Press Release – October 18, 2016
Small cost-of-living increase triggers huge Medicare Part B premium hike for many retirees

WASHINGTON – American Federation of Government Employees National President J. David Cox Sr. is calling on Congress to pass emergency legislation to prevent massive increases in Medicare Part B premiums for millions of retirees next year.

The government today announced a 0.3 percent cost-of-living adjustment for federal retirees and Social Security recipients. The COLA is based on the year-over-year change in the prices for goods and services purchased by hourly and clerical workers.

This small COLA has inadvertently triggered a massive increase in Medicare Part B premiums for the 30 percent of beneficiaries who do not currently receive Social Security benefits.

Premiums for Medicare Part B are expected to increase 23 percent next year, from $121 a month to $149 a month. A so-called “hold harmless” provision prevents Medicare Part B premiums from increasing by more than the dollar increase in an individual’s Social Security payment. But for the 16 million retirees who don’t receive Social Security, including 1.6 million federal retirees under the Civil Service Retirement System, the full increase must be paid unless Congress acts.

“Congress must act now to prevent a massive increase in Medicare Part B premiums for this group of retirees,” Cox said. “Although most seniors would be protected, this group will have to pay more solely because of the uniqueness of their pension system.”

Congress last year extended the hold harmless provision to cover all Medicare Part B beneficiaries when there is no cost-of-living adjustment. However, this provision does not apply when there is a small COLA, as there will be in 2017.

Even without the increase in Medicare Part B premiums, retirees will have to tighten their belts to account for next year’s miniscule cost-of-living adjustment. Retirees already are facing a 6.2% increase in their health insurance premiums next year.

“Prices for many items that seniors must purchase are rising faster than the overall inflation rate,” Cox said. “Forcing this group of retirees to shoulder such a huge cost burden will have a devastating impact on their already modest living standards.”

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The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 670,000 workers in the federal government and the government of the District of Columbia.

Source: AFGE | Federal Retirees to Face Huge Spike in Medicare