New budget deal offers valuable benefits for retired, disabled Americans


January 14, 2016

For the nation’s 54 million Medicare beneficiaries, 2016 should see some very positive financial news. Thanks to the recent bipartisan budget deal passing in the U.S. House of Representatives, enrollees may avoid a proposed 52 percent increase in Medicare Part B premiums. Once the deal passes, premium increases will be much lower. And, this deal’s benefits will also extend to the nation’s disabled workers, preserving their Social Security benefits.

Medicare Part B is vital, as it covers medically necessary and preventive services and supplies. Medically necessary conditions are those leading to debilitating symptoms or side effects. Preventive services refer to preventing or detecting illness at an early stage, when treatment is most likely to work.

With Part B, rate increases are capped by law, based on the Social Security cost-of-living adjustment (COLA). However, 2016 will see no COLA, so there will be no Part B premium increases for the 70 percent of those beneficiaries considered held harmless. Under this clause, Social Security recipients typically receive the same amount of benefits year-to-year. But the remaining 30 percent not held harmless will see big increases, including:

  • New enrollees benefits beginning in 2016
  • Enrollees not receiving Social Security benefit checks
  • Enrollees subject to the income-related premium adjustment
  • Dual Medicare-Medicaid beneficiaries; their premiums are paid by state Medicaid programs

Considerable savings for monthly premiums

Assuming this new budget passes in the U.S. Senate, 2016 Part B premiums for an estimated 17 million beneficiaries will rise 14 percent, rather than 52 percent. This represents an increase from the current base rate of $104.90 per month to $120 per month, plus a $3-per-month surcharge. Without this deal, Part B premiums would increase to $159.30 per month.

To keep Medicare Part B costs low, about $12 billion will be covered by the Treasury Dept., in the form of a loan paid back over time by gradual Part B premium increases. Beneficiaries will pay about $3 a month more in premiums until 2021. Higher-income beneficiaries can expect to pay more than $120; this could range from $168 to $384, plus the surcharge. These beneficiaries are subject to Medicare’s income-related monthly adjustment amount.

Financial security protected for millions

This proposed deal is considered very beneficial for the elderly and their financial security. “Congress is helping to prevent financial hardship for many beneficiaries at a time when there is no Social Security cost-of-living adjustment,” stated Jo Ann Jenkins, chief executive officer of AARP. With about 38 million Americans and their families turning to AARP, a nonprofit, nonpartisan organization, their endorsement carries serious weight.

Those Americans receiving Social Security disability payments should also benefit from this proposed budget deal. But this deal means that a big cut to these payments can be avoided. It will redistribute payroll taxes among Social Security program trust funds. And, this will ensure the disability insurance program’s solvency. Previously, this program was faced with running out of funding in 2016. As a result, about nine million enrollees would have had an automatic 19 percent reduction in their benefits.