Projected 2017 Medicare Part B Premium Increase

2017 Medicare Part B premiums are projected to increase by almost $30/month to $149/month for about 30% of Medicare enrollees. Medicare will not finalize this increase until the fall. .

The 2017 Medicare Part B premium is expected to stay roughly the same at $121.80/month for the vast majority of enrollees who receive Social Security benefits. But for new enrollees, enrollees who do not receive Social Security benefits, and enrollees with high incomes the projected 2017 premium is $149/month.

Medicare Background

Medicare is the federal health insurance program for people 65 or older. It also covers younger people with disabilities and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant).

The two parts of Original Medicare are Part A (hospital insurance) and Part B (physician services and outpatient care). Part A does not have a premium. You have a co-payment if you use hospital services.

Part B has a monthly premium. The Government deducts the Part B premium from your Social Security monthly check if you have claimed your Social Security benefit. The 2016 Part B premium is $121.80/month if your 2014 income was less than $85,000 ($170,000 if married filing jointly). Part B premiums are higher for seniors with higher adjusted gross income. The 2016 Part B premium can be as high as $389.80/month if your individual income in 2014 was above $214,000 (above $428,000 if married filing jointly).

Why is the 2017 Premium Projected to Increase for Some Enrollees and Not for Others?

Total Medicare Part B premiums must generally equal 25% of the expected cost of annual Part B services. And 2017 Part B expenses are likely to increase by 6.9% from 2016. But a hold-harmless provision limits the increase in the Medicare Part B premium for those enrollees who currently receive Social Security.

This provision limits the growth in the Medicare Part B premium to the dollar increase in an individual’s Social Security benefit. The 2017 cost-of-living adjustment for Social Security benefits is expected to be small at 0.2%. Not anywhere close to the estimated increase in Medicare Part B expenditures of 6.9%. As a result, the 2017 Medicare Part B premium will not increase much above its 2016 level of $121.80/month for enrollees receiving Social Security.

To balance Medicare program expenditures, enrollees not receiving Social Security benefits have to make up the difference. The premium is expected to be $149/month for 2017 or a 22.3% increase for these enrollees.

The 2017 Medicare Part B premium level won’t be finalized until later this fall so stay tuned. It could change if inflation were to increase unexpectedly and cause a larger increase in the cost of living adjustment to Social Security benefit or if Congress were to change the hold-harmless provision.

2 Responses to Projected 2017 Medicare Part B Premium Increase

  1. OBSERVER August 22, 2016 at 10:30 pm #


    • Michael Wroblewski, CFP® August 24, 2016 at 9:04 am #

      Thanks for the clarification. The Government will announce any changes to the Part B premium later this fall. Please stay tuned.

Leave a Reply