Combatting Rise in Medicare Part B Premiums for Federal Retirees

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By on December 7, 2016 in Pay & Benefits, Retirement with 0 Comments

In October 2016, FedSmith author Michael Wald wrote about a letter to lawmakers asking them to find a solution to the sharp expected increase in Medicare Part B premiums for some federal employees. (See Groups Urge Lawmakers to Combat Rising Medicare Part B Premiums)

“In the letter, the organizations state that ‘According to the 2016 Medicare Trustees Report, Part B premiums will increase significantly for nearly 30 percent of beneficiaries. It is estimated that 2017 Part B premiums could increase to an estimated $149 per month, which is a significant increase over the standard 2016 Part B premium of $121 per month. The trustees also predict that this increase will be accompanied by a hike in the Part B deductible—up to $204 from $166.’ ”

Who Would Be Most Impacted?

While most CSRS retirees would be affected by a large increase, other groups feeling the impact would include people turning 65 this year, state and local government retirees not covered by Social Security, and state Medicaid programs.

The cost of living adjustment (COLA) for many federal retirees and Social Security recipients did not go up in 2016. (See Your COLA Increase in 2016 Will Be: Zero) The news for 2017 is a little better but, overall, federal retirees will still see their overall income go down. The COLA increase for 2017 will be 0.3%.

New Legislation Proposed

Congresswoman Dina Titus (D-NV)

Congresswoman Dina Titus (D-NV)

Congresswoman Dina Titus (D-NV) has introduced H.R. 6428. The title of the bill is “To amend title XVIII of the Social Security Act to limit Medicare part B premium increases for 2017.”

The bill would extend limits on Medicare Part B premium increases in 2017 to those who do not pay premiums directly from a Social Security benefit. This would benefit a number of federal retirees. It would limit Medicare, Part B increases to an average of about $4.00 per month.

The bill is a long way from being approved. It was assigned to a congressional committee on December 2, 2016. The committee will consider it and possibly send it on to the House or Senate as a whole. GovTrack predicts the bill has a 1% chance of being enacted into law.

NARFE Explains Why Legislation is Important

A press release from the National Active and Retired Federal Employees Association (NARFE) describes the current situation in this way:

While the so-called “hold harmless” provision of Medicare law limits Part B premium increases for most beneficiaries to the annual cost-of-living adjustment (COLA) in their Social Security benefit – an average increase of $4 in 2017 – that protection does not apply to those who do not pay premiums from a Social Security benefit, new enrollees or those with higher incomes. Furthermore, because total Medicare premiums are designed to cover 25 percent of the cost of the program, those not held harmless are forced to pay higher premiums to cover the lost premium income resulting from application of the hold harmless provision to others.

NARFE strongly supports the bill and explained the reasons for their support:

“For the second year in a row, many federal retirees, state government retirees, new enrollees and individuals who delay receipt of Social Security benefits will be paying more in premiums simply because they pay those premiums through their federal annuity or a personal check instead of through Social Security benefits.  While premiums for most have risen, on average, only $4 per month over the past two years, those who are not held harmless will see their premiums rise nearly $30 per month.”

The legislative fix for this situation is not resolved and time is growing short. At least now there is the possibility of a fix going into effect before the Medicare increases take effect.

© 2017 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47

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