I’ve been following this issue and this is the clearest explanation I’ve seen so far: Surprise! Your Medicare Part B premiums may increase by 50 percent in 2016. This article explains the financial medicare heartburn induced in a portion of the population:

Most Part B premiums are paid out of people’s monthly payments from Social Security, and it has what’s called a “hold harmless” provision. According to this rule, Social Security benefits can’t decline from one year to the next. Normally, this is not a problem for Medicare. Each October, Social Security announces a cost of living adjustment (COLA) for the following year. Medicare can then boost Part B premiums and these higher payments will be taken out of people’s COLA-adjusted Social Security benefits.

But what happens when the COLA is zero, as it’s forecast to be next year? Medicare beneficiaries who pay the lowest Part B premium directly to Social Security — about 70 percent of all beneficiaries — can’t be required to pay any premium increases at all next year.

Unfortunately, Medicare is not able to just absorb all those projected increases in 2016 Part B expenses. By law, it must collect about 25 percent of Part B expenses from beneficiaries. Because it can’t collect any more dollars from the 70 percent of beneficiaries who are held harmless, it must seek to achieve this 25-percent ratio by collecting a lot more from people who aren’t held harmless.

The trustees thus projected these folks would pay 52 percent more in Part B premiums next year.

This group includes new enrollees to Medicare in 2016, people with modified adjusted gross incomes (MAGI) above $85,000 ($170,000 on joint tax returns) and those who pay their Medicare premiums directly to Social Security, because they haven’t yet begun receiving Social Security benefits. People with low-incomes who have their premiums paid by their state are also not held harmless, so state budgets also would take a hit next year.

So this medicare heartburn group will probably see premiums jump over 50%. This includes: federal civilian and military retirees who have not worked enough under Social Security (10 years or more) to have a Social Security benefit sufficient to pay premiums: people between 65 and 70 who have delayed taking Social Security; upper income folks on medicare; new medicare enrollees, and low income recipients whose premiums are paid by the state. Sort of ironic for a provision called “hold harmless”.