Dear Savvy Senior,
I know there won't be a cost-of-living increase in Social Security benefits next year but what about Medicare? I've heard some beneficiaries will get hit with a big Part B monthly premium increase in 2016. What can you tell me, and who will this affect?
All things considered, the news regarding your Medicare costs next year is pretty good. For about 70 percent of the nation's 52 million Medicare beneficiaries, there will be no Part B premium increase in 2016. And thanks to the 2015 Bipartisan Budget Act that was signed into law by President Obama on Nov. 2, the other 30 percent will pay much less than previously projected. Here's what you can expect.
Part B Premiums
Because the Social Security Administration will not be giving out a cost of living increase (or COLA) in 2016, the Medicare Part B premiums for most current beneficiaries will not go up either. Thanks to the "hold harmless" provision in the Medicare law, which prohibits Part B premiums from rising in any year that there's no COLA, the 2016 monthly premium will remain at $104.90 for most current Medicare participants.
However, this provision does not protect new Medicare enrollees (those who enroll in 2016), beneficiaries who are directly billed for their Part B premium, or current beneficiaries who have deferred claiming their Social Security. This includes people 65 or older who are still working but have signed up for Medicare because their employer doesn't offer health insurance. It also hits people who have filed and suspended Social Security benefits to allow a spouse to claim.
If you fit into any of these categories, your Medicare Part B premium will increase to $121.80 a month in 2016--which is much lower than the $159.30 that it would have been, had the budget deal fell through.
The hold-harmless rule also does not protect high-income Medicare beneficiaries who already pay higher Part B premiums because their annual incomes are above $85,000 for an individual or $170,000 for a couple. If you fit into this category, here's what you'll pay for your Part B premium next year, based on your 2014 tax returns.
Individuals with incomes of $85,000 to $107,000, or married couples filing joint tax returns with incomes of $170,000 to $214,000, will pay $170.50 per month.
Individuals earning $107,000 to $160,000 (couples $214,000 to $320,000) will pay $243.60.
Individuals with incomes of $160,000 to $214,000 (couples $320,000 to $428,000) will pay $316.70.
Individuals over $214,000 or couples above $428,000 will pay $389.80.
Another increase high-income beneficiaries (those with incomes over $85,000, or $170,000 for joint filers) need to be aware of is the surcharge on Part D premiums. Affluent seniors that have a Medicare Part D prescription drug plan will pay an additional $12.70 to $72.90 per month, depending on their income, on top of their regular Part D premiums.
Deductibles and Co-Pays
Other changes you need to know about that will affect all Medicare beneficiaries include the Part B deductible, which will increase to $166 in 2016 (it's currently $147); and the Part A (hospital insurance) annual deductible which will go up to $1,288 (it's currently $1,260) for hospital stays up to 60 days. That increases to $322 per day for days 61-90, and to $644 a day for days 91 and beyond. And the skilled nursing facility coinsurance for days 21-100 will also increase to $161 per day (it's currently $157.50).
For more information on all the Medicare costs for 2016 visit Medicare.gov and click on "Your Medicare Costs" tab at the top of the page, or call 800-633-4227.
Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of "The Savvy Senior" book.