Medicare Premium Increases Partially AvertedSubmitted by Grunden Financial Advisory, Inc on November 4th, 2015
The same time it was announced Social Security recipients won’t receive any increases in their benefits in 2016, the government was announcing that certain Medicare participants would be paying dramatically higher premiums for Medicare Part B, the highest price jump in the program’s history. Under Social Security and Medicare rules, the government is required to collect 25% of all expected Part B costs from recipients each year—in the form of premiums. The total Part B cost is anticipated to reach $171.2 billion 2016 and would have resulted in historic premium increases.
Additionally, there is a provision saying that in years where there is no increase in Social Security benefits—such as in 2016—Medicare premiums must be held steady for current Social Security recipients. As a result, the entire increase would have had to be borne by enrollees who either don’t yet collect Social Security checks; enrollees with incomes above $85,000 (single) or $170,000 (married); or are dual Medicare-Medicaid beneficiaries. In all, these three categories represent 30% of 2016 Medicare beneficiaries—roughly 7 million Americans. In essence, 30% of Medicare beneficiaries would have been supporting 100% of the premium increase.
Under the recently-passed government budget deal, Medicare recipients who are not taking Social Security checks and fall below the income thresholds will see their monthly premiums go up from $104.90 to $120.00 plus a $3 monthly surcharge. This will allow premiums to rise more gradually, and spread the cost over a longer period of time. Originally the monthly premium was projected to rise to $159.30 for these Medicare recipients. High earners above the threshold ($85,000 –single or $170,000 –married) will pay a higher premium and perhaps even a higher monthly surcharge. Current estimates of Medicare Part B premiums for high earners range from $168 to $384 per month.