Retirees don't all pay the same Medicare Part B premium. While most Medicare beneficiaries will experience a modest premium increase next year, a few specific groups of seniors will have to pay much higher premiums. Here's a look at how much retirees will need to pay for Medicare Part B in 2017.
Existing Social Security beneficiaries. Medicare premiums are prevented by law from increasing faster than Social Security payments for existing beneficiaries. The Social Security cost-of-living adjustment was just 0.3 percent for 2017. So, the monthly Medicare Part B premium will only increase by a few dollars from $104.90 in 2016 to $109 in 2017 for most existing Social Security recipients. About 70 percent of Medicare enrollees will experience this small premium increase, according to the Centers for Medicare and Medicaid Services. Most Social Security beneficiaries have their Medicare premiums deducted from their Social Security payments.
New Medicare enrollees. Retirees who sign up for Medicare in 2017 will pay the standard Medicare Part B premium of $134 for 2017, up 10 percent from $121.80 in 2016. These new enrollees will pay $300 more for Medicare Part B in 2017 than existing Social Security recipients. "Because of the 'hold harmless' provision covering the other 70 percent of beneficiaries, premiums for the remaining 30 percent must cover most of the increase in Medicare costs for 2017 for all beneficiaries," according to a statement from the CMS. New enrollees include people who will turn 65 in 2017 and those who were previously covered by group health insurance through their job and elect to join Medicare in 2017.
Retirees who haven't signed up for Social Security. Some retirees sign up for Medicare before claiming Social Security in order to qualify for higher Social Security payments later on in retirement. The Social Security full retirement age is 66 for most baby boomers, which is a year later than the Medicare eligibility age of 65. Retirees who sign up for Social Security before age 66 collect a reduced payment. Those who delay signing up for Social Security between ages 66 and 70 will qualify for higher monthly payments. However, people who sign up for Medicare without claiming Social Security will pay the standard Part B premium of $134 per month for 2017. There is also a small group of retirees who are eligible for Medicare, but not Social Security.
Medicaid recipients. Some low income retirees are eligible for both Medicaid and Medicare. In this case, the state Medicaid program will pay the $134 monthly Medicare Part B premiums for 2017.
High income retirees. The approximately 5 percent of Medicare beneficiaries with high incomes have paid higher Medicare Part B premiums since 2007. Retirees bringing in more than $85,000 per year ($170,000 for couples) pay Medicare premiums ranging from $187.50 per month for those just over the income cutoff to $428.60 monthly for those earning over $214,000 ($428,000 for couples) in 2017.
Late enrollees. You are first eligible to sign up for Medicare Part B during a seven-month period that begins three months before you turn 65. If you don't sign up during this initial enrollment period you might have to pay a late enrollment penalty for the rest of your life. Monthly Part B premiums increase by 10 percent for each twelve-month period you delay signing up for Medicare after becoming eligible for the program. If you delay signing up for Medicare for two years after your initial enrollment period your premiums will be 20 percent higher. However, if you delay signing up for Medicare because you are still working and have group health insurance through your job, you will need to sign up for Medicare within eight months of leaving the job or the coverage ending in order to avoid the penalty.
Other costs. Premiums aren't the only Medicare out-of-pocket costs retirees must pay. The Medicare Part B deductible will increase by $17 to $183 in 2017. After the deductible, retirees could be responsible for 20 percent of the cost of covered services unless they supplement Medicare with additional insurance.
Emily Brandon is the author of "Pensionless: The 10-Step Solution for a Stress-Free Retirement."