2016 Medicare Premiums to Soar for 1 in 3 Seniors
Thursday, 22 Oct 2015 12:11 PM
The federal government’s announcement that there will be no Social Security cost-of-living increase in 2016 could force up to 15 million seniors paying higher Medicare premiums — up to 50 percent — unless Congress intervenes, experts say.
Because of a quirk in the law means about 30 percent of Social Security recipients will see their Medicare costs rise from $104.90 to $159.30 monthly for the Part B premiums that cover doctors, outpatient, and medical equipment needs.
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Without federal action, that would be the largest increase in the history of Medicare, the nation’s healthcare program for elderly and disabled Americans.
Under federal rules, the 70 percent of seniors who have their Medicare premiums deducted directly from their Social Security benefits will be protected against higher premiums in 2016. But those who don’t will be on the hook for the premium increases, along with 3.1 million seniors with above-average incomes, 2.8 million enrollees who will be new to Medicare next year, and 1.6 million Medicare beneficiaries who haven’t begun taking their retirement benefits yet, officials say.
The Social Security COLA decision is based on changes in consumer prices. The Bureau of Labor Statistics announced this month that prices during this year’s third quarter — for gasoline and other products — were lower than the comparable 2014 quarter, ruling out COLA increase 2016.
That means the wage ceiling subject to Social Security payroll taxes will remain at $118,500 in 2016. It’s the third time this has happened in 40 years, with all three since 2010.
By comparison, Social Security benefits rose 1.7 percent this year, just under 2 percent for three years in a row. The last two years benefits stayed flat were 2010 and 2011.
AARP and other senior advocacy groups argue that retirees are short-changed by the federal method for tracking consumer prices. Older consumers don’t benefit as much as other Americans from drops in gas prices, for instance, because many don’t have work-related commutes.
At the same time, seniors spend more on medical care than younger Americans — with people 65 and older spending twice as much per-capita, as those under 65. Yet medical expenses are not calculated as part of the COLA measurement. In fact, medical costs are rising faster than overall inflation, up 3.5 percent to 7 percent since 2010. According to the Senior Citizens League, Social Security benefits have lost 22 percent of their buying power since 2000.
In its annual report on Medicare, officials projected the following 2016 increases for different income groups:
• For incomes below $85,000 ($170,000 if filing jointly) — Part B premiums would rise from $104.90 to $159.30.
• For incomes between $85,000 and $107,000 ($170,000 to $214,000 if filing jointly) — from $146.90 a month this year to $223.00. • For incomes between $107,000 and $160,000 ($214,000 to $320,000 if filing jointly)—from $209.80 a month this year to $318.60.
• For incomes between $160,000 and $214,000 ($320,000 to $428,000 if filing jointly) — from $272.20 a month this year to $414.20.
• For incomes above $214.000 ($428,000 if filing jointly) — from $335.70 a month this year to $509.80.
Medicare open enrollment runs from Oct. 15 to Dec. 7.
Because of a quirk in the law means about 30 percent of Social Security recipients will see their Medicare costs rise from $104.90 to $159.30 monthly for the Part B premiums that cover doctors, outpatient, and medical equipment needs.
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Under federal rules, the 70 percent of seniors who have their Medicare premiums deducted directly from their Social Security benefits will be protected against higher premiums in 2016. But those who don’t will be on the hook for the premium increases, along with 3.1 million seniors with above-average incomes, 2.8 million enrollees who will be new to Medicare next year, and 1.6 million Medicare beneficiaries who haven’t begun taking their retirement benefits yet, officials say.
The Social Security COLA decision is based on changes in consumer prices. The Bureau of Labor Statistics announced this month that prices during this year’s third quarter — for gasoline and other products — were lower than the comparable 2014 quarter, ruling out COLA increase 2016.
That means the wage ceiling subject to Social Security payroll taxes will remain at $118,500 in 2016. It’s the third time this has happened in 40 years, with all three since 2010.
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AARP and other senior advocacy groups argue that retirees are short-changed by the federal method for tracking consumer prices. Older consumers don’t benefit as much as other Americans from drops in gas prices, for instance, because many don’t have work-related commutes.
At the same time, seniors spend more on medical care than younger Americans — with people 65 and older spending twice as much per-capita, as those under 65. Yet medical expenses are not calculated as part of the COLA measurement. In fact, medical costs are rising faster than overall inflation, up 3.5 percent to 7 percent since 2010. According to the Senior Citizens League, Social Security benefits have lost 22 percent of their buying power since 2000.
In its annual report on Medicare, officials projected the following 2016 increases for different income groups:
• For incomes below $85,000 ($170,000 if filing jointly) — Part B premiums would rise from $104.90 to $159.30.
• For incomes between $160,000 and $214,000 ($320,000 to $428,000 if filing jointly) — from $272.20 a month this year to $414.20.
• For incomes above $214.000 ($428,000 if filing jointly) — from $335.70 a month this year to $509.80.
Medicare open enrollment runs from Oct. 15 to Dec. 7.
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