Medicare Part B Premiums in 2016-OUCH for Some Beneficiaries

It’s that time of year…CMS releasing the 2016 figures for Medicare. For some beneficiaries, the amount of their Part B premiums and deductibles is going to be a big OUCH!  The New York Times ran an editorial on October 10, 2015 on how the premiums and deductibles are calculated and what it means for some beneficiaries in 2016. The Unlucky Millions Paying More for Medicare explains

Under a 1997 law, premium payments must cover 25 percent of the projected per capita costs for Part B. The premiums, which can rise and fall from year to year, are usually deducted from beneficiaries’ Social Security payments each month. A “hold harmless” provision guarantees that for most people the dollar amount of a premium increase cannot be so big that they are left with a Social Security check that is less than that of the year before. The goal is to ensure that beneficiaries, most of whom have modest incomes, don’t have less money to live on.

Since there will be no Social Security COLA for 2016 but Part B premiums are set to rise, the impact is going to hit hard a certain group of beneficiaries:

The roughly 70 percent of beneficiaries who are “held harmless” will pay the same premium as last year. That means the increased cost will have to be made up by the other 30 percent, because of the rule that premiums must cover one-quarter of Part B costs. This group includes 2.8 million new enrollees, 1.6 million people who don’t collect Social Security benefits and 3.1 million higher-income beneficiaries.

How big a hit will this group take? A pretty big one.  Consider this in dollar amounts. 

The Part B premium has been just under $105 a month for three years, but it is projected to reach $159 in 2016 and then drop to $120 in 2017.

Similarly, the Part B deductible, which must be paid by everyone on Medicare (no one is “held harmless”), will rise from $147 in 2015 to $223 in 2016, before falling back to $169 in 2017. This will pose a particular burden to beneficiaries just above the poverty line who aren’t eligible for assistance from Medicaid in paying deductibles.

The editorial calls for action by Congress to resolve the way premiums are determined. But for now, OUCH!