Changes to Social Security and Medicare in 2016

Even as the DOL’s fiduciary rule looms large, today’s consumers are becoming more and more aware of the extent to which they are responsible for their retirement, and the retirement income industry is well positioned for a strong 2016. With this awareness comes the increasing value of financial advice. As we know, Social Security is a cornerstone of many retirees’ income in retirement, and a few important changes are made to this program, and Medicare, each year.

Now that we’ve rung in the New Year, be sure to sit down with your clients to help them understand the changes coming to Social Security and Medicare in 2016.

The first major change we will see is that there will be no cost of living adjustment (COLA) to Social Security in 2016. The COLA, based on the Consumer Price Index (CPI), increases to account for inflation. However, the Social Security Administration determined that since there will be no increase in the CPI, there will be no increase in COLA. Your clients may not understand how the COLA is determined and might be counting on their benefits to increase this year as they have in the past.

The Social Security Administration also announced that the “File-and-Suspend” strategy will expire on April 30, 2016. This strategy allows a married partner to file for benefits starting at age 62 and suspend them, allowing their spouse to collect on their record while they continue to work. Starting in May 2016, the beneficiary can still voluntarily delay their benefit, but their spouse will no longer be able to collect spousal benefits, including divorced spouses. These changes do not apply to widowers and surviving divorced spouses, or those strategies already being used by retirees. Be sure to connect with your clients nearing full retirement age so that there are aware of this big change.

Another important change to note is that Medicare has increased premiums for those in higher income brackets. In 2015, the premiums were $104.90 and in 2016 we will see them increase to $121.80. For those with substantial healthcare costs especially, this increase could be significant.

These are just a few of the changes being made to Social Security and Medicare in 2016. Be sure to access IRI’s Retirement by the Numbers 2016 to learn more.

In your discussions with clients on their personalized retirement strategies, be sure to assess life expectancy, health care costs, product mix, and long-term care to optimize their Social Security benefits. To access a webinar recording on the changes to Social Security in 2016, visit