If you are going to file for Medicare Part B benefits in 2016 you will probably pay more in premiums than your friends that are currently enrolled and receiving benefits. New enrollees will pay $121.80 per month while the currently enrolled will continue to pay $104.90. That is because there will not be an allowed Medicare cost increase for those beneficiaries that are also collecting social security. Medicare is restricted by law not to raise Medicare premiums at a faster than the dollar amount social security increases. Essentially, a Social Security benefit check that subtracts Medicare Part B cannot be lowered due to a Medicare price increase. Social Security recipients are not getting an increase in 2016. Therefore, if they are on Medicare Part B their respective monthly premium will remain at the 2015 rate. Not so for those who have not drawn Social Security yet. They get the higher rate. That would include new enrollees or those that are currently on Medicare, but have not filed for Social Security benefits yet. And, that higher rate will be your base rate. So, you could conceivably pay more for Medicare over the rest of your life.
This move presents a possible reason for taking social security at the same time you file for Medicare if applicable, so you can be protected by the Medicare rate increase rules. Of course, this strategy would only be beneficial for some.
Planning for retirement is getting more and more complex. You should have a professional analyze your situation several years before you pull the trigger and retire. At Busenbark Wright CPA LLC we can look at your situation and figure out what is best for you. Learn more about us at busenbarkwrightcpa.com.
Dan Busenbark, CPA