Medicare costs are expected to jump significantly in 2016. Though about 15 million Americans could be affected, there could be a small window of opportunity for a few beneficiaries if they act now.
Millions of Americans, the majority of them old and infirm, will now have to brace themselves for higher premiums of Medicare. However, those who have been getting their premiums deducted automatically have been spared, owing to a nifty technicality. Since this year there won’t be a Cost-of-Living Adjustment, commonly referred to as COLA, those who have been getting their premiums deducted from their Social Security check beforehand won’t be asked to bear the higher costs.
Though the majority of the Americans who avail Medicare fall into this category, the rest or estimated 15 million Americans who have been paying their premiums individually and separately will now have to pay a lot more. Essentially, those who have been paying for Medicare costs individually will have to bear the burden of the increased premiums, which the other group isn’t entitled to pay.
Monthly Medicare premiums will go up for those who don’t have deductions taken out of their Social Security checks, reported the Huffington Post. Only three times in the past 40 years has the American administration chosen not to dole out COLA, which automatically activates the “hold harmless” clause. What the clause essentially says is that if the American citizen entitled to medical benefits isn’t getting a raise, neither is he or she mandated to pay higher premiums.
This safeguards about 70 percent of Americans, said AARP South Dakota Associate State Director Cathy McLeer.
“That in the event of a no COLA year, like we’re having right now, where there is no increase in that monthly benefit for Social Security recipients that all Medicare beneficiaries should be held harmless.”
But for the remaining 30 percent or approximate 15 million Americans, the cost of Medicare is expected to jump by more than 50 percent in 2016. Premiums are expected to rise from $104.90 to $159.30 a month (for incomes below $85,000), according to 2015 Medicare Trustees Report. Moreover, the 30 percent Americans will include new enrollees from 2016 as well.
What’s concerning is the fact that the rise in Medicare costs from 2016 is going to hit the seniors the hardest. What’s even more baffling is the fallout of the revision is going to impact women harder.
It’s observed that older people spend a lot more on medical care than the youth. Statistically speaking, people 65 and older spend twice as much per-capita as those under 65. However, medical expenses aren’t factored in during COLA measurement. It’s no secret that medical costs have been rising far quicker and are steeper than inflation. In fact, according to the Senior Citizens League, Social Security benefits have lost 22 percent of their buying power since 2000, reported News Max.
Moreover, it’s a known fact that women in America are outliving men. Statistically, of the Medicare recipients aged 85 years and above, almost 70 percent are women. Those women who have been living with acute medical conditions will now have to pay a higher premium, reported the National Older Women’s League.
Those looking to avoid paying the higher Medicare costs in 2016 could think of enrolling right now, reported Forbes. Interested and eligible Americans could sign up for their Social Security benefits before the end of 2015 and enroll in the program to have their Medicare premiums deducted from the monthly payments. However, the savings achieved might not be significant, caution experts. But on the plus side, for each year after 66 that Americans delay signing up, there is an 8 percent increase in Social Security benefits (up until age 70) for life. Still, without federal intervention, the Medicare costs could pinch significantly starting next year.
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