One problem with delayed Social Security claims: Risk of higher Medicare Part B premiums

Delaying your Social Security benefit as long as possible is a great way to boost retirement income, but the strategy comes with one built-in downside. Most seniors enroll in Medicare at 65, but those who are not yet receiving Social Security run the risk of much larger annual increases in their Part B premiums.

Healthcare inflation is resurgent, and more retirees are delaying their Social Security claims. So that leaves a question: how significant is the risk of higher Medicare costs, and does it ever justify an earlier-than-planned Social Security claim?

In most cases, the risk is small, and the benefits of a delayed filing far outweigh the higher healthcare costs. I asked Social Security Solutions, one of the leading Social Security optimization services, to run scenarios for hypothetical couples. We found that the net drag is modest – anywhere from 4 to 6 percent of the higher Social Security benefit gained through delay.

“Delaying your benefit is more than likely worth paying the hold-harmless penalty,” said Robin Brewton, vice president of client services at Social Security Solutions. “It’s important to run your own numbers, because everyone’s scenario will be different, but in most cases it won’t make sense to claim earlier to protect yourself from higher Medicare costs.”

Learn more about how this works in my column this week for Reuters Money.


  1. Bruce King says:

    Mark, can you give some examples where waiting would not be worthwhile for Medicare Hold Harmless?

  2. Mark Miller says:

    Bruce, situations where the Medicare beneficiary is subject to high-income premium surcharges. In most other cases, it is not worthwhile to drive the decision around the hold harmless provision. And, as mentioned in the column, in years where the Social Security COLA is normal (and that is most of the time), the hold harmless provision doesn’t pose a major risk to people paying regular Part B premiums.

  3. Mark, thanks for your reply. However, ambiguous again you stated “In most cases, …”. Is there any case wherein it would not be better to defer filing, & fix the Medicare surcharge to the cola? This is all I’m asking: what is the opposing case so that I can weigh the cost/benefit & assign probability.

  4. Mark, from BLS CPU-W Table 29, April 2017, Dec to Dec data:
    BLS Table 29 2009 2010 2011 2012 2013 2014 2015 2016 Avg.
    CPI-W all items 3.4 1.7 3.2 1.7 1.5 0.3 0.4 2.0 1.9
    CPI-W Outptnt Svcs 8.5 5.2 4.6 5.6 3.8 4.5 3.3 3.6 5.8
    Gap 5.1 3.5 1.4 3.9 2.3 4.2 2.9 1.6 3.9
    So, this Outpatient Services index simulates Part B inflation; for the last 8 years there has been a 4% gap, compared to the 8% increase in SS for delaying from age 66 to 70, or the 6% increase from 62 to 66 confirming your assertion that, based on this data, delaying the SS benefit outruns Part B inflation. Do you agree with this analysis? Sorry if the table registration goes awry since there isn’t a comment preview & edit function.

  5. Mark Miller says:

    Hi, Bruce – sorry about the late reply, I have been traveling. First, clarifying my first comment for you: as I stated, the only clear-cut example where premiums might outrun COLAs consistently is for beneficiaries paying high-income premiums. The work I did for this piece with Social Security Solutions did not involve in-depth Monte Carlo-style simulations, but our conclusion was that this is not an issue that other beneficiaries should worry about. As for your CPU-W Table 29 question, I don’t think you can use this as a proxy for Part B premiums. Two reasons: 1) Medicare costs are not equal to general health care inflation in the economy (Medicare tends to run lower) and 2) CMS is not bound to set the not-held-harmless rate at the same rate as its cost increases imply. In both recent cases where Part B was set to spike, CMS found ways to moderate the increase. Hope this helps.

  6. Bruce King says:

    Thanks Mark, that is clear now.

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