Medicare Premiums Expected to Rise Steeply for Some, Stay Unchanged for Most

Most Medicare enrollees can expect to pay the same amount for their Medicare Part B coverage (the portion of Medicare that pays for doctors’ services and outpatient care) in 2016 as they do this year ($104.90), according to estimates from the latest Medicare trustees report. But about 1 in 7 enrollees will face a dramatic increase.

Most enrollees will see no change
In 2016, about 70 percent of Medicare enrollees will be protected from an increase because of a “hold harmless” provision in federal law that says their Medicare premium cannot go up from one year to the next by more than the increase in their Social Security benefit. Government officials currently estimate there will be no cost-of-living increase in Social Security benefits next year because inflation has been so low.

Some will face a steep jump
For about 30 percent of Medicare enrollees, premiums are expected to rise steeply. About 14 percent of enrollees will pay these premiums themselves. The rest will not be directly affected because they are enrolled in Medicaid or a Medicare Savings Program and their premiums are paid by their state.

Three groups will see increases:

• People who newly enroll in Part B in 2016 (about 5 percent of Medicare enrollees)
• Medicare enrollees who do not receive a Social Security check — for example, enrollees who delay claiming Social Security benefits because they continue to work (about 3 percent of Medicare enrollees)
• Higher-income enrollees (people with income above $85,000 or couples with income above $170,000) who pay higher premiums (about 6 percent of Medicare enrollees)

 

For these enrollees not protected by the hold harmless provision, the Part B standard monthly premium will be $159.30 in 2016, a 52 percent increase. Higher-income enrollees who pay higher premiums will also see a 52 percent increase; their 2016 monthly premiums will be between $223 and $509.80, depending on income.

The rise is especially steep because the total increase in premium revenue required in 2016 will be spread among only the 30 percent of enrollees who are not protected by the hold harmless provision, rather than among all enrollees.

In 2017, the pattern is expected to reverse
The Social Security cost-of-living adjustment is expected to be about 3 percent in 2017, so enrollees protected by the hold harmless provision in 2016 would see an increase in premiums in 2017, while other groups would see a decline. The Part B standard monthly premium is currently projected to be $120.70 in 2017.

Can anything be done to lower the increases in 2016?
The agency that manages Medicare will announce actual premium amounts in October, so there is still time for government officials to take action to modify the rates. Worth considering is a modification that spreads the increase over two or more years (in place of a steep rise in 2016 followed by a drop in 2017), which would be easier for affected enrollees — as well as states — to absorb. Stay tuned.

Photo courtesy of iStock.

 

Harriet Komisar is a senior strategic policy adviser at the AARP Public Policy Institute, where she works on Medicare and other health care topics.