2017 Medicare Costs

What Will You Pay for Medicare Part B in 2017?

We don't actually know yet.  The 2017 Part B premium is projected by most estimates to be $149.00 a month for those new to Medicare and lower for those already enrolled and currently collecting Social Security benefits.  And for those who pay an income-related monthly adjustment amount (IRMAA) it could be as high as $400.00.

But, Don't Panic Yet!

In 2015 Congress set the base Medicare Part B premium for 2016 at $121.80. That was much less than the 52% hike that many were predicting at this time last year. But most Medicare beneficiaries continue to pay the same amount in 2016 as they did in 2015 - $104.90 a month because of a "Hold Harmless" rule that prevents increases beyond the amount the Social Security cost of living adjustment (COLA) adds to your check.

There was no Social Security increase for 2016 which meant that the Part B premium amount could not go up at all for beneficiaries who are “held harmless.”  Their monthly 2016 Part B premium remained at $104.90.  This applies to most people who have their Part B premium deducted from their monthly Social Security checks.

So, what will happen in 2017?

By law, the premiums paid by Medicare beneficiaries must cover 25% of expected Part B costs for the year. Medicare costs are projected to go up in 2017. The hold harmless rule effectively shifts the cost increase to beneficiaries who are not protected by it.  This includes you if:

  • You are not collecting Social Security benefits.
  • You enroll in Part B for the first time in 2016.
  • You pay an income-related monthly adjustment amount.
  • You get BOTH Medicare and Medicaid benefits. (Medicaid will pay the cost increase.)

Federal Funds Helped Bridge Gap

The Bipartisan Budget Act of 2015 helped offset the increases in 2016 by subsidizing the increase with a loan of general revenue from the Federal Treasury to the Part B Trust Fund. Medicare beneficiaries will pay back the loan over time from set increases to future premiums.  Starting in 2016, beneficiaries who are not subject to the hold harmless provision - roughly 30% of Medicare beneficiaries - will pay an additional $3 in their monthly Part B premium for a number of years until the loan is repaid.

Starting in 2017 and beyond, all beneficiaries will pay an additional $3 on top of their monthly premium amount, unless they are held harmless under the rules described above.  Higher income individuals who are subject to a higher income-related Part B premium will pay a higher additional amount, roughly $12 per month.

The .2% COLA Could Have An Impact.

The Social Security Administration is estimating the next COLA at .2% or 20 cents for every dollar or $200 for every $1,000.  The small COLA now projected for 2017 will have an impact on Part B premiums. The report estimates that standard premiums for most of those in the 30 percent not currently held harmless would jump by $27.20 to $149.00 a month in 2017. The other 70 percent (currently paying $104.90) would pay $107.60 a month in 2017 - $2.70 more than they pay now, according to a report done by the nonprofit National Committee to Preserve Social Security and Medicare.

Of course, Congress may step in again with another loan to stave off the large increases so we may not know what the actually premium will be until late November or early December.  I will post the information as soon as it's available. 

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