Some seniors face 52% increase next year in Medicare Part B premiums – to pay for others

Some seniors face 52% increase next year in Medicare Part B premiums – to pay for others

Next year, millions of Medicare enrollees will see their premiums jump from $104.90 to $159.30, a stunning 52-percent increase. …

Most of Medicare’s 55 million enrollees—about 70 percent, according to the Medicare Trustees—will not experience this big one-year jump in their Medicare premiums.

The reason: The Medicare law includes a so-called “hold harmless” provision that directly impacts seniors’ Part B premium increases. Under the “hold harmless” provision, seniors’ annual Medicare premium increases are limited to the dollar increase in their Social Security benefit. That dollar amount is determined by the Social Security program’s annual cost-of-living adjustment (COLA). …

Today, that means an annual income below $23,540 for an individual or $31,860 for a couple. …

Because payment for physicians’ and outpatient services under Medicare Part B will still increase from 2015 to 2016 (the cost of Part B benefits are projected to jump from $277.3 to $294.4 billion over that period), the law provides that the Medicare premiums for all of those not protected under the “hold harmless” provision must increase.

The Medicare Trustees say:

Under current law, Part B premiums for other beneficiaries must be raised substantially to offset premiums forgone due to the hold harmless provision, to prevent asset exhaustion, and to maintain a contingency reserve that accommodates normal financial variation.

In short, the large premium increases—for the entire Part B program—are being absorbed by a minority of Part B enrollees, which is why the increase is so large for those enrollees.

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