Americans who are Social Security and/or Medicare beneficiaries need to stay aware of the annual changes in each program. Important changes have been reported by Voya Financial Services and other sources.
Medicare & Social Security Changes for 2016
Every year there are changes to Social Security and the Medicare program, and existing enrollees and those who will join in 2016 need to fully understand what new Medicare provisions go into effect in 2016 as they impact your benefits and what you pay for them.
Some Will See Increases in Part B Premiums
Every year there is a modest increase in Medicare Part B premiums, but for 2016, they only affect about 30 percent of all enrolled. Since inflation was so low, for only the fourth time in 40 years there is no COLA (cost of living adjustment). This triggered the “hold harmless” provision that prohibits Medicare program premium increases. The hold harmless provision only affects those enrolled in Medicare who pays their Part B premium through deductions from their monthly Social Security.
For the 30 percent who do not have their premium deducted from their Social Security check they will see an increase of 16 percent to $121.80.
The Part B deductible rises by $19 to $166 for 2016. The Part A deductible for hospital admissions also rises – $28 to $1,288. This covers the first 60 days of inpatient care. From day 61 to day 90 the inpatient coinsurance increase rises by $7 to $322 per day. Part A coverage for skilled nursing care also goes up – from the 21st to 100th days by $3.50 to $161.00 a day in 2016.
Part D Drug Coverage
Part D premiums are not set by the Federal Government and premiums vary by plans depending on coverage options. Deductibles are set by Medicare laws and cannot exceed $360. But tiers and copays could increase an older Americans out of pocket costs greatly.
So while plan premiums are expected to be about 8 percent higher, the number of plans available is less than half of what was available 10 years ago when Part D became effective.
Social Security Changes in 2016
Social Security celebrates its 80th birthday this year. Each year folks at retirement age or already receiving Social Security need to know that there are important changes in Social Security.
April Marks the End of File and Suspend
For 2016, the most important change occurs in April, when file and suspend (F&S) ends. This is a strategy used by many to get more from Social Security. This happened as a result of the budget bill passed by Congress in November 2015 and signed by the president. With less than six months to take advantage of F&S, older Americans will have to scramble to get more out of Social Security.
How File & Suspend Works
The file and suspend strategy serves mostly married couples. It works this way – for a spouse to claim spousal benefits while the other continues to defer benefits and still accrue credits. If a spouse chooses to delay benefits without using the F&S strategy both spouses would have to wait until the person who deferred benefits reaches age 70.
Another benefit of the file-and-suspend rules is that by filing, the primary worker not only activates eligibility for a spouse to claim spousal benefits but also for dependent benefits to be paid on behalf of minor children as well (albeit subject to the maximum family benefit limitations).
Check with your tax advisor to see if you qualify for file and suspend and if it makes sense for you to do. You have until April 30, 2016, and must be at least 66 to claim file and suspend benefits.
Under the new Social Security laws, restricted applications for the file as a spouse first strategy end on January 1, 2016. Spouses must be 62 years old at the time of filing to collect benefits at age 66.
No Increase in Cost of Living
The COLA increase happens almost every year, but for 2016, forget about it as inflation during 2015 was very low.
Normal Annual Increases
In 2016, the amount of wages to needed to earn a quarter of coverage rises by $40 to $1,260. The threshold for earnings for non-blind Social Security benefits for disabled also increases by $40 to $1,130.
Understanding the changes each year for Social Security and Medicare are important for retired Americans and if you don’t completely understand how they impact you call your Social Security office or for Medicare visit Medicare.gov.