CMS Publishes Final Medicare Part B Premium Rates For 2016

By on November 11, 2015 in Pay & Benefits, Retirement with 22 Comments

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After months of speculation and debate, the Centers for Medicare and Medicaid Services (CMS) has published the official rates for Medicare Part B premiums beginning in January 2016.

As previously discussed, for the 70 percent of Part B participants who have their premiums deducted from their monthly Social Security benefits, the rate will remain the same as in 2015 at $104.90 per month.

The standard rate for most everyone else not covered by the “hold harmless” provisions of the Social Security Act will increase to $121.80.

This group includes CSRS retirees who did not contribute to Social Security while they worked for the government and now do not receive Social Security benefits. Only individuals who have their Part B premiums deducted from their Social Security benefits are covered by the “hold harmless” provision.

CMS explains that the $121.80 “is equal to 50 percent of the monthly actuarial rate for aged enrollees (or approximately 25 percent of the expected average total cost of Part B coverage for aged enrollees) plus $3.00.”

To qualify for the hold harmless protection, “the reduced premium for the individual for that January and for each of the succeeding 11 months is the greater of either (1) the monthly premium for January reduced as necessary to make the December monthly benefits, after the deduction of the Part B premium for January, at least equal to the preceding November’s monthly benefits, after the deduction of the Part B premium for December; or (2) the monthly premium for that individual for that December.”

In the advance notice from CMS that will be posted in the Federal Register on November 16, 2015, “If a beneficiary has to pay an income-related monthly adjustment, they will have to pay a total monthly premium of about 35, 50, 65, or 80 percent of the total cost of CMS-8061-N 2 Part B coverage plus $4.20, $6.00, $7.80, or $9.60.”

CMS notes that “Section 1844(d) of the Social Security Act, as added by section 601(b) of the Bipartisan Budget Act of 2015, provides for a transfer from the general fund to the Part B account of the SMI Trust Fund. This transfer of $7,440,648,000 consists of $5,237,880,000 in reduced premium revenue for enrollees age 65 and older, and $2,202,768,000 in reduced premium revenue for enrollees under age 65.”

Under the Bipartisan Act of 2015, Part B enrollees will repay this transfer over the next several years through a monthly surcharge. The repayment amounts will be added to the Part B premium otherwise determined each year and paid back to the general fund of the Treasury.

CMS also announced a $19 increase in the Part B deductible for 2016. The Part B deductible for 2016 is $166.00 for all Part B beneficiaries.

“Our goal is to keep Medicare Part B premiums affordable. Thanks to the leadership of Congress and President Obama, the premiums for 52 million Americans enrolled in Medicare Part B will be either flat or substantially less than they otherwise would have been,” said CMS Acting Administrator Andy Slavitt. “Affordability for Medicare enrollees is a key goal of our work building a health care system that delivers better care and spends health care dollars more wisely.”

Part B Monthly Premiums for 2016 

File individual tax return with income: File joint tax return with income: Total monthly premium amount
Less than or equal to $85,000 and premium deducted from Social Security benefits Less than or equal to $170,000 and premium deducted from Social Security benefits

$104.90

Less than or equal to $85,000 and premium not deducted from Social Security benefits Less than or equal to $170,000 and premium not deducted from Social Security benefits

$121.80

Greater than $85,000 and less than or equal to $107,000 Greater than $170,000 and less than or equal to $214,000

$170.50

Greater than $107,000 and less than or equal to $160,000 Greater than $214,000 and less than or equal to $320,000

$243.60

Greater than $160,000 and less than or equal to $214,000 Greater than $320,000 and less than or equal to $428,000

$316.70

Greater than $214,000 Greater than $428,000

$389.80

Premiums for beneficiaries who are married and lived with their spouses at any time during the taxable year, but file a separate return, are as follows:

Beneficiaries who are married and lived with their spouse at any time during the year, but file a separate tax return from their spouse: Total monthly premium amount
Less than or equal to $85,000

$121.80

Greater than $85,000 and less than or equal to $129,000

$316.70

Greater than $129,000

$389.80

Sources: Centers for Medicare and Medicaid Services and Walton Francis

© 2016 Michael Wald. All rights reserved. This article may not be reproduced without express written consent from Michael Wald.

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About the Author

Michael Wald is an independent economics analyst and writer based in the Atlanta area. He specializes in topics related to business, labor, and human resources. Prior to his retirement from the U.S. Department of Labor, he served as the agency’s Southeast Regional Director of Public Affairs and Southeast Regional Economist.

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