Major Part B Spikes Reduced

October 30, 2015

The newly passed budget deal will keep millions of Medicare beneficiaries from being stuck with a 52 percent premium hike. 

Seventy percent of Medicare beneficiaries will be “held harmless” and see no premium hike for 2016. The other 30 percent will still see a (lower) premium increase in 2016.

Those who will see higher Part B premiums include people who:

  • will enroll in Medicare for the first time in 2016,  or
  • have incomes above $85,000 a year ($170,000 for couples), or
  • are enrolled in Medicare but not receiving Social Security payments.

All Medicare enrollees will see an annual deductible increase to $167 from the current $147. Without the budget deal, it would have been $233.

In essence, anyone receiving a Social Security check, who is already paying $104.90 in monthly premiums, and won’t exceed the income level shown above, will keep paying the same $104.90 per month next year. 2016 income thresholds are based on the adjusted gross income from your 2014 federal tax return.

Those below the income threshold who aren’t receiving Social Security checks or who will enroll in Part B for the first time next year will pay a monthly premium of $120. 

Because Medicare is a needs-based entitlement program, the government subsidizes less and less of the Medicare premium as income rises. 

The following chart shows how much 2016 premiums will rise for those in the higher income brackets. These are not official numbers, but are estimates based on the information currently available.

Medicare Increase New photo

The bill pays for the reduced increases by treating the saved amount like a government loan, and implements a mandatory immediate payback. Beneficiaries subject to the increased premiums in the lowest income bracket will see an additional $3 added on to their monthly premium. Those in higher income brackets will pay proportionally more. The fee will remain in place until the loan is completely paid. 

In the event of no cost-of-living increases in 2017, the budget agreement extends these changes to affected beneficiaries in that year as well. 

MOAA members sent over 24,000 messages asking their elected officials to tackle the inequity in Part B premiums. Your efforts helped protect millions of Medicare beneficiaries from a 52 percent increase in monthly premiums. The premium increases will still come as a surprise to many who haven’t been paying attention as this situation unfolded. But those of you who answered the call to action know you saved them from a far greater hike.