Medicare recently warned that Part B premiums could increase by as much as 52% for certain recipients in 2016. This could affect Medicare recipients not currently receiving Social Security benefits…recipients whose incomes are above $85,000 ($170,000 if married and filing jointly)…and people new to Medicare in 2016. Meanwhile, everyone else on Medicare is likely to see no increase in premiums at all.
Reasons for this unequal treatment: The Medicare system is required to increase premiums when costs increase—but a Social Security “hold-harmless” rule might prevent it from spreading this cost increase among all participants. This provision says that an individual’s Medicare Part B premiums cannot rise by more than the amount that the individual’s Social Security benefits increase because of that year’s cost-of-living adjustment (COLA). Because of low inflation, there’s a chance that there will be no COLA for 2016, so the burden of the Medicare cost increase might fall on the 30% of Medicare recipients who don’t qualify for the hold-harmless provision.
If there is a modest COLA, all Medicare participants will see a more modest increase in Part B premiums. This determination is expected by mid-October.
Ways to avoid a premium spike…
Request an income adjustment. The Social Security Administration will look at your tax return from 2014 to determine whether you qualify for the hold-harmless provision in 2016. If your modified adjusted gross income was above $85,000 ($170,000 if married filing jointly) in 2014 but has since fallen, perhaps because you retired, contact Social Security and request a reconsideration of your initial income-related monthly adjustment amount.
Check whether you qualify for state Medicare Savings Programs. These state-run programs exist to help people of modest means pay Medicare costs, including Part B premiums. Typically a couple must have annual income of less than around $22,000 to qualify.