Health care costs can take a bite out of retirement nest eggs in ways investors haven’t anticipated. Recently, the Centers for Medicare & Medicaid Services (CMS) announced hikes in Medicare Part B premiums and deductibles for 2017.
The deductible will climb to $183, a 10% increase from 2016. About 30% of people not protected by Medicare Part B’s “hold harmless” provision would be looking at premium increases ranging from $134 to $428.60, depending on their income in 2015. These include new enrollees, those not receiving Social Security, and higher-income beneficiaries. Because the 2017 Social Security cost-of-living adjustment is 0.3%, all other beneficiaries will see premiums rise to $109 in 2017, compared to $104.90 in 2016.
And many experts agree that heath care prices won’t be reversed any time soon, making it even more important for people to plan ahead. “Next year, we expect to see an increase of a little over 22% for Medicare Part B,” says Ron Mastrogiovanni, president of Health View Services (HVS), a provider of software that projects health care costs.
The firm’s research indicates that health care inflation including Medicare Part B is expected to grow 6% annually for the next 10 years. These rising expenses highlight the need for plan sponsors and their advisers to relay to participants the importance of anticipating health care expenses in retirement.
In an interview with PLANSPONSOR, Mastrogiovanni outlined some strategies that plan providers and advisers can pursue to raise awareness and encourage participants to take action. First, he notes that it’s important to communicate to investors that Medicare costs vary immensely depending on income. NEXT: Determining what Medicare will cost