As we shared in our recent post, some Medicare beneficiaries could be facing a steep hike in their 2016 Medicare premiums. Part B premium increases are tied to Social Security COLA (Cost of Living Adjustment), and since there will be no COLA in 2016 (announced October 15th) most (about 70%) of Medicare recipients fall under the “hold harmless” protection and will not pay more. However, the remaining 30% (those not receiving Social Security, new Medicare enrollees, and high income individuals) could be facing a base rate increase of 52% (from $104.90 to $159.30) on their 2016 Medicare B premium. The premium scales higher based on 2014 income (up to $509.80).
The potentially good news is that a bipartisan budget proposal which recently passed in the House of Representatives would offer relief for these 30% of Medicare recipients*. Under this budget, the 2016 Medicare premium increase would be reduced to about a 14% increase. In this proposal, the costs for Part B would be covered by a treasury loan, gradually paid back by incremental Medicare premium increases.
There are some other provisions in this budget that might affect you or your loved ones. First, on a positive note, it addresses potential cuts to Social Security disability payments, by reallocating some of the payroll taxes to this program. On a less positive note, some households may be losing Social Security benefits (those receiving benefits under a spouse, ex-spouse or parent’s work record…if that person has suspended his/her benefits).
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You may want to read our article about Medicare 2016 open enrollment as well.
*Update: The bill was passed in the Senate.