Back in November 2016, Medicare announced monthly premium increases of approximately 10 percent for Part B, while the cost of the annual deductible also rose from $166 to $183. Although a significant increase, it was lower than many had feared.
On the surface, premium increases can seem straightforward, but not everyone pays the same amount for their Part B premium. Let’s explore the different costs according to your particular situation.
If You Are a Social Security Beneficiary
For approximately 70% of Medicare beneficiaries, the “hold harmless” rule that is part of Social Security will protect them from a massive premium increase. This provision ensures that a person’s Social Security payment cannot fall from one year to the next. Its Cost of Living Adjustment (COLA) funds higher Part B premiums. In 2016, COLA was zero percent, which meant the cost of Medicare premiums didn’t increase on the 2015 figure.
In 2017, the COLA is 0.3 percent, an amount that won’t fund costlier part B premiums. As a result, the “hold harmless” provision comes into effect. If you receive Social Security payments, COLA goes toward your Medicare premium, and you will NOT receive an increase in your Social Security payments. This reduces the monthly Part B increase to just $4.10 on the 2016 figure.
In 2017, you will pay $109 a month, assuming your earnings don’t fall into an upper threshold.
If You Are a New Enrollee
Those who signed up to Medicare in 2017 will pay a part B premium of $134 a month, an increase on the $121.80 figure in 2016. New enrollees will pay a total of $300 more for Part B this year than recipients protected by the hold harmless provision. Most new enrollees are either joining Medicare because they turn 65 in 2017 or are now joining after switching from group health insurance previously covered by an employer.
If You Don’t Have Social Security
It isn’t uncommon for retirees to take Medicare before claiming Social Security as a means of benefiting from increased Social Security payments later down the line. Remember, full retirement on Social Security occurs at 66, a full year later than Medicare eligibility. If you sign up for Social Security before the age of 66, you’ll receive a lower payment than if you wait. Delay signing up until 70 years old, as you’ll get a higher monthly payment.
Conversely you’ll also have to pay $134 a month. For many people in this situation, however, it is well worth paying a little extra now to receive a lot more later on.
If You Have a High Income
The cost of the Medicare Part B program is dependent on your income. Estimates suggest that only 6% of enrollees will fall into one of the higher income surcharges. Consider these figures:
If You File an Individual Tax Return (Annual Earnings)
- $0-$85,000: $134 a month
- $85,001-$107,000: $187.50 a month
- $107,001-$160,000: $267.90 a month
- $160,001-$214,000: $348.30 a month
- $214,001+: $428.60 a month
If You File a Joint Tax Return
- $0-$170,000: $134 a month
- $170,001-$214,000: $187.50 a month
- $214,001-$320,000: $267.90 a month
- $320,001-$428,000: $348.30 a month
- $428,001+: $428.60 a month
The annual Medicare Part B deductible rises to $183 in 2017, an increase from the $166 figure in 2016. Once you have paid the deductible, you might have to pay 20 percent of the cost of covered services unless you have additional insurance to supplement this expenditure.
Although the majority of beneficiaries do not face a charge for Medicare Part A, they must still pay when they use a benefit. For example, you pay a deductible of $1,316 for each benefit period, an increase on the $1,288 figure in 2016. There are still no coinsurance costs for the first 60 days but the cost of days 61-90 has grown from $322 a day in 2016 to $329 in 2017. Additionally, the cost of days 91 and beyond has increased from $644 a day in 2016 to $658 in 2017.
If you are a Social Security beneficiary, you can thank its “hold harmless” provision for keeping Medicare premium increases down. The total increase amounts to around $50 a year, which shouldn’t pose a concern for the vast majority of Medicare enrollees.