Medicare Releases Official 2016 Part B Premiums

Medicare Part BAfter months of speculation, Medicare’s standard Part B premiums for 2016 have been officially announced. About 70 percent of beneficiaries will continue to pay the same amount that has been charged for the past three years: $104.90 a month. Others will pay $121.80 a month, or more for higher-income beneficiaries who already pay higher premiums.

As previously reported, the double standard arises from a quirk in the law that occurs only when there is no Social Security cost of living increase (COLA) in any given year, which is the case for 2016. The law “holds harmless” people whose Part B premiums are automatically deducted from their monthly Social Security checks, ensuring that their payments are not reduced by a premium increase.

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But this means that the whole brunt of the Medicare program’s increased expenses must be shared among those who are not protected. These include people who are new to Medicare in 2016; already enrolled in Medicare but do not draw Social Security payments; or pay higher income-related premiums.

The standard $121.80-a-month premium, though still a hefty increase, is much less than the $159.30 a month — an unprecedented 52 percent hike — that was projected in the Medicare Trustees’ report to Congress in July. That amount represented actuarial estimates of how much the Part B program, which covers doctors’ services and outpatient care, will cost next year. Part B premiums are required by law to cover 25 percent of those costs, with the federal government paying the rest out of general revenue.

But under recent budget legislation, signed into law Nov. 2, Congress and the White House intervened to soften the burden on beneficiaries not held harmless. This requires those people to pay a surcharge of $3 a month (included in the $121.80) to begin paying off the loan that funded the reduction.

Medicare beneficiaries who pay higher income-related premiums will see their monthly payments rise to between $170.50 and $389.80, depending on income level and including surcharges of between $4.20 and $9.60 a month.

The loan is expected to be paid off, and the surcharge to end, within five years.

Other Medicare costs in 2016:

  • Part B annual deductible: $166 (up from $147 in 2015).
  • Part A premium (for the relatively few people who must pay premiums because they haven’t earned 40 work credits from payroll taxes): $411 a month for those with fewer than 30 credits; $226 a month for those with 30 to 39 credits (up from $407 and $224, respectively).
  • Part A deductible for patients admitted to the hospital: $1,288 (up from $1,260).
  • Daily copays for admitted patients after 60 days in the hospital: $322 a day (up from $315) for days 61 to 90. Lifetime reserve days: $644 a day (up from $630).
  • Daily copays in a skilled nursing facility: $0 for days 1 through 20; $161 a day (up from $157.50) for days 21 through 100.


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