Medicare Premiums and Other Costs for 2016
During the past several weeks, you may have seen media reports announcing that Medicare Part B premiums would be rising dramatically for some beneficiaries in 2016. But thanks to a provision in the Bipartisan Budget Act of 2015 signed into law on November 2, affected beneficiaries face more modest increases next year. Standard Medicare Part B premiums for the majority of beneficiaries won’t be rising at all.
What you’ll pay for Medicare Part B in 2016
The Centers for Medicare & Medicaid Services (CMS) has announced that in 2016, most individuals (about 70% of Medicare beneficiaries) will continue to pay $104.90 per month for Medicare Part B (Medical Insurance), the same standard premium they paid in 2013, 2014, and 2015. If you fall into this category, your premium won’t be rising because you won’t be receiving a Social Security cost-of-living allowance (COLA) increase in your benefit next year, as was previously announced by the Social Security Administration (SSA). Due to a provision in the Social Security Act, you are “held harmless” from Part B premium increases when no Social Security COLA is payable.
Unfortunately, this is not the case for the approximately 30% of Medicare beneficiaries who are not subject to this “hold harmless” provision. You fall into this group and will pay more for Medicare Part B next year if:
- You enroll in Part B for the first time in 2016.
- You don’t get Social Security benefits.
- You have Medicare and Medicaid, and Medicaid pays your premiums.
- Your modified adjusted gross income as reported on your federal income tax return from two years ago is above a certain amount.*
The table below shows what you’ll pay next year if you’re in this group.
| Beneficiaries who file an individual income tax return with income that is: | Beneficiaries who file a joint income tax return with income that is: | Beneficiaries who file an income tax return as married filing separately with income that is: | Monthly premium in 2015: | Monthly premium in 2016: |
| $85,000 or less | $170,000 or less | $85,000 or less | $104.90 | $121.80 |
| Above $85,000 up to $107,000 | Above $170,000 up to $214,000 | N/A | $146.90 | $170.50 |
| Above $107,000 up to $160,000 | Above $214,000 up to $320,000 | N/A | $209.80 | $243.60 |
| Above $160,000 up to $214,000 | Above $320,000 up to $428,000 | Above $85,000 up to $129,000 | $272.70 | $316.70 |
| Above $214,000 | Above $428,000 | Above $129,000 | $335.70 | $389.80 |
Although substantial, Part B premiums are far less than originally projected for 2016 because of a provision in the Bipartisan Budget Act of 2015 that limited premium increases for beneficiaries who are not subject to the “hold harmless” provision.
*Beneficiaries with higher incomes have paid higher Medicare Part B premiums since 2007. To determine if you’re subject to income-related premiums, the SSA uses the most recent federal tax return provided by the IRS. Generally, the tax return you filed in 2015 (based on 2014 income) will be used to determine if you will pay an income-related premium in 2016 (your 2013 income was used for 2015 premiums). You can contact the SSA at (800) 772-1213 if you have new information to report that might change the determination and lower your premium (you lost your job and your income has gone down or you’ve filed an amended income tax return, for example).
Changes to other Medicare costs
Other Medicare Part A and Part B costs will change in 2016, including the following:
- The annual Medicare Part B deductible for Original Medicare will be $166, up from $147 in 2015.
- The monthly Medicare Part A (Hospital Insurance) premium for those who need to buy coverage will cost up to $411, up from $407 in 2015. However, most people don’t pay a premium for Medicare Part A.
- The Medicare Part A deductible for inpatient hospitalization will be $1,288, up from $1,260 in 2015. Beneficiaries will pay an additional daily co-insurance amount of $322 for days 61 through 90, up from $315 in 2015, and $644 for stays beyond 90 days, up from $630 in 2015.
- Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $161 for days 21 through 100 in a benefit period, up from $157.50 in 2015.
For more information on costs and benefits related to Social Security and Medicare, visitSocialsecurity.gov andMedicare.gov.
To view the Medicare fact sheet announcing these and other figures, visit Medicare.gov.
The foregoing is provided for information purposes only. It is not intended or designed to provide legal, accounting, tax, investment or other professional advice. Such advice requires consideration of individual circumstances. Before any action is taken based upon this information, it is essential that competent, individual, professional advice be obtained. JAS Financial Services, LLC is not responsible for any modifications made to this material, or for the accuracy of information provided by other sources.
Some Social Security tactics are eliminated as part of the “budget deal”
| Following is a summary of the tactics that will be eliminated:
Voluntary Suspension When the legislation becomes effective, all benefits paid from an account will be suspended when a person suspends their benefit. Previously, a beneficiary could suspend their benefits while a spouse or qualifying children could continue collecting a benefit from their account. The new legislation will require that a beneficiary be receiving his or her own benefit in order for other benefits to be paid from their record. The new legislation does not prevent the suspending of benefits for the purpose of accruing delayed retirement credits. If a person files early and later decides it was a mistake, they will be able to suspend benefits at full retirement age and accrue delayed retirement credits. However, any other benefits being paid from the suspended benefit will stop. Someone who has already claimed benefits with a file and suspend strategy, or anyone who implements such a strategy within the next 6 months, can continue with their strategy. Restricted Application The new legislation extends a concept called “deemed filing.” Deemed filing has only been a factor before reaching full retirement age. Prior to reaching full retirement age, if a person filed for any benefit, they were “deemed to be filing” for all benefits. This meant that if someone was eligible for their own benefit and a spousal benefit, they would only be paid a single benefit, the higher of the two. But if the individual waited until full retirement age to claim a benefit, they could choose which benefit to receive. If the choice was made to receive a spousal benefit, their own retirement benefit would continue to accrue delayed retirement credits. The new rule extends the deemed filing provision to age 70, meaning that the payable benefit will always be the higher benefit if eligible for more than one. The new rules about restricted application apply only to individuals who attain age 62 after 2015. For those who achieve age 62 prior to 2016, it remains possible to file a restricted application for spousal benefits only at full retirement age. However, this option is being effectively “phased out” over the next four years. Widows and Divorced Benefits Divorced benefits seem to have suffered what some are calling an unintended consequence of the legislation. As of now, since filing a restricted application will not be available for anyone reaching age 62 after 2015, divorced individuals will not able to use this option unless they fall into the grandfathered group who will already be aged 62 by the end of 2015. The above is an edited version of several explanation prepared before the enactment of the legislation. It is possible the published version of the legislation may differ. Your plans included the above tactics, you should revise your plans. You may need to act quickly if you are close to age 62 to preserve these tactics for your situation.
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Social Security and Medicare Figures for 2014
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Social Security has improved the information available online
“my Social Security” provides improved information applicable to you. Information and tasks available includes: your benefit verification letter, your benefit and payment information, your earnings record, ability to change your address and phone number. Start or change your direct deposit of your benefits,
This allows you to obtain information when you need it. It will save your time and eliminate the need to travel to a social security office to obtain this information. It avoids the delay of getting information that is helpful in your financial planning.
The website address is: http://www.socialsecurity.gov/myaccount/
