What You Will Pay in 2019 for Medicare/TRICARE
Medicare recently released its new rates for 2019. After staying the same last year, Medicare and TRICARE for Life beneficiaries will see their Part B premium increase slightly this year. The Part B standard premium is set to increase $1.50 per month, from $134 to $135.50.
For the past two years, some Medicare beneficiaries have been paying lower premiums and have been protected by a provision called the “hold harmless” rule. Medicare estimates only 2 million beneficiaries will have their premiums shielded this year.
Let's recall why this was originally put into place.
Adjustments are made annually to both the Social Security benefit and the Medicare premiums an individual pays. These adjustments are indexed to different inflation measures. The Social Security COLA is based on the CPI-W index, which measures inflation. By contrast, the Medicare premium is based on how much the Medicare program itself grows through its spending on medical services.
These different adjustment measures have resulted in Medicare premiums that typically increase at a rate greater than Social Security COLAs. For instance, from 2000 to 2018, Social Security COLAs increased an average of 2.2 percent annually, which resulted in a cumulative benefit increase of approximately 50 percent. This was considerably less than the average 6.1 percent annual increase in standard Medicare Part B premiums, whose premium growth was a whopping 195 percent over the same period, according to a Congressional Research Service report released last month.
The bottom line? A greater percentage of total Social Security benefits were being deducted to pay for Medicare premiums. Congress has acted several times to protect beneficiaries from the impact of large Medicare Part B premium increases. The hold-harmless provision was made permanent, and prevents certain Social Security beneficiaries' monthly benefit amounts from decreasing from one year to the next due to an increase in their Medicare Part B premiums.
The new premiums for 2019:
- Part B premium: $135.50 (was $134)
- Part B deductible: $185 (was $183)
- Part A deductible (inpatient) $1,364 (was $1,340)
Premiums for higher-income beneficiaries ($85,000 and above) are:
- Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $189.60.
- Individuals with annual incomes between $107,000 and $133,500 and married couples with annual incomes between $214,000 and $267,000 will pay a monthly premium of $270.90.
- Individuals with annual incomes between $133,500 and $160,000 and married couples with annual incomes between $267,000 and $320,000 will pay a monthly premium of $352.20.
- Individuals with annual incomes between $160,000 and less than $500,000 and married couples with annual incomes above $320,000 and less than $750,000 will pay a monthly premium of $433.40.
- Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $460.50.
Remember, the Social Security Administration uses the income reported two years ago to determine beneficiaries Part B premiums. For example, the income reported on your 2017 tax return would be used to determine whether you would pay a higher monthly premium in 2019. So here is an important tip: if you have a reduction in income and change rate groupings noted above, you can have your income basis updated (due to a qualifying event such as retirement) before the tax returns catch up later. For more information, see this article.
You can access more information from Medicare for 2019 here.