We get it: Medicare is confusing and trying to figure it out makes your eyeballs bleed. But here are five things you really need to understand about what Medicare has in store for you in 2016.
1. 30 percent of Medicare Part B recipients are about to get screwed royally on their premiums.
Here's how this will go down: If you are among those who pay your Part B premium directly out of your Social Security check -- meaning Social Security deducts the money before paying you monthly -- you are in the lucky 70 percent club. You will not be asked to shoulder any of the Medicare Part B increase because of this nifty little technicality: There is no cost-of-living adjustment, known as COLA, being given this year to Social Security beneficiaries. When that happens -- just three times in the past 40 years -- there is a "hold harmless" clause that kicks in and says if you don't get a raise, neither does Medicare. So for the 70 percent of Social Security beneficiaries whose Medicare is paid directly, you may do the Snoopy happy dance.
But not so fast, you remaining 30 percent. If you've been paying for Medicare directly yourself, Medicare is just going to shift what the 70 percent aren't paying and charge you instead! You can expect a 52 percent increase in premiums from $104.90 to $159.30 a month, according to the 2015 Medicare Trustees Report.
And who are these not-so-lucky 30 percent? They include every single new Medicare enrollee in 2016. Welcome folks!
3. Overall, women will be screwed more than men.
Of Medicare recipients age 85 and older, nearly 70 percent are women. Women outlive men and are more likely to experience three or more chronic medical conditions. Women also outpace men when it comes to cognitive and physical impairments that interfere with their ability to live independently, says the National Older Women's League, OWL.
4. The one thing you could do might actually cause more harm than good.
Consider enrolling in Medicare now rather than waiting until 2016 if you are already eligible. You can also sign up for your Social Security benefits before the end of 2015 and enroll in the program to have your Medicare premiums deducted from your monthly payment. That will move you from the 30 percent "pick up the tab for everyone" group to the 70 percent "protected by no COLA" group. But if the reason you've been paying your premium directly is because you postponed collecting Social Security, the reduction in your Medicare Part B premium actually may not be enough of a savings to start Social Security before you intended. For each year after age 66 that you delay, there is an 8 percent increase in Social Security benefits (up until age 70) for life. Do the math.
5. Part D will continue to be the part we love to hate.
Part D is the part of Medicare that covers prescription drugs. It's also the part that experts say we'd better be paying attention to during this open enrollment period because costs are jumping big-time here too. Five of the 10 most popular Part D plans have announced plans to raise 2016 premiums by 16 percent to 26 percent, according to Avalere Health.
Tom Kornfield, vice president at Avalere, told The Huffington Post, "We found that Part D premiums are projected to increase by 8 percent for the top 10 plans. The size of these changes highlights the importance for seniors to use the current open enrollment period to shop around for the best plan for them."
Currently, 58 percent of all stand-alone prescription-drug plans have deductibles, with 44 percent requiring participants to pay the annual maximum of $320 allowed by Medicare.
Premiums only tell half the story, though. Deductibles may be the real work of the devil and they are also rising. Currently, 58 percent of all stand-alone prescription-drug plans have deductibles, with 44 percent forcing enrollees to pay the annual maximum deductible allowed by Medicare of $320. In 2016, 67 percent of those plans will have a deductible and 53 percent will charge the $360 maximum, according to Kaiser.
And as complicated and convoluted as all this sounds, it's something that people 65+ really need to understand.
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