Massive Medicare Part B premium increases in 2016

You may recall in the past several years I have commented that the low or no Part B premium increases (and even decreases) were questionable and in the long run not a great idea; a poor strategy and poor management.

It looks like the chickens are coming home to roost in 2016 with projected premium increases of up to 52%. This should make for interesting politics. Keep in mind that the Affordable Care Act froze the income levels through 2019 so more beneficiaries will be paying the higher premiums.  

So much for all the success of Obamacare holding down health care costs.

Here is what the Medicare trustees are projecting:

• For incomes below $85,000 ($170,000 if filing jointly)—Part B premiums would rise from $104.90 to $159.30. (This is what newcomers to Medicare and those who pay premiums directly will pay next year if they are in the lowest income bracket.)
• 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.

Now for the “good” news. Unless you are paying higher income premiums which are above the standard $104.90, your premium can’t be raised more than your increase in Social Security benefits which currently will be zero. Whoopee‼️ The 30% who do pay supplemental premiums must pick up the additional cost for the 70% who will not see an increase.  Is that what you call the fair share?

What the Medicare Trustees say:

In 2015 the monthly Part B premium rate is $104.90. For determining an individual’s monthly premium rate, there is a hold- harmless provision in the law that limits the dollar increase in the premium to the dollar increase in an individual’s Social Security benefit. This provision applies to most beneficiaries who have their premium deducted from their Social Security benefit, or roughly 70 percent of Part B enrollees. Without the hold-harmless provision, beneficiaries would face a premium of $120.70 for 2016. However, because the cost-of-living adjustment for Social Security benefits is expected to be 0.0 percent for 2016, premiums would not increase from the 2015 level for those beneficiaries to whom the provision applies. Under current law, Part B premiums for other beneficiaries must be raised substantially to offset premiums foregone due to the hold-harmless provision, to prevent asset exhaustion, and to maintain a contingency reserve that accommodates normal financial variation. Accordingly, under the intermediate economic assumptions, the estimated monthly premium in 2016 for these other beneficiaries is $159.30, which is matched by general revenue transfers.