Q: If Medicare Part B premiums increase in 2016 will everyone pay the higher premiums?
A: There are nearly 51 million people enrolled in Medicare Part B in 2015. Higher premiums will apply to roughly seven million people in 2016, according to the Kaiser Family Foundation. But thanks to the budget bill signed by President Obama on November 2, 2015, the premiums will only be about 16 percent higher, instead of the 52 percent that had been anticipated. There will also be a $3/month surcharge added to the Part B premiums for those seven million enrollees; the surcharge will be added to all enrollees’ premiums beginning in 2017, assuming there’s a cost-of-living adjustment to Social Security checks.
CMS finalized the Part B premiums on November 10, 2015. For the 30 percent of enrollees for whom the higher premiums will apply, Part B will cost $121.80/month plus the $3 surcharge for those with income below $85,000.
Those who will pay higher premiums in 2016 consist of four groups:
- New enrollees. People who are newly enrolled in Medicare Part B in 2016.
- Enrollees who pay higher premiums based on their income. For single enrollees whose income is higher than $85,000, Part B premiums are already higher than the standard rate. And their premiums will also increase by about 16 percent (prior to the budget bill, high-income Part B enrollees were also facing a 52 percent premium hike). For high-income enrollees, the monthly Part B premium will range from $170.50 to $389.80, and they’ll also pay a slightly higher surcharge that will range from $4.20 to $9.60.
- Enrollees who haven’t begun receiving Social Security checks. Some Medicare enrollees between age 65 and 70 have opted to begin receiving Social Security benefits after age 65, which means they pay Medicare directly for Part B, rather than having the premium withheld from a Social Security check. Most enrollees are only protected from the 2016 premium spike if their premiums are deducted from a Social Security check, so those who haven’t yet begun drawing Social Security benefits will be charged the higher premium in 2016.
- Enrollees who are covered under a public sector retirement program instead of Social Security. There are about 1.6 million public sector retirees who paid into a different pension system in lieu of Social Security. This includes some firefighters, police officers and teachers (about 40 percent of public school teachers are in this position), as well as government employees who are covered under the Civil Service Retirement Program. These retirees pay Part B premiums directly to Medicare, since they don’t receive a Social Security check from which the premium can be deducted. Just like people who have not yet begun to receive Social Security, this group will also pay higher premiums in 2016.