Due to the combination of currently low inflation and a variety of rules governing Social Security and Medicare, Medicare Part B premiums are likely to skyrocket as much as 50% in 2016 (2015 premiums are $104.90/month for most beneficiaries).
Most current beneficiaries will not be subject to the increase, but those above a certain income level and those who are starting Medicare in 2016 will be exposed. Also, those who are currently on Medicare, but have not yet started Social Security benefits will also be exposed to the higher premiums.
Am I Exposed? If So, How Can I Avoid the Increase?
- If you are currently on Medicare and receiving Social Security benefits, your Medicare Part B premiums are being deducted from your Social Security paycheck. You are not exposed and your 2016 premiums will be the same amount paid in 2015 – unless your income is above $85,000 if single, or $170,000 if married filing jointly. If you aren’t sure, take a look at your Social Security statement and look for the deduction of Medicare Part B premiums.
- If you have income in excess of $85,000 (single) or $170,000 (married filing jointly), your Medicare Part B premiums are already higher than the base rate of $104.90/month (if you are currently covered by Medicare). Your premiums will also increase substantially in 2016. If you fall into this income category, but will not start Medicare until age 65, you also will pay the higher premiums when you enroll. Unfortunately, for any beneficiaries above these income thresholds, there is no action you can take to avoid this.
- If you are not yet 65, and thus not yet covered by Medicare this does not apply to you. If you will be turning 65 in 2016, the higher premiums will apply when you enroll, but unfortunately, there is no action that you can take to avoid them. The only exception would be to keep working in a job that does not require you to enroll in Medicare when you are age 65 or older.
- If you are currently enrolled in Medicare, but are delaying Social Security benefits to gain higher credits, you will be exposed to the higher premiums. You can avoid the higher premiums by starting your Social Security benefits now – but only if you receive at least two months of benefits in 2015. If this applies to you will need to act quickly to avoid the premium increase.
- You may want to consider starting Social Security benefits now, if you originally planned to start in 2016. If you did not plan to start benefits until 2017 or later, you probably do not want to start now, as the delayed credits from waiting will exceed the higher Medicare Part B premiums in most cases.