Millions of Americans that choose to receive Medicare Part B benefits may finally be able to sleep a little more peacefully at night. On November 2, President Obama signed the Bipartisan Budget Act of 2015 into the law. Among many things, the law cuts the expected increase in Medicare Part B premiums from a whopping 52 percent to a less drastic 14 percent.
Why the Law Is Necessary
Medicare is required to charge Part B premiums that are high enough to cover 25 percent of its estimated Part B expenses. This coming year, 70 percent of beneficiaries will be protected from Part B premium increases under the “hold harmless” provision. Without the law, CMS would have had to charge the remaining 30 percent of beneficiaries who are not protected by the provision alarmingly higher premiums to cover the Part B program’s expenses. Projections estimated these beneficiaries’ current monthly rates would have increased from $104.90 to approximately $159.30.
Without government intervention, one in three Americans would have had to helplessly watch as their Medicare Part B premiums increased by 52 percent in 2016. The Bipartisan Budget Act of 2015 helps keep Part B coverage more affordable for America’s seniors.
How the Law Affects Beneficiaries
Thanks to the new law, Medicare Part B beneficiaries no longer have to worry if their Part B premiums will skyrocket in 2016. The Bipartisan Budget Act of 2015 levels out the expected spike in Part B premiums and deductibles. Consequently, the 30 percent of Medicare beneficiaries who are not protected by the “hold harmless” provision will only see their rates go from $104.90 to roughly $120—a 14 percent increase. Additionally, these beneficiaries will only see their Part B deductibles increase by approximately $20 instead of the previously estimated $70 or more.
In order to curb the increase in Part B premiums, the Medicare trust fund will receive a loan from the U.S. Treasury. As a result, beneficiaries will be required to pay a $3 monthly surcharge to repay the loan. They will also continue to see increases in their monthly Part B premiums over the next several years.
Other Important Information about the Law
The Bipartisan Budget Act of 2015 is a two-year agreement that raises the national debt ceiling through March 2017. During this time, it provides an additional $80 billion in spending to split evenly between military and domestic programs.
To offset the cost of this increase in spending, there will be both increases in revenue collected by the federal government and budget cuts to programs such as Medicare and Social Security. Although the agreement is far from perfect, it adds temporary stability to the Social Security Disability Insurance fund and keeps Medicare Part B premium increases from spiking for those who are not in the “held harmless” category and the Part B deductible increases more modestly for all.