Q. How much will I have to pay each month for Medicare Part B in 2016? Will there be a huge jump in premiums, as originally predicted?
A. Medicare beneficiaries who have Part B premiums withheld from their Social Security checks — about 70 percent of beneficiaries — will continue to pay $104.90 a month for Part B. If you aren’t collecting Social Security yet or will enroll in Medicare in 2016, you will have to pay $121.80 a month in 2016. The $121.80 monthly premium also applies to people who are eligible for both Medicare and Medicaid and have their premiums paid for by their state. And if your income exceeds certain limits, you’ll pay more — from $170.50 to $389.80 a month (see the table below).
The premiums aren’t as high as they were expected to be. Because Medicare Part B premiums are designed to cover 25 percent of total Part B costs each year, the monthly premium would have been $120.70 across the board in 2016 if everyone were on the hook for the increase, according to the Medicare trustees’ report. But most Medicare beneficiaries are protected by the “hold-harmless provision,” a law that prohibits Social Security benefits from being reduced because of an increase in Medicare premiums. In most years, Medicare cost increases are covered by the Social Security cost-of-living adjustment. But there will be no Social Security COLA for 2016 because of low inflation, which means that the monthly premiums will be capped at $104.90 for Medicare beneficiaries who have their premiums withheld from their Social Security benefits.
Under the rules, the remaining 30 percent of Medicare beneficiaries must cover the rest of the cost of Part B, which would have boosted their premiums to $159.30 a month in 2016. But under pressure from retiree advocacy groups, the budget deal signed by President Obama on Nov. 2 reduced the increase for 2016. Anyone not protected by the hold-harmless provision will have Part B premiums capped at $121.80 a month.
To help pay for the shortfall, a $3 surcharge, which is included in the $121.80 premium, will be added to monthly Part B premiums for the next few years. Those protected by the hold-harmless provision won’t pay the extra $3 this year, but $3 may be added to their premiums in 2017 if there is a Social Security COLA next year.
Single filers with modified adjusted gross income of more than $85,000, or more than $170,000 if married filing jointly, have been subject to a high-income surcharge since 2007. In 2016, these people will have to pay the $121.80 base amount plus a high-income surcharge of $48.70 to $268 a month, depending on their income. “Modified adjusted gross income” includes all taxable income, whether from a job, interest, dividends, capital gains or a pension, plus it adds in tax-exempt interest.
Your income is usually based on your last tax return on file, which would be your 2014 return, for 2016 premiums. But you may be able to get the high-income surcharge reduced or eliminated if your income has decreased since then because of certain life-changing events, such as the death of a spouse, divorce, retirement or reduced work hours. In that case, you can ask Social Security to use your more recent income instead. Contact the Social Security Administration, estimate your 2015 income, and provide evidence of the change, such as a marriage or death certificate, a signed statement of retirement from your employer, or pay stubs showing your reduced income. See Medicare Premiums: Rules for Higher-Income Beneficiaries for more information.
|Single Filer Income||Joint Filer Income||2016 Monthly Premium|
|Up to $85,000||Up to $170,000||$121.80 or $104.90*|
|85,001 – $107,000||$170,001 – $214,000||$170.50|
|$107,001 – $160,000||$214,001 – $320,000||$243.60|
|$160,001 – $214,000||$320,001 – $428,000||$316.70|
|More than $214,000||More than $428,000||$389.90|
* If protected by the hold-harmless provision