Hi Larry,

I did a file & suspend at age 66 so my wife could collect spouse benefits. I turn 70 in April 2019. My plan was to file for my benefit effective January 2019 with 45 months of delayed retirement credits at 130% of my PIA. In the meantime I read where the SS cola is estimated to be about 2.7% which also make my medicare premiums jump up. My question is: Would I be better off filing for my SS benefit effective in December 2019 with 44 months of delayed retirement credits at 129.3% of PIA to be “held harmless” or stick to my plan to file effective January 2019?

Thanks,
Tyler

Hi Tyler,

First of all, you'd need to reinstate benefits no later than November 2018 to potentially qualify for lower than normal Part B Medicare premiums in 2019 based on the 'hold harmless' provision. That would cause you to receive at least 5 fewer delayed retirement credits (DRC) than you would receive if you waited until age 70 to start drawing, resulting in a roughly 3.33% lower benefit rate. And, that lower rate would also carry over to your wife's potential widow's rate if you die before her.

Furthermore, if there is in fact a 2.7% Social Security cost of living increase (COLA) at the end of this year, the odds of the 'hold harmless' rule lowering your 2019 Part B premiums are likely miniscule. In order for the 'hold harmless' rule to come into play, the standard Part B premium amount would have to increase by more than the COLA increases your Social Security benefit.

For example, say Bob is receiving a monthly Social Security benefit of $2000 and he pays the standard Part B premium of $134 per month. A 2.7% COLA would raise Bob's monthly benefit rate by $54 to $2054, so the 2019 standard Part B premium amount would have to rise by more than $54 in order for Bob to potentially pay a lower than normal Part B premium rate next year under the 'hold harmless' rules. That would amount to a more than 40% increase in the Part B premium rate, which would be much higher than the average annual increase of less than 8%.

If Bob in the example above was only getting a Social Security benefit of $1000 per month, the Part B premium would have to increase by more than $27 per month for the 'hold harmless' provision to potentially apply to him. That would still be a more than 20% increase in the premium rate, which is also unlikely.

It's your decision to make, but before deciding when to start drawing your benefits you should strongly consider using our maximization software to compare your options so that you'll be aware of the probable long term effects of your decision.

Best, Jerry