Note: these numbers have been finalized for 2016 at slightly less than originally reported. Apologies for any confusion.
As we discussed in a previous post, with the lack of a Cost of Living Adjustment coming for Social Security recipients benefits in 2016, for most Medicare Part B participants the premium will remain unchanged at $104.90 in 2016. However, approximately 30% of Part B participants will see an increase to their premium for 2016 – and originally this amount was going to be a 52% increase. Lost in all of the hullabaloo around the elimination of File & Suspend, a part of the Bipartisan Budget Act of 2015 helped to reduce that increase, which will be “only” 16% for 2016.
Instead of increasing to nearly $160 per month, the Medicare Part B premium will only increase to $121.80 per month for most of those affected. This change was taken care of in part by spreading the additional cost over the coming five years at a $3 per month surcharge for anyone who 1) starts Medicare between 2016 and 2021 and 2) anyone who is receiving Medicare Part B but paying the premiums directly rather than via withholding from Social Security.
Everyone gets to take part in some of the pain, though. Even though you may not see an increase to your monthly premium, your deductible is on the rise as a result of Medicare revenue shortfalls, but not as much as was originally expected. In addition to the premium increase for some recipients, all Medicare Part B recipients will experience an increase to the deductible. Originally this was to increase to $223 per year (from the current $147), but under BBA2015 the increase to the annual deductible was only $19, to a total deductible of $166 for 2016.
How may I be affected?
It depends on your income tax filing status, your household income on your tax return, and whether or not you’re receiving Social Security benefits and having your Part B premium deducted from the monthly check. (Incidentally, if you are receiving Social Security and are not having the Part B premium deducted but are paying directly, you should change this asap to avoid paying extra!)
If you’re delaying your Social Security benefits while paying your Part B premium directly, this increase will affect you. Plus, regardless of your Social Security filing status, if you’re in the upper income levels (see below) you’ll see an increase to your Part B premium (plus the $3 surcharge) as well.
The lowest Medicare Part B premium is found for folks who have an income of less than $85,000 (single) or $170,000 (married filing jointly). At income levels above that, the Part B premium increases.
The table below outlines the premium amounts for the various income levels and filing statuses:
| Social Security | Income Tax filing status | 2016 Medicare Part B Premium | |
| Single | Joint | ||
| Receiving and Part B premium deducted | Income $85,000 or less | Income $170,000 or less | $104.90 |
| Receiving and Part B premium NOT deducted or not receiving | Income $85,000 or less | Income $170,000 or less | $121.80* |
| Not applicable | Income between than $85,001 and $107,000 | Income between $170,001 and $214,000 | $170.50* |
| Income between $107,001 and $160,000 | Income between $214,001 and $320,000 | $243.60* | |
| Income between $160,001 and $214,000 | Income between $320,001 and $428,000 | $316.70* | |
| Income $214,001 or more | Income $428,001 or more | $389.80* | |
* These premiums reflect the $3 surcharge on top of the regular Part B premium for each income level.
Sterling Raskie, MSFS, CFP®, ChFC®
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.
For taxpayers with the premium costs of $417.20 or $512.80 does it make sense to apply for coverage at age 65 since these costs plus medi-gap may be GREATER than the cost of conventional coverage. Am I missing something here by even considering this?
Should these taxpayers consider turning their back to medicare coverage in light of these very high premiums?
Thanks Sterling for your anticipated thoughts.
Sorry Jim, I did not realize that you wrote this article.
I guess the other side of the coin is the penalties for not applying for Part B, including the possibility that the conventional coverage may refuse to pay benefits if you’re over 65 (expectation is to be secondary). Plus if the conventional coverage becomes higher cost, there is an additional penalty to start Part B late after opting out. There are probably other things to consider as well, but these are the ones that come to mind at the moment.
jb