2017 Social Security and Medicare Increases

by Barry L Weller, EA

2017 Social Security Income Benefit Increase …
1975 was the beginning of automatic annual cost of living allowances (COLA) in Social Security Income Benefit checks.  In the 42 years, three years had zero percent (0%) increases.  Those years were 2010, 2011 and 2016.  Until 2017, increases ranged from 1.3% to 14.3%.  (See the COLA History Chart at the end of this article.)   Beginning in January 2017, monthly Social Security Income Benefits will increase by only 0.3%.  This means the retired worker who in 2016 received an average monthly benefit of $1,350 will receive only a $4 per month increase in 2017.  However, since most Social Security recipients have their Medicare Part B premiums deducted from their Social Security income benefit checks, they will not see the small COLA in their monthly check because of the Medicare premium increase.  (See the 2017 Medicare Premium Increase below.)

2017 Social Security Wage Limit Increase …
For those working and paying into the Social Security system, the news is even worse.  They will see a large increase in the maximum wage limit subject to Social Security payroll taxes.  For 2017, the maximum taxable wages will be $127,200.  This is up from $118,500 in 2016.  For employees subject to the taxable maximum, they will have a tax increase of $539.40 while self-employed individuals subject to the taxable maximum will have a tax increase of $1,078.80.

2017 Medicare Premium Increase …
Most Medicare beneficiaries will experience a modest premium increase in 2017.   Medicare Part B premiums are prevented by law from increasing faster than Social Security payments for existing beneficiaries. This is the “hold harmless” provision of the law.  Since the Social Security COLA is only 0.3% for 2017, the monthly Medicare Part B premium will only increase from $104.90 in 2016 to $109.00 in 2017 for most existing Social Security recipients.  About 70 percent of Medicare enrollees will experience this small premium increase.  However, since all retirees don't all pay the same Medicare Part B premium, some seniors will have to pay much higher premiums.  Those who will be paying higher premiums include retirees who will sign up in 2017.  They will be paying the standard Medicare Part B premium of $134.00 per month.  This up 10 percent from $121.80 standard rate in 2016.  Therefore, the new 2017 enrollees will pay $300 more for Medicare Part B than existing Social Security recipients.  New enrollees include people who will turn 65 in 2017 and those who were previously covered by group health insurance through their job and elect to join Medicare in 2017.

COLA Increases from 1975 to 2017
July 1975 -----  8.0% 
July 1976 -----  6.4% 
July 1977 -----  5.9% 
July 1978 -----  6.5% 
July 1979 -----  9.9% 
July 1980 ----- 14.3% 
July 1981 ----- 11.2% 
July 1982 -----  7.4% 
January 1984 -- 3.5% 
January 1985 -- 3.5% 
January 1986 -- 3.1% 
January 1987 -- 1.3% 
January 1988 -- 4.2% 
January 1989 -- 4.0% 
January 1990 -- 4.7% 
January 1991 -- 5.4% 
January 1992 -- 3.7% 
January 1993 -- 3.0% 
January 1994 -- 2.6% 
January 1995 -- 2.8% 
January 1996 -- 2.6%
January 1997 -- 2.9% 
January 1998 -- 2.1% 
January 1999 -- 1.3%
January 2000 -- 2.5% 
January 2001 -- 3.5% 
January 2002 -- 2.6% 
January 2003 -- 1.4% 
January 2004 -- 2.1% 
January 2005 -- 2.7% 
January 2006 -- 4.1% 
January 2007 -- 3.3% 
January 2008 -- 2.3% 
January 2009 -- 5.8% 
January 2010 -- 0.0% 
January 2011 -- 0.0% 
January 2012 -- 3.6% 
January 2013 -- 1.7% 
January 2014 -- 1.5% 
January 2015 -- 1.7% 
January 2016 -- 0.0% 
January 2017 -- 0.3%

Barry L Weller, EA is the president of Barry Weller & Associates with offices at 216 E Philadelphia Ave, Boyertown, PA 19512   Phone (610) 367-8280    He is an enrolled agent, licensed to represent taxpayers before the IRS.             Revised 1/2/2017