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Hot Off the Presses: Social Security and Medicare Updates for 2019

     
January 08, 2019

Each year, millions of baby boomers come closer to retirement. If you’re an HR professional or an employer tasked with preparing these long-serving, highly-valuable individuals for life after work, you’ve got to stay up with the latest Social Security and Medicare trends and changes. And, if you’re an employee, it’s important to have the right information to help you make the best decisions for your long-term financial security, healthcare coverage, and other retirement-related considerations.

Let’s start by examining some high-level changes related to cost-of-living, taxable earnings, full retirement age, and Medicare premiums and deductibles.

Trend Spotlight: Increases All Over!

Cost-of-Living Adjustments

On October 11, 2018, the Social Security Administration (SSA) announced all of their 2019 figures. As it turns out, Social Security beneficiaries will receive a 2.8% cost-of-living adjustment (COLA) for monthly benefits payable in 2019 - an improvement over the 2.0% increase of 2018. This increase is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For the average retired worker, the increase is about $39 a month.

Taxable Earnings Base Increase

The Social Security taxable earnings base will increase to $132,900 in 2019 from $128,400 in 2018. There are about 175 million working people paying this combined 7.65% payroll tax, matched by their employers, to support these programs.

Full Retirement Age Limit

In 2019, the full retirement age (FRA, or the age at which a person may first become entitled to full or unreduced retirement benefits) will be 66 for people born January 2, 1953, through January 1, 1954 However, keep in mind that, for Social Security and Medicare purposes, the FRA is established on the day before an individual’s birthday. So, for example, someone born on January 1 is considered to have been born in the previous year.

For more examples, reference the Social Security figures in the table below related to when different individuals reach FRA.

Medicare Premiums and Deductibles

On October 12, 2018, the Centers for Medicare and Medicaid Services (CMS), an agency under the U.S. Department of Health and Human Services (HHS), released the 2019 Medicare premiums and deductibles. Here are some highlights related to increases:

  • The standard Part B monthly premium will increase to $135.50 in 2019 for most current, new, and high-income Medicare beneficiaries, as well as for people whose Medicare premiums are paid by Medicaid.
  • With the 2.8% Social Security COLA increase coming in 2019, there are still about two million current Medicare Part B beneficiaries (about 3.5%) who will have a premium increase, but it will be no more than the increase in their Social Security benefits due to the hold harmless rule which protects recipients from having their previous year’s benefit levels reduced by any increases in the Part B premium.
  • Beneficiaries with high incomes will pay additional income-related Part B premiums in the upcoming year.
  • For Medicare Part D recipients, the standard prescription drug plan for 2019 is predicted to be $32.50 per month - an actual decrease from the monthly premium of 2018 (albeit a small one, with an estimated difference of only one dollar). These premiums are adjusted every January, while drug plan enrollment is within three months of becoming eligible for Medicare. Individuals can change plans or enroll for the first time from October 15 to December 7, and coverage becomes effective on January 1. Also, note that high-income enrollees in Part D pay a premium surcharge that operates very much like the Part B program.

Summary Table: 2018 Vs. 2019 Social Security and Medicare Data

The following table provides even more in-depth comparisons between 2018 and 2019 Social Security and Medicare figures, including both increases and decreases.

Social Security 2018 2019
Cost-of-living Adjustment (COLA) for December (payable in January). 2.0% (12/17) 2.8% (12/18)
FICA tax rate:    
  • Social Security for employees.
6.20% 6.20%
  • Medicare (Hospital Insurance). An additional FICA tax of 0.9% applies to high-income beneficiaries with annual incomes above $200,000 ($250,000 for married couples filing jointly). The employer does not pay this additional percentage.
1.45% 1.45%
Maximum Social Security earnings for tax contributions and benefits. $128,400 $132,900
Medicare taxable earnings. no limit no limit
Earnings required to earn one credit (maximum of four credits per year). $1,320 $1,360
Retirement Earnings Test exempt amounts:    
  • Under full retirement age (FRA) throughout year (age 66).
$17,040 $17,640
  • Reaches FRA in year (period before the month FRA is attained).
$45,360 $46,920
  • FRA and over.
no limit no limit
Maximum monthly retirement benefit at FRA. $2,788 $2,861
Medicare Part A (Hospital Insurance) 2018 2019
Part A inpatient deductible per benefit period. $1,340 $1,364
Part A daily coinsurance 61st through 90th days. $335 $341
Part A daily coinsurance for up to 60 “lifetime reserve” days. $670 $682
Part A daily coinsurance 21st through 100th days in a skilled nursing facility. $167.50 $170.50
Part A voluntary monthly premium if not eligible for premium-free Part A. $422 $437
Part A reduced monthly premium for persons with 30-39 credits. $232 $240
Medicare Part B (Medical Insurance) 2018 2019
Part B annual deductible. $183 $185
Part B (Medical Insurance) the standard monthly premium for about two million current Medicare beneficiaries (about 3.5%) will have a premium increase but it will be no more than the increase in their Social Security benefits due to the “hold harmless” provision of the law. Up to $134 Up to $135.50
Part B (Medical Insurance) standard monthly premium for most current, new, and high-income Medicare beneficiaries, and people whose Medicare premium is paid by Medicaid. $134.00 $135.50
Part B (Medical Insurance) standard monthly premium:*    
File an Individual Tax Return File a Joint Tax Return    
0 to $85,000 annual income0 to $170,000 annual income $134.00 $135.50
$85,001 to $107,000$170,001 to $214,000 $187.50 $189.60
$107,001 to $133,500$214,001 to $267,000 $267.90 $270.90
$133,501 to $160,000$267,001 to $320,000 $348.30 $352.20
$160,001 to $500,000$320,001 to $750,000 $428.60 $433.40
over $500,000**over $750,000** n/a $460.50
*Income brackets for beneficiaries based on their 2017 federal income tax return filing status and adjusted gross income in 2019 (2016 returns for 2018).
**The Bipartisan Budget Act of 2018 set an additional Part B premium level starting in 2019 for high-income beneficiaries.
   
Medicare Part D (Prescription Drug Coverage) 2018 2019
Part D (Prescription Drug Coverage) monthly premium (estimate). $33.50 $32.50
Part D monthly premium adjustment for high-income beneficiaries (paid to Medicare):*    
File an Individual Tax Return File a Joint Tax Return    
0 to $85,000 annual income0 to $170,000 annual income $0 $0
$85,001 to $107,000$170,001 to $214,000 + $13.00 + $12.40
$107,001 to $133,500$214,001 to $267,000 + $33.60 + $31.90
$133,501 to $160,000$267,001 to $320,000 + $54.20 + $51.40
$160,001 to $500,000$320,001 to $750,000 + $74.80 + $70.90
over $500,000**over $750,000** n/a + $77.40
*Income brackets for beneficiaries based on their 2017 federal income tax return filing status and adjusted gross income in 2019 (2016 returns for 2018).
**The Bipartisan Budget Act of 2018 set an additional Part B premium level starting in 2019 for high-income beneficiaries.
   
2019 Figures Released April 2, 2018 2018 2019
Part D deductible. $405 $415
Part D initial benefit limit. $3,750 $3,820
Part D catastrophic threshold. $5,000 $5,100
Part D minimum cost-sharing for catastrophic coverage. Generic/Preferred: $3.35 $3.40
Other: $8.35 $8.50

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This data is designed to help you or your employees properly prepare for a well-deserved retirement. After all, there’s nothing better than peace of mind when it comes to your or your employees’ financial security and healthcare coverage.