There are good and bad news for seniors. The good news is that they have received a cost of living increase in their Social Security benefits, the bad news is that Medicare has also increased its cost. The Centers for Medicare and Medicaid Services (CMS) has revealed to the public that premiums for its Part B plan will increase by about 6% in 2025.
For those who choose to enrol in Part B, the cost will be automatically deducted from their Social Security checks.
For Those Who Don’t Know, Medicare Is Divided Into Four Parts
- Part A, which covers inpatient care in hospitals and other facilities, is premium-free for all but about 1% of beneficiaries due to taxes paid by most retirees while they worked.
- Part B covers visits to doctors, outpatient care, preventative services such as vaccines, medical equipment like wheelchairs, and home health care, which carries a cost. Although it is much lower than paying out of pocket or through a private insurance company without the support of a company or CMS, beneficiaries will still need to pay a monthly fee to be able to access this service.
- Part C, better known as the Medicare Advantage plan, is offered by Medicare-approved private companies, and most include drug coverage (Part D). Each company will offer their services in different parts of the country, with different prices and coverages depending on a multitude of factors.
- Part D helps cover the cost of prescription drugs (including many recommended shots or vaccines). Plans that offer Part D drug coverage are run by private insurance companies that follow rules set by Medicare. You can purchase Part D independently.
When talking about Part B, the majority of retirees choose this option instead of going through Part C, as the cost is a lot lower than going through an insurance company for the majority of Americans. Between Parts A and B most services are covered and retirees can have a healthy happy life when combined with Part D for those who take a lot of medications.
What Is The Medicare Part B Premium For 2025?
According to a statement released by the CMS on Friday, the standard monthly premium for Medicare Part B enrollees will climb by $10.30, or about 6%, to $185.00 from $174.70 in 2024. The annual deductible for all Medicare Part B beneficiaries will also rise to $257 in 2025 from $240. This is not a surprise for retirees, as, the CMS explains, this increase is due to “projected price changes and assumed utilization increases that are consistent with historical experience.”
Even though it may seem like it, prices for Medicare don’t go up every year. In fact, in 2023, the premium for Part B was $164.90, which was over $5 lower than the year before.
Medicare Part B monthly premiums are calculated based on the beneficiary’s income, which means that those in the wealthier tiers also must pay an additional Income-Related Monthly Adjustment Amount, or IRMAA, which, data from the CMS reflects, impacts about 8% of those with Medicare Part B.
In general, married individuals who live with their spouses at any point during the year and file separate tax returns with a modified adjusted gross income of $106,000 or less are required to pay only the standard Medicare Part B premium of $185 per month.
Those whose incomes fall between $106,000 and $394,000 will pay an IRMAA of $406.90 in addition to the $185 premium, totalling $591.90 each month. Seniors with incomes exceeding $394,000 will face an IRMAA of $443.90, bringing their total monthly payment, with the standard premium, to $628.90.
