New Medicare Part B Premium for 2016
You have probably already received a letter from the Social Security Administration notifying you that your Medicare Part B premium for 2016 will be $121.80.
Here is an explanation of the reasons for the increase. Medicare Part B covers outpatient services such as doctor’s visits, x-rays, blood tests, and some medical equipment.
By law, Medicare Part B premiums must cover 25% of the cost of running the program and provide for adequate trust fund reserves. To accomplish this, Part B premiums are set to fulfill the requirement of this law. But, since Social Security recipients have not received a cost-of-living increase, their premiums cannot be hiked. They are protected under the “hold harmless” provision of the Social Security Act and their premiums will remain at $104.90.
The above account for 70% of the people who have their Part B premiums deducted from their monthly Social Security checks. The 30% who are not protected under the “hold harmless” provision includes Medicare beneficiaries who have not yet claimed Social Security, higher-income beneficiaries, those new to the Medicare program, and those who do not have their premiums deducted from a Social Security check (that’s us).
Initially the Part B premiums were to be raised to $159.30 for 2016, but due to a last minute budget deal between Congress and the administration it was set at $121.80. This budget deal involved getting a $7 billion loan from the Treasury Department.
Beneficiaries not protected under hold harmless will pay a $3 monthly surcharge to repay the Treasury loan, which is included in the $121.80 total. Upper income beneficiaries will pay considerably more, ranging from $170.50 a month for individuals making more than $85,000 a year, to $389.80 a month for those making more than $214,000. The amount charged is based on the 2014 tax returns. All beneficiaries will pay $166 next year for their Medicare Part B deductible – up from the current $147.
Medicare Part D, the prescription drug part of Medicare, is also income related and is based on your 2014 tax return.
Many of you question why you must pay for this coverage to two different places. The answer is that your plan premium is paid to the provider, such as to Silverscript, Wellcare, or Blue Cross, etc.
The income-related increase portion is paid to the government. In 2003 then President Bush signed into law the Modernization Act, which stated that beginning in 2007 all Part D Plans, would be income-related and that that extra charge would go directly to the government and not the plan provider, therefore you are required to make out two different checks going to two different places.
NOTE: This material aims only to create awareness, and is not intended as expert or professional advice, nor “endorsed” by CalRTA. Please carefully review with qualified resources and legal advisors prior to acting.
CalRTA IIRG (Insurance Information Research Group)
 courtesy of Gloria Cutshall, Insurance Chair Division 6

3930 E. Saginaw Way
Fresno, CA 93726
T: 559 229.6351
F: 559 221.0075