New Medicare Part B Premiums: Many Will Pay More

October 27, 2017

Amid all of the changes to TRICARE this year, we have been happy to report that TRICARE For Life (TFL) has remained unaffected and unchanged. While new Medicare Part B rates will be coming out in the next few weeks, the trustees of the Medicare program project the base amount of $134 a month used in 2017 will remain the same for 2018. 

However, many beneficiaries who have been paying less than that base amount could see increases in their Part B premiums. Those with higher incomes also will pay more. Here's why:

The COLA

Social Security is set to rise by 2 percent at the outset of 2018, in accordance with the COLA. This has some notable implications for Part B premiums. Recall a bit of recent history: Back in 2016, Social Security received no COLA. A “hold harmless” provision in Medicare law - which prevents any rise in Medicare premiums to exceed the dollar amount increase in their Social Security COLA - locked many Medicare beneficiaries into their then-current premiums ($105 at the time). 

Last year, there was a small COLA of 0.3 percent, and premiums protected by the “hold harmless” provision rose - slightly. The average premium in 2017 was $109 a month. 

But with a 2 percent COLA set for 2018, many Medicare beneficiaries now will pay the full $134 a month - an overall increase.

A Shift in Income Brackets

Higher-income Medicare beneficiaries are among the groups who were not protected under the COLA “hold harmless” provision and already have been paying higher premiums.

However, these high-income surcharges will undergo a structural change that is likely to increase costs. These income bracket changes are a result of a “doc fix” law passed in 2015, which resolved a long-standing problem with Medicare payment rates to physicians. 

The law increases payments to doctors, in part, through higher-income premiums. The 2015 legislation shifted the income brackets at which certain increases take hold. The bottom line: If your modified adjusted gross income is more than $133,500 (as a single filer; $267,000 if you're filing jointly), your monthly premiums may rise by $80. The chart below depicts these changes. 

2018 Part b premiums

 

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