Q: Will all Medicare beneficiaries pay higher premiums in 2017?
A: Yes, but premiums will vary, and most Part B enrollees will only see an increase of about 4 percent, which comes out to a little over $4 per month. And their Social Security checks will increase by enough to cover that increase, so their net Social Security checks will be the same as they were in 2016.
For about 70 percent of Part B enrollees, the average premium in 2017 will be about $109/month. That’s up from $104.90/month in 2016. Premiums would be higher if the Social Security cost of living allowance (COLA) was higher. But the COLA is only 0.3 percent for 2017, which adds about $4/month to the average Social Security check. Since Medicare Part B premiums are deducted from Social Security checks, and since there’s a “hold harmless” provision that — in most cases — prevents Social Security checks from declining from one year to the next, Part B premiums can’t increase by more than about $4/month for most enrollees.
But if your Social Security check is higher, and the 0.3 percent COLA therefore adds a larger amount to your check, your Part B premium will be higher than $109/month. Essentially, the COLA for 2017 will be entirely devoted to Medicare Part B premiums for most enrollees in 2017.
For the other 30 percent of enrollees, the standard premium will be $134/month in 2017, which is a 10 percent increase over the $121.80/month this group paid in 2016. Medicare enrollees with income over $85,000 ($170,000 for a couple) are among that 30 percent, but their premiums are further increased above the standard rates.
Those who will pay at least $134/month for Part B in 2017 consist of four groups:
- New enrollees. People who are newly enrolled in Medicare Part B in 2017.
- Enrollees who pay higher premiums based on their income. For single enrollees whose income is higher than $85,000 (or married couples with income above $170,000), Part B premiums are already higher than the standard rate, and will increase again for 2017. For high-income enrollees, the monthly Part B premium will range from $187.50 to $428.60.
- 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 larger 2017 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 $134/month in 2017.
- 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 2017.
People who were new to Medicare in 2016:
The Social Security COLA was zero percent for 2016, so there was a very similar situation in 2016. Roughly 70 percent of Part B enrollees had no increase at all in their Part B premiums (since their Social Security checks didn’t increase at all), but for the same group described above, Part B premiums increased by 16 percent in 2016.
So if you were new to Medicare in 2016, you weren’t protected from the higher Part B premiums that took effect in 2016, and you were paying $121.80/month for your Part B coverage.
But if you’re currently receiving a Social Security check, and if you’re not in the high-income group described above, you’re now protected by the provision that prevents Social Security checks from declining from one year to the next. So your 2017 Part B premiums will be higher than they were this year, but only by an average of a little over $4/month, since your Social Security check can’t decrease in 2017.