Some retirees may see Medicare costs increase by as much as 203 percent. This is what HealthView Services, a company that provides health care cost projection software, uncovered in a recent analysis of changes to Medicare Part B and Part D coverage.
Costs are increasing for some beneficiaries as a result of changes to the income brackets used in Medicare means testing.
Under the current system, individuals in high income brackets pay higher costs, called a surcharge. Because of changes to the brackets, some individuals may find themselves in a higher bracket, meaning that their costs are going up.
What Are the Income Brackets?
For 2018, there are five income brackets to determine how much people pay for Medicare Part B.
|Annual Income||Monthly Premium|
|$85,000 or less for an individual or $170,000 or less for a married couple||$134|
|above $85,000 and up to $107,000 for an individual or above $170,00 and up to $214,000 for a married couple||$187.50|
|above $107,000 and up to $133,500 for an individual or above $214,000 and up to $267,000 for a married couple||$267.90|
|above $133,500 and up to $160,000 for an individual or above $267,000 and up to $320,000 for a married couple||$348.30|
|above $160,000 for an individual or above $320,000 for a married couple||$428.60|
The Bipartisan Budget Act of 2018 introduces an additional income bracket that will go into effect in 2019. Individuals earning more than $500,000 and married couples earning more than $750,000 will be moved into a higher bracket and will pay more for Medicare Part B. A new bracket and premium increase will also apply to Medicare Part D.
Who Will Be Impacted?
The creation of a new bracket will impact only the highest earners – individuals earning more than $500,000 and married couples earning more than $750,000. However, these are not the only changes to impact Medicare costs in recent times.
Some high-income beneficiaries are already seeing higher monthly premiums due to changes to the income brackets that occurred in 2018. The top three 2018 income thresholds are lower than they were in 2017. As a result, many people are now in a higher bracket and are paying more each month. This change impacted individuals earning more than $133,500 and married couples earning more than $267,000.
The report from HealthView Services also warns that more people may see higher surcharges in the years to come because the income brackets are not indexed to inflation.
Under the Bipartisan Budget Act of 2018, Medicare income brackets will not be indexed to inflation until 2028. In the meantime, the brackets will not be adjusted to reflect inflation, which may cause some people to enter higher brackets as inflation causes their incomes to increase.