Trustee’s Report Offers Outlook on Medicare Finances and 2017 Part B Premiums

The 2016 annual report of the Board of Trustees (the Trustee’s Report) was released this week. The report estimates that the Medicare Part A trust fund will be fully funded through 2028. Health reform is a major contributor to an improved financial outlook for the Medicare program. The Part A trust fund’s projected fully funded date of 2028 is 11 years later than it was before the Affordable Care Act (ACA) was enacted.

The Trustees note that the upcoming Social Security cost-of-living adjustment (COLA) is projected to be small–around 0.2%–and may trigger the hold-harmless provision. This provision limits the increase in some beneficiaries’ premiums for Medicare Part B. If the hold-harmless provision is triggered, the Part B premium for beneficiaries who are not protected could rise significantly.

In 2015, the COLA was 0.0% and most beneficiaries whose Part B premiums are withheld from their Social Security checks were held harmless. However, in order to prevent large increases for those beneficiaries not held harmless last year, Congress acted to reduce the higher premiums paid by those individuals.

The exact amount of the COLA will not be known until the Consumer Price Index (CPI) for September 2015 is released. If the COLA is 0.0% again, last year’s Congressional action will continue to depress Part B premiums. If the COLA is above 0.0%, Congress may need to  enact additional legislation to soften the impact of the increased premium.

Read the Trustee’s Report.