Retiree Budget-Buster: Big Price Hikes for Medicare Premiums in 2016

Some Medicare beneficiaries could see their rates jump by more than 50%.

Retirees, adjust your budget: Double-digit price hikes for Medicare Part B premiums are coming next year.

See Our Slide Show: 11 Common Medicare Mistakes

The actual rates for Part B (which covers the costs of doctor visits and outpatient care) will be announced in October and take effect Jan. 1. The boost may be 15% for all participants or a whopping 52% for some, depending on whether Social Security recipients see a cost-of-living raise for 2016.

If Social Security checks are increased, everybody will pay more for Part B, bumping the monthly premium from $104.90 to $120.70 to cover higher expenses. That’s the scenario for a 15% increase in costs.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

But without a raise in Social Security benefits, higher Medicare fees couldn’t be charged to most folks. So the larger increase would apply to about 30% of Medicare beneficiaries:

  • those who enroll in Part B in 2016,
  • people who don’t have their premiums deducted from Social Security payments,
  • individuals with annual incomes above $85,000,
  • and people eligible for both Medicare and Medicaid.For the last group, known as “dual eligibles,” Part B premiums are paid by the state where they live.Medicare beneficiaries in these groups would see bills jump to $159.30 a month unless the Obama administration took steps to lessen the pain. That’s possible, but not certain.
Martha Lynn Craver
Associate Editor, The Kiplinger Letter