The big question often asked by roughly 65 million people enrolled into Medicare on an annual basis tends often than not to be: “Are Medicare premiums going up?”
The answer, unfortunately, is yes and will be yes for quite some too.
Believe it or not, unlike most expense in your life Medicare premiums and their future costs are easier predict due to the fact the federal government projects where they will be for the next 9 years annually.
Every June or so, the Medicare Board of Trustees (MBT) releases its Annual Report that projects where Medicare premiums will be headed for the next 9 years.
By looking at the past Annual Report from the MBT starting in 2006 and continuing through 2019 in terms of each Part of Medicare that impacts retirees on an average basis the projections have been pretty close to accurate in most cases.
The exception to this has been specifically with where the National Base Premium has fallen (Part D) as well as the Part D Deductible.
Historically the MBT has overestimated the projections of these two coverages by more than 16.00% on average through 2006 to 2019.
The good news is that if this trend continues the actual Part D premium and the Part D Deductible may in fact be lower than projected over the next several years.
The alternative view, though, is that in order for these two Parts of Medicare to remain solvent in the future they needed to be much higher in years’ past, thus the actual premiums and costs may be higher.
For the remaining two Parts of Medicare, Part A Deductible and Part B premium, the MBT has, again been fairly accurate over the last 13 years when it comes to where the costs/premiums of these coverage will be in the future.
So, what can be expected in terms of premiums/costs for Medicare?
The 2019 MBT Annual Report projects that in 2028 the costs/premiums will be:
- Part A Deductible: $1,840.00 for the year. A 3.31% annual rate of inflation over the next 7 years.
- Part B Premium: $226.30 a month. A 6.21% annual rate of inflation over the next 7 years.
- National Base Premium (Part D): $51.37 a month. A 6.58% annual rate of inflation over the next 7 years.
- Part D Deductible: $670 for the year. A 6.03% annual rate of inflation over the next 7 years.
Please note:
- The 2019 Annual Report was used as the MBT stated that projections could not be determined in its 2020 Annual Report due to the uncertainties of Covid-19.
- The Part A Deductible may be used in determining the premiums for Supplemental Plans (Medigap) as these plans may cover this expense.
