By Emily Brandon, Nov. 20, 2015 US News & World Report
Specific groups of retirees will be charged more expensive Medicare Part B premiums than everyone else. New Medicare enrollees will pay bigger premiums than most existing beneficiaries.
Most retirees will pay Medicare Part B premiums of $104.90 per month in 2016. Medicare payments are prevented by law from increasing faster than Social Security payments. Since Social Security recipients didn’t get a cost-of-living adjustment for 2016, most existing Social Security beneficiaries will continue to pay the same Medicare Part B premium as in 2015. However, the Centers for Medicare and Medicaid Services estimates that about 30 percent of the 52 million Americans expected to be enrolled in Medicare Part B in 2016 will pay higher premiums. Here’s a look at the specific groups of people who will pay bigger Medicare premiums in 2016:
New enrollees. Retirees who sign up for Medicare in 2016 will pay $121.80 for Medicare Part B, $16.90 more per month than existing Social Security recipients. This group includes people who will turn 65 in 2016 and employees who worked past age 65 at a job with group health insurance, but will switch to Medicare in 2016. The Bipartisan Budget Act of 2015 prevented a much higher premium increase to $159.30 for new beneficiaries. This law modified how Part B premiums are calculated for 2016. General tax revenue will be used to cover the costs of the premium reduction, but all Part B enrollees will repay this amount over time through small surcharges added to their premiums until the money is repaid.
Retirees not collecting Social Security payments. If you signed up for Medicare before claiming your Social Security payments, you are not protected from Medicare premium increases. Some Medicare beneficiaries haven’t signed up for Social Security yet in order to collect delayed retirement credits and qualify for higher Social Security monthly payments when they do claim them. There’s also a small group of people covered by Medicare, but not Social Security. These Medicare recipients will pay $121.80 for Medicare Part B in 2016.
Medicaid recipients. Some Medicare beneficiaries are also eligible for Medicaid, which pays for their Medicare premiums. In this case the higher Medicare Part B premium is passed along to state Medicaid programs that pay the premium for people who are dually eligible for Medicaid and Medicare. The Kaiser Family Foundation estimates that dually eligible beneficiaries will make up two thirds of those not protected from the Medicare premium increase.
High income beneficiaries. Retirees with high incomes have been paying bigger Medicare Part B premiums since 2007. Those with retirement incomes between $85,000 and $107,000 ($170,000 to $214,000 for couples) will pay $170.50 in Medicare Part B premiums in 2016. The premium jumps to $243.60 for retirees earning from $107,000 to $160,000 ($214,000 to $320,000 for couples) and $316.70 for those with incomes of $160,000 to $214,000 ($320,000 to $428,000 for couples). People who earn more than $214,000 as an individual or $428,000 as a couple pay $389.80 per month for Medicare Part B. Less than 5 percent of Medicare beneficiaries pay these inflated premiums.
All Medicare beneficiaries will face an increase in their cost-sharing requirements. The Medicare Part B deductible will increase from $147 in 2015 to $166 in 2016, even for existing Social Security beneficiaries paying the lower premium. The Medicare Part A deductible for a hospital stay will also increase slightly from $1,260 in 2015 to $1,288 in 2016.
To Your Successful Retirement!
Michael Ginsberg, JD, CFP®