Medicare Part B will cost more in 2025

On November 8, the Centers for Medicare and Medicaid Services announced 2025 Medicare premiums and costs. Let’s take a quick look at what you need to know.

Part B Premium and Deductible

The premium for Part B, health insurance, will be $185 in 2025, an increase of $10.30 (5.9%). CMS attributed the increase to “projected price changes and assumed utilization increases that are consistent with historical experience.”

Many retirees were concerned about the Part B premium because Social Security’s cost of living adjustment, known as COLA, is only 2.5% for 2025. However, the Part B premium increases by 5.9%, so there is doubt as to whether the exemption clause would apply. This provision prevents a recipient’s Social Security benefits from decreasing due to an increase in the Part B premium.

You may remember that there was no COLA in 2016; However, the Part B premium increased $16.90 to $121.80. Nearly 70% of Part B beneficiaries were protected by the provision and paid the 2015 premium ($104.90) every 12 months.

That probably won’t happen this time for two reasons. First, in 2016, CMS wrote in the third paragraph of the fact sheet that there was little doubt that the exemption clause would apply. CMS does not mention the provision in the current update. Second, the Part B premium increases by $10 per month, but the COLA increases the monthly benefit by about $50 for singles and $75 for couples. Very few Social Security recipients would need protection because the increase in monthly pension benefits would cover the increased Part B premium.

IRMAA

The income-related monthly adjustment amounts (IRMAA) are tied to the Part B premium, so they will also increase in 2025.

• The threshold for single and married filing separately is $106,000 (up from $103,000) and for married filing jointly it is $212,000 (an increase from $206,000). .
• This year, monthly adjustments for Part D, prescription drug coverage, will range from $12.90 to $81 and next year will range from $13.70 to $85.80.
• The thresholds for full Part B coverage (which apply to most IRMAA enrollees) are the same as for Part D. However, the CMS fact sheet did not include an adjustment table for full Part B, an interesting and unexpected omission. I have reached out to CMS and will update this post if I receive a response or the numbers are available

I have often been asked by married individuals subject to the higher IRMAA tiers whether filing separately would reduce their contributions. I show them the tables and they quickly realize that they would pay significantly more because there are only two tiers for those who file separately. In 2024 they range from $130,000 to $397,000 and over $397,000. The corresponding adjustments are $377.70 and $412.20. (An individual or individual filing jointly and exceeding the $103,000 threshold will pay $69.90.) The adjustments will undoubtedly be higher next year.

Medicare is vital, so people have to pay the premiums. But unfortunately, rising costs are a fact in today’s world. Hoping for the lowest but budget for more.