicare Economic Security Solutions Act , H.R.
480, would change the Part B penalty parameters to more closely align with the Part A penalties by capping the
surcharge to 15% of the Part B premium and limiting the duration of the penalty to twice the period of nonenrollment.
Congressional Research Service

51

Medicare Part B: Enrollment and Premiums

Author Information

Patricia A. Davis

Specialist in Health Care Financing

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

Congressional Research Service
R40082 · VERSION 48 · UPDATED
52