As a result of the links between Social Security and Medicare, some Medicare beneficiaries will face a 50 percent increase in Part B premiums in 2016, while more than two thirds will not see an increase at all.
Medicare is required by law increase premiums to cover increases in per-capita costs. In most years, the increase is around $15 - $20 at most.
Low inflation in 2015 means that for the first time in many years, there will be no cost of living (COLA) for Social Security. The law says that if Social Security benefits don't rise, neither can Medicare premiums and roughly 70% of Medicare beneficiaries won't see the premium hike
Here’s the problem: that means the entire burden of this year's Medicare cost increases falls on the remaining 30%, who will see up to 50% increase in their premiums.
This includes high income seniors, new enrollees, those enrolled in Medicare but not getting a Social Security check, and the so-called "dual eligibles" (who receive Medicare and Medicaid benefits; their premiums are paid by state Medicaid programs).
For high-income people, those premium hikes are hefty: for a single making more than $214,000, Part B premiums are will increase from $335.70 to $509.80. For some of these folks, it'd be cheaper to buy insurance through Affordable Care Act exchanges than to buy Part B plus Part D drug coverage and a Medigap policy. But they also might be better off with Medicare long term.
Take a look at this article in Forbes (October 9, 2015) "Untangling the Medicare Premium Mess -- And What It Means For You."
If you have questions, call me at 516-307-1236 to find out how this might impact you in 2016.