Information you need to live a happy, worry-free retirement!
Aug 31, 2015
Some Medicare enrollees could see a 52% increase in their Medicare Part B premiums and also their Part B deductibles starting in January 2016, according to the 2015 Social Security Board of Trustees’ annual report. Part B covers doctor visits and other types of outpatient care.
A projected 52% increase in the Part B premium would be an increase of nearly $60 a month — from today’s premium, set at $104.90 a month, to just over $159 a month in 2016. That would add up to an extra $720 a year. A projected 52% increase in the Part B deductible would bump the current deductible of $147 up $78, to $225 in 2016. Together, the premium and deductible increases would be nearly $800 more a year — at a time when Social Security benefits are possibly not going to increase.
But don’t panic. The increased Medicare Part B expenses won’t affect everyone and remain uncertain until an October pricing announcement.
The possible Part B premium and deductible hikes are related to the government’s annual cost-of-living adjustment (COLA) to Social Security benefits — an automatic adjustment started in 1975 to prevent inflation from eroding Social Security beneficiaries’ buying power. Each year, the COLA for the coming year is announced in October.
But ahead of that announcement, Social Security’s trustees recently issued their annual report, in which they projected no COLA for 2016 because inflation has been flat. You’ve probably heard about the no-COLA projection in the news, because it’s unusual for Social Security benefit amounts to not increase from year to year. In only two other years — 2010 and 2011 — have Social Security recipients received no bump-up in benefits, according to InvestmentNews.
So how does Social Security intersect with Medicare Part B?
In most cases, Medicare Part B premiums are subtracted directly from monthly Social Security benefits payments. Social Security has a provision called the “Hold Harmless” rule stating that Social Security benefits payments cannot decrease due to rising Medicare Part B premiums. In other words, if you have your Medicare Part B premium deducted from Social Security automatically, you are protected from this premium increase. This is roughly 70% of Medicare beneficiaries.
The remaining 30%, however, would pay a higher premium based on the projection that there will be no Social Security COLA, the Washington Post reported. That 30% includes anyone who enrolls in Part B for the first time in 2016; enrollees who pay their Medicare Part B premium directly to Medicare (including some federal retirees); and enrollees who pay an income-related higher premium.
The Wall Street Journal reports that the largest single group of people affected are the 3.1 million participants subject to higher Part B premiums because their incomes are above $85,000 (or $170,000 for couples). Within this group, the trustees projected that single individuals earning up to $107,000 (and couples earning up to $214,000) would have their 2016 monthly premiums rise from $146.90 a person to $223 in 2016.
Remember, nothing is determined yet. The Social Security Administration will make an official announcement about the 2016 COLA in October. Because of the way the COLA is determined, there’s still a chance that a cost-of-living adjustment could happen if inflation picks up in the next few months. And as the projected Part B hikes loom, Health and Human Services Secretary Sylvia M. Burwell said she is examining various policy options to soften the potential 52% price increase.
Still, if the Part B increases happen and you’re among the unlucky, it’s good to prepare for the reality that you could pay both a higher Part B premium each month and spend more out-of-pocket in order to meet your Part B deductible. If you need help offsetting the cost of the potential Part B premium and deductible hikes, Medicare MarketPlace’s Licensed Insurance Agents can help review your plan — a service that is no extra charge to you. Medicare MarketPlace is dedicated to helping you understand Medicare so you can make a choice that is right for you.
Even if you anticipate that you won’t be subject to the Part B increase, remember that the Medicare Open Enrollment Period is right around the corner. This is the annual election period, from Oct. 15 through Dec. 7, when people with Medicare Advantage or Medicare Prescription Drug coverage can make changes to their plans for the coming year. Because plans and premiums can change from year to year, Medicare MarketPlace® encourages you to review your plans then. You may also want to review your Medicare Supplement health insurance plan each year, because those premiums also can change. Insurance carriers announce plan changes starting Oct. 1. You are welcome to call Medicare MarketPlace ahead of that time to speak to one of our Licensed Insurance Agents. They’ll collect your prescription drug list now so that you’re ready as soon as carriers announce plan changes, and they’ll even call you for a full plan review —a free service — that could save you money or improve your plan.
To speak with a Licensed Insurance Agent at Medicare MarketPlace, call at 1-800-639-0781