The AFT as issued a bulletin from on recent changes to Social Security and Medicare that all retirees, and soon to be retirees, should be aware of.
2016 Changes Announced for Social Security and Medicare
The Social Security Administration and Centers for Medicare and Medicaid Services recently announced changes in Social Security and Medicare benefits effective January 1, 2016. This bulletin provides some of the key changes for review and use by local leaders and active and retired members. More detailed information can be found at www.ssa.gov.
Social Security Changes
- Cost-of-living Adjustment
There will be no cost-of-living adjustment (COLA) for Social Security beneficiaries in 2016, as there was no increase in the Consumer Price index (CPI-W) from third quarter 2014 to third quarter 2015. This development was in large part due to lower gas prices throughout the measurement period. This is only the third time in 40 years that the Social Security Benefit has not increased. The CPI increase in 2015 was 1.7 percent
- Maximum Taxable Earnings
The amount of earnings subject to Social Security taxes has not increased, as by law this amount remains unchanged when there is no COLA.
Maximum taxable earnings
2015 – Social Security $118,500, Medicare No limit
2015 – Social Security $118,500, Medicare No limit
- Age to Receive Full Social Security Benefits
Year of Birth Full Retirement Age (FRA)
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 & later 67
- Additional Social Security Information
● Full retirement age for normal benefits is 66 in 2016. The normal benefit is reduced by 25% for early retirements at age 62.
● If you turn 66 in 2016 but delay receiving Social Security, the Delayed Retirement Credit will increase your benefit by 8.0% for each full year that you do not receive a benefit up to age 70.
● If you take the early retirement benefit (ages 62 through 66), and continue to work, one dollar in benefits will be withheld for every two dollars in annual earnings above the earnings threshold of $15,720 in 2016, as was done in 2015. By law the earnings limit remains unchanged when there is no COLA.
● The earnings limit for the year that you reach full retirement age (FRA) will remain at $41,880, (the 2015 level). This limit applies only to earnings for months prior to attaining FRA. One dollar in benefits will be withheld for every three dollars in earnings above this limit.
● Once you reach full retirement age, your Social Security benefit will not be diminished if you continue to work at your current job or another job.
Medicare Changes for 2016
- Part A Premium (hospital services)
Most people don’t pay a monthly premium for Part A. However, if you buy Part A, you’ll pay up to $411 each month. This amount is higher than the 2015 premium of $407 but still less than the $426 premium of 2014.
- Part A deductible and copay for inpatient hospital services
Deductible is $1,288 ($1,260 in ’15)
Days 1-60: $0 copayDays 61-90: $322 co-pay per day ($315 in ’15)
Days 91-150: $644 co-pay per day ($630 in ’15)
Beyond 150 days: all costs
Part A Skilled Nursing Facility:
Days 1-20: $0 co-pay, the same as last year
Days 21-100: $161/day ($157.50 in ’15)
Days beyond 100: all costs
- Part B Premium (physician services)
Most people will pay $104.90 per month, the same as last year, because there was no COLA for 2016 Social Security benefits. However, certain groups of beneficiaries will pay $121.80 if they are in any one of the following groups:
● New Part B Enrollees in 2016
● Medicare enrollees who do not get Social Security benefits
● Enrollees who are directly billed for their Part B premium
● So-called “dual eligible” with both Medicare and Medicaid, and Medicaid pays the Medicare premium
● High income enrollees whose modified adjusted gross income as reported to IRS from two years ago is above $85,000 (for single tax payers) and over $170,000 (for married joint filers) will pay more than $121.80
- Part B Deductible
$166 in 2016; $147 in 2015.
- Part B Co-Insurance
Once the deductible is met you pay 20% of approved costs and Medicare pays 80%
● U.S Social Security Administration Fact Sheet on the 2016 Social Security Changes. www.ssa.gov/news/press/factsheets/colafacts2016.html
● U.S. Social Security Administration Research, Statistics & Policy Analysis, OASDI and SSI program Rates & Limits, 2016. http://www.socialsecurity.gov/policy/docs/quickfacts/prog/highlights/
● U.S. Centers for Medicare and Medicaid Services fact sheet on 2016 Medicare Costs. www.medicare.gov/Pubs/pdf/11579.pdf
● 2016 Medicare parts A & B Premiums and deductibles. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-11-10.html
● Legislative Alert—December, 2015 The Centers for Medicare and Medicaid Services (CMS) have confirmed the Premium & Deductible Amounts for 2016 for Parts A and B. https://wfis.wellsfargo.com/newsroom/legislativeupdates/Documents/2015Alerts/14386-EB-Compliance-Alert-December2015-MedicareFNL.pdf
If you have any questions regarding this information, please contact Steven Williams, AFT Research and Strategic Initiatives Department, at email@example.com or John Abraham, AFT Research and Strategic Initiatives Department at firstname.lastname@example.org, or Earl Hadley, AFT Legislation Department at email@example.com