Monthly premiums are an unavoidable part of Medicare. For the most part, everyone pays the same monthly premium fee, but some people pay more than others. Several factors can impact your monthly costs.
2016 is bringing several different changes to Medicare coverage, restrictions, and costs. One of the most significant changes coming to Medicare this year is the increase in monthly premiums for Medicare Part B.
In 2016, the monthly premiums for Part B are going to raise to $121.80, which is a 16% increase from 2015. But this price increase isn’t going to impact every Medicare enrollee. Only people enrolling in Medicare for the first time in 2016 are going to pay the higher premiums. But the standardized increase is not the only thing that could be raising your monthly Part B premium.
Your Medicare Part B monthly premium is based on your annual income. If your income falls into a higher income category, your premium will be higher. Medicare has five income categories that could affect the amount you pay every month for Part B benefits.
For anyone that earns $85,000 or less ($170,000 for join tax filing), you will pay the standard amount every month. The next category is for anyone that makes between $85,000 and $107,000, these beneficiaries will pay $170.50 every month. Those with an annual income between $107,000 and $160,000 will pay $243.60 in monthly premiums. The next category is from $160,000 to $214,000, and those monthly premiums are $316.70 for 2016. The highest category is for anyone that is making more than $214,000 every year, and those people will pay the highest monthly premiums of $389.80.
The adjusted premiums are based on your reported IRS tax return from 2 years prior. So, your 2016 Medicare Part B premium is based on your 2014 taxable income.
Annual income is not the only factor that can change your monthly premiums. Several other categories can impact your monthly premiums.
Medicare Part B premiums are not allowed to increase faster than Social Security payments – this is the “hold harmless” provision. Retirees that had enrolled in Medicare before they started receiving Social Security benefits will pay more every month for Part B. Anyone that falls into this group are not protected from the premium increase like those receiving Social Security. This group of enrollees will pay $121.80 every month.
Medicaid and Medicare
Medicaid enrollees will also notice differences in their monthly premiums. Those that are eligible for both Medicare and Medicaid can receive help paying for their Medicare Part B premiums. State Medicaid programs pay for these premiums. The Kaiser Family Foundation is estimating that dual-eligibles (Medicare and Medicaid) will account for two-thirds of the enrollees that are not protected from the premium increases.
Assistance with Premiums
If you have problems paying your monthly premiums, some programs can assist you. The Medicare Savings Programs can provide state help in paying for your Medicare Part A and Part B deductibles, copayments, and coinsurance. There are four different types of Medicare Savings Programs: Qualified Medicare Beneficiary Program, Specified Low-Income Medicare Beneficiary Program, Qualifying Individual Program, and Qualified Disabled and Working Individuals Program. Each program has different qualifications, limits, and restrictions for enrollees that apply for the program. Each program also only covers certain Part A or Part B premiums or deductibles. If you would like to apply for one of these programs, call your state Medicaid Program office to begin the application process.
Understanding your Medicare monthly premiums can be confusing. If you don’t fully understand why you are paying the amount you are, contact your local Social Security office or contact a Medicare professional through the Medicare.gov website. A Social Security or Medicare representative can walk you through your specific Medicare coverage and costs.