No projected 2018 increase in standard Medicare premium

[Editor’s note: Medicare 2018 premium information released, November 20, 2017.]

The July annual report of the Medicare Trustees to Congress on the financial state of the program shows no projected 2018 increase in the standard Medicare premium, which is $134 today; indeed, the Part B premium may fall. But, two groups of people with Medicare are projected to pay a higher 2018 Part B premium. People with 2017 Medicare monthly premiums of $109 are likely to pay higher premiums in 2018 because their Social Security benefits are projected to increase. And, some people with annual incomes above $85,000 also will likely pay higher premiums because the income level for paying more than the standard 25 percent of income contribution will be adjusted downward in 2018.

A projected 2 percent increase in people’s Social Security checks–an average monthly increase of $27.20–means that people paying the standard 2018 Medicare monthly premium of $134 will likely see a reduction in their Part B premium. But, the 70 percent of people with Medicare who have paid a lower premium because their Social Security benefits have barely increased over the last two years–people who have been paying an average monthly premium of $109–will likely see an increase in their Part B premium.

The income adjustment for calculating the Part B premium in 2018 for people with annual incomes above $85,000 stems in part from increasing costs in Part B, which covers doctors visits, durable medical equipment, outpatient therapy and other outpatient care. In 2016, Part B spending was 2.1 percent of GDP.  The Trustees project it to increase to 3.4 percent by 2037.

The Trustees report shows intermediate projections that in both 2018 and 2019 individuals will pay a standard monthly premium of:

• $134.00 if their income is $85,000 or less
• $187.50 if their income is between $85,001 and $107,000
• $267.90 if their income is between $107,001 and $133,500
• $348.30 if their income is between $133,500 and $160,000
• $428.60 if their income is more than $160,001

You can calculate the premium amounts for higher-income couples by doubling the incomes listed.

Beginning in 2007, people with annual incomes above $85,000 (couples more than $170,000) pay Part B premiums that are far higher than people with annual incomes below $85,000. About one in 16 people with Medicare (6 percent) have annual incomes above $85,000. That percentage is projected to grow to 8.3 percent by 2019, according to the Kaiser Family Foundation.

People with Medicare are notified of 2018 Part B premium changes in the fall, before the Medicare open enrollment period from October 15 through December 7. The annual Part B deductible is expected to remain at $183. The Medicare Part D premium is projected to drop by about $1.2o a month.

The Medicare Trustees estimate that Part B and Part D out-of-pocket costs, including premiums and copays, account for about 25 percent of a typical individual’s Social Security benefits in 2017.

The Medicare Trustees now project the Medicare hospital insurance trust fund (Part A of the program) to be insolvent by 2029, one year later than the Trustees projected last year. The Trustees project lower hospital insurance spending than they projected last year, because of lower inpatient hospital utilization assumptions and lower than expected spending in 2016.

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