Medicare Part D Costs in 2016

Learn How to Budget Your Health Expenses

Part D Costs 2016
Find the Part D plan at the best rate. Yuri_Arcurs/E+/Getty Images

Congress has announced Medicare costs for 2016. Part D plans are run by private insurance companies and therefore rates will vary. However, the federal government sets guidelines on how much you can be charged.

Part D Deductibles

The maximum deductible a plan can charge for 2016 is set at $360, an increase of $40. This 12.5 percent rate hike may or may not affect you depending on what insurance company or Part D plan you choose.

Part D Premiums

Premiums are expected to rise in 2016. The government sets no formal restrictions on premium rates but a 13 percent increase is anticipated for stand-alone Part D plans, increasing the average premium from $36.68 to $41.46 per month.

Part D National Base Beneficiary Premium

The national base beneficiary premium (NBBP) is the number used to calculate your Part D penalty if this applies to you. The number is set at $34.10 for 2016.

Part D IRMAA

The government also charges you extra for Part D coverage based on your income. This is known as Income-Related Medicare Adjustments Amounts (IRMAA). You will pay monthly IRMAA to the federal government as well as monthly premiums to the insurance company.

2016 Part D IRMAA for Individuals
IncomeYour 2016 CostsChange from 2015
Less than $85,000$0 per month

$ 0 increase per month / year

$85,000 - $107,000$12.70 per month

$0.40 increase per month

$4.80 increase per year

3.25 percent increase

$107,000 - $160,000$32.80 per month

$1.00 increase per month

$12.00 increase per year

3.14 percent increase

$160,000 - $214,000$52.80 per month

$1.50 increase per month

$18.00 increase per year

2.92 percent increase

More than $214,000$72.90 per month

$2.10 increase per month

$25.20 increase per year

2.97 percent increase

2016 Part D IRMAA for Married Couples
IncomeYour 2016 CostsChange from 2015
Less than $170,000$0 per month

$0 increase per month / year

$170,000 - $214,000$12.70 per month

$0.40 increase per month

$4.80 increase per year

3.25 percent increase

$214,000 - $320,000$32.80 per month

$1.00 increase per month

$12.00 increase per year

3.14 percent increase

$320,000 - $428,000$52.80 per month

$1.50 increase per month

$18.00 increase per year

2.92 percent increase

More than $428,000$72.90 per month

$2.10 increase per month

$25.20 increase per year

2.97 percent increase 

2016 Part D IRMAA for Married People Filing as Individuals
IncomeYour 2016 CostsChange from 2015
Less than $85,000$0 per month

$0 increase per month / year

$85,000 - $129,000$52.80 per month

$1.50 increase per month

$18.00 increase per year

2.92 percent increase

Greater than $129,000$72.90 per month

$2.10 increase per month

$25.20 increase per year

2.97 percent increase

The Donut Hole

The donut hole narrows in 2016. The amount that you pay before you enter the donut hole, known as the initial coverage limit, increases from $2,960 to $3,310. This is great news. It means that it will take longer before you enter the donut hole.

Once you are in the donut hole, you will pay 45 percent for brand name medications and 58 percent for generic medications, not your usual copays. This tends to cause a sharp increase in your out of pocket spending. You will pay smaller percentages each year through 2020.

You will spend $1,540 in the donut hole for 2016 as compared to $1,760 in 2015. After you have spent this amount, you enter the phase of catastrophic coverage where you will pay $2.95 for generic drugs and $7.40 for brand name medications.

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