An Unexpected Spike for Medicare Premiums?

A nurse discusses medication with a patient in 
Denver. Photo: John Moore/Getty Images

Provision could hike 2016 rates by 52% for some recipients

Unless the U.S. Department of Health and Human Services intervenes, some Medicare beneficiaries will face a steep increase in their 2016 premiums, even as the vast majority of Medicare recipients pay no increase at all.

Medicare’s trustees projected in a recent report that for about 30% of the program’s beneficiaries, 2016 premiums would rise by 52% for Part B, which covers doctor visits and other types of outpatient care.

The projected increases result from a little-noticed intersection between the rules governing Medicare and Social Security.

LINK: What the annual Medicare and Social Security 
reports miss

Under the Social Security Act’s “hold harmless” provision, Medicare can’t pass along to most Social Security recipients a premium increase that is higher than whatever they would receive through Social Security’s annual cost-of-living adjustment, according to Casey Schwarz, policy and client-services counsel at the nonprofit Medicare Rights Center.

With inflation so low, Social Security isn’t expected to pay a cost-of-living increase in 2016. So Medicare would be unable to pass any premium increase along to the estimated 70% of beneficiaries who will qualify for this “hold harmless” treatment in 2016. As a result, Medicare must spread the projected increase in its costs across the remainder.

But while the final rates the government sets in the fall are typically close to the trustees’ predictions, HHS Secretary Sylvia Mathews Burwell has said she would search for ways to reduce the increase for affected beneficiaries. The final decision about 2016 rates “will be based on our preliminary projections today, subject to additional data, and the administration’s consideration of policy options,” she said last week.

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