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Medicare Premiums Set to Spike Without Congressional Action

medicare-2In 2016, Medicare monthly premiums are scheduled to rise from $104.90 to $159.30, a spike of more than 50 percent that will affect about 16.5 million Medicare enrollees. While that 16.5 represents a little less than 30 percent of Medicare enrollees, it includes people who sign up for Medicare for the first time in 2016, low-income seniors whose premiums are paid by state Medicaid plans, high-income seniors who already pay premium surcharges, and federal and state government employees. Furthermore, the deductible for Medicare Part B is expected to rise from $147 to $223.

However, 36 million Medicare Part B enrollees will not be expected to pay any premium increases because their plans are linked to Social Security cost-of-living adjustments. Thanks to low interest rates, there aren’t expected to be any cost-of-living adjustments to Social Security recipients. Should that change and Social Security recipients qualify for more benefits, then all Medicare Part B enrollees would be impacted by the premium hike.

With about 70 percent of Medicare beneficiaries’ rates protected by a “hold harmless provision” in the Social Security Act, Part B premium raises and other Medicare costs will be shouldered by the other 30 percent. Advocates have approached Congress to try to freeze the rising costs for all Medicare enrollees through next year, saying that, for many Part B beneficiaries, the more-than-$50-a-month rate hike could have a huge impact on their personal finances.

Backing the advocates, data from the Kaiser Family Foundation says that in 2014, about half of Medicare beneficiaries lived on an annual income of $24,000 or less and had less than $63,350 in savings. Twenty-five percent of those beneficiaries lived on less than $14,350 a year and had less than $11,900 in savings.

With the pressure on Congress to act to protect the 30 percent of Medicare beneficiaries that stand to be affected, it remains to be seen what track they will take. Unfortunately, Congress may be reluctant to act, despite the broad range of advocates, because a fix to the Medicare system could cost the federal government $10 billion by one estimate.

  1. Time.com. Sept. 10, 2015. “Advocates Aim to Block Medicare Premium Increases.
    http://time.com/money/4029555/medicare-premium-increases/. Accessed Sept. 23, 2015.
  2. Kaiser Family Foundation. Sept. 10 2015. “Income and Assets of Medicare Beneficiaries, 2014 – 2030.”http://kff.org/medicare/issue-brief/income-and-assets-of-medicare-beneficiaries-2014-2030/. Accessed Sept. 23, 2015.
  3. Time.com. Sept. 10, 2015. “Advocates Aim to Block Medicare Premium Increases.”
    http://time.com/money/4029555/medicare-premium-increases/. Accessed Sept. 23, 2015.