Medicare Public Domain
Image: Public Health Image Library, CDC.

This article was updated on May 7, 2016.

Changes to the Medicare program happen each year, and they affect tens of millions of Medicare participants. Because Medicare is a crucial part of how Americans 65 and older manage their healthcare expenses, it's important to know what new Medicare provisions took effect in 2016 and what impact they've had on your benefits and what you pay for them. Here, you'll learn more about three key Medicare changes for 2016.

Increased Medicare Part B premiums -- for some
The monthly premiums that Medicare participants pay for Part B medical coverage reflect changes in the costs of the Medicare program, and modest annual increases in those premiums happen almost every year. Because of an unusual confluence of events, 2016 is a special case in which only about 30% of Medicare participants will see a premium increase for Part B.

Inflation remained in check in 2015, and as a result, Social Security beneficiaries didn't see a cost-of-living adjustment in their benefits this year. That triggered what's known as the hold-harmless provision, which prevents Medicare from passing through premium increases when there aren't any Social Security COLAs. However, the hold-harmless provision only applies to the roughly 70% of Medicare participants those who have their premiums withheld from their Social Security checks. That put the other 30% in danger of having to cover the entire excess.

Early projections suggested that those premium increases could have exceeded 50%. Thanks to a budget deal, those increases were limited, but the baseline premium amount for those not covered under the hold-harmless provision nevertheless rose 16% to $121.80 for most participants. That substantial hike has taxed many seniors' budgets, despite the fact that it's far less severe than it could have been.

Deductibles and copayments will rise for Part A and Part B
Medicare makes participants cover an initial deductible and leaves them responsible for copayments for certain services. Those amounts generally rise from year to year.

For instance, the Part B deductible went up $19 to $166 in 2016. For Part A hospital coverage, the deductible for hospital admissions rose $28 to $1,288, which covers the first 60 days of covered hospital care. From the 61st to the 90th day, additional coinsurance payments of $322 per day are up $7 from 2015 levels. Part A coverage for skilled nursing facilities carries a coinsurance amount for the 21st to 100th days, and that daily amount rose $3.50 to $161 in 2016.

Higher premiums and fewer choices for Medicare Part D
Premium costs for Medicare Part D prescription drug plans are also on the rise. The government doesn't set premiums for Part D plans, and each plan can charge a different amount depending on what specific coverage it provides and its particular costs. According to the Kaiser Family Foundation, 4.4 million participants will see their premiums rise by $10 or more per month, and based on what plan providers have announced, those who are enrolled in the most popular Part D plans can expect a premium increase averaging about 8%. In addition, Part D plans are limited by Medicare law to have deductibles no larger than $360, but a rising number of plans are bumping up against that maximum.

At the same time, the number of drug-plan choices for Medicare participants continues to drop. On average, seniors have about 26 plans to choose from in 2016, which is down by more than half in less than a decade. Nationwide, the 886 plans offered represents an 11% decline and is the smallest number ever in the history of Part D coverage.

Medicare changes are particularly hard for older Americans on fixed incomes, especially when they involve higher costs and more financial responsibility for healthcare needs. Unfortunately, that's a trend that most Medicare participants have gotten used to seeing from year to year, and 2016 is proving particularly challenging for many who rely on Medicare for financial support in staying healthy.

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