Every year, it seems Social Security and Medicare get more and more confusing.
It’s frustrating, for sure, and many people simply don’t know where to start—or what they are entitled to—as they near retirement. These people often look to their employer for guidance and information for transitioning to the next phase of life. To do this, employers must stay up on the latest Social Security and Medicare trends and changes. And, if you’re an employee, it’s important to have the right information to help you make the best decisions for your long-term financial security, healthcare coverage, and other retirement-related considerations.
Knowing what Social Security and Medicare provides in retirement and when to start benefits is key. Let’s start by examining some high-level changes related to cost-of-living, taxable earnings, full retirement age, and Medicare premiums and deductibles.
Trend Spotlight: Increases All Over!
Cost-of-Living adjustment
On October 12, 2023, the Social Security Administration (SSA) announced all their 2024 figures. As it turns out, Social Security beneficiaries will receive a 3.2% cost-of-living adjustment (COLA) for monthly benefits payable in 2024! The COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For the average retired worker, the increase is about $59 a month for a monthly benefit of $1,907.
Taxable earnings base increase
The Social Security taxable earnings base will increase to $168,600 in 2024 from $160,200 in 2023. There are about 181 million working people paying this combined 7.65% payroll tax, matched by their employers, to support these programs.
Full retirement age limit
In 2024, the full retirement age (FRA, or the age at which a person may first become entitled to full or unreduced retirement benefits) will be 66 and 8 months for people born January 2, 1958, through January 1, 1959. However, keep in mind that, for Social Security and Medicare purposes, the FRA is established on the day before an individual’s birthday. So, for example, someone born on January 1 is considered to have been born in the previous year.
For more examples, reference the Social Security figures in the table below related to when different individuals reach FRA.
Medicare premiums and deductibles
On October 12, 2023, the Centers for Medicare and Medicaid Services (CMS), an agency under the U.S. Department of Health and Human Services (HHS), released the 2024 Medicare premiums and deductibles. Here are some highlights related to increases:
- The standard Part B monthly premium will go down to $174.70 in 2024 for most current, new, and high-income Medicare beneficiaries, as well as for people whose Medicare premiums are paid by Medicaid.
- Beneficiaries with high incomes will pay additional income-related Part B premiums in the upcoming year.
- For Medicare Part D recipients, the standard prescription drug plan for 2024 is predicted to be $34.50 per month. These premiums are adjusted every January, while drug plan enrollment is within three months of becoming eligible for Medicare. Individuals can change plans or enroll for the first time from October 15 to December 7, and coverage becomes effective on
January 1. Also, note that high-income enrollees in Part D pay a premium surcharge that operates very much like the Part B program.
Summary table: 2023 vs. 2024 Social Security and Medicare data
The following table provides even more in-depth comparisons between 2023 and 2024 Social Security and Medicare figures, including both increases and decreases.
| Social Security |
2023 |
2023 |
| Cost-of-living Adjustment (COLA) for December (payable in January). |
8.7% (12/22) |
3.2% (12/23) |
| FICA tax rate: |
|
|
- Social Security for employees.
|
6.20% |
6.20% |
- Medicare (Hospital Insurance). An additional FICA tax of 0.9% applies to high-income beneficiaries with annual incomes above $200,000 ($250,000 for married couples filing jointly). The employer does not pay this additional percentage.
|
1.45% |
1.45% |
| Maximum Social Security earnings for tax contributions and benefits. |
$160,200 |
$168,600 |
| Medicare taxable earnings. |
no limit |
no limit |
| Earnings required to earn one credit (maximum of four credits per year). |
$1,640 |
$1,730 |
| Retirement Earnings Test exempt amounts: |
|
|
- Under full retirement age (FRA) throughout year.
|
$21,240 |
$22,320 |
- Reaches FRA in year (period before the month FRA is attained).
|
$56,520 |
$59,520 |
|
|
no limit |
no limit |
| Maximum monthly retirement benefit at FRA. |
$3,627 |
$3,822 |
| Medicare Part A (Hospital Insurance) |
2023 |
2024 |
| Part A inpatient deductible per benefit period. |
$1,600 |
$1,632 |
| Part A daily coinsurance 61st through 90th days. |
$400 |
$408 |
| Part A daily coinsurance for up to 60 “lifetime reserve” days. |
$800 |
$816 |
| Part A daily coinsurance 21st through 100th days in a skilled nursing facility. |
$200 |
$204 |
| Part A voluntary monthly premium if not eligible for premium-free Part A. |
$506 |
$505 |
| Part A reduced monthly premium for persons with 30 to 39 credits. |
$278 |
$278 |
| Medicare Part B (Medical Insurance) |
2022 |
2023 |
| Part B annual deductible. |
$226 |
$240 |
| Part B (Medical Insurance) standard monthly premium for most current, new, and high-income Medicare beneficiaries, and people whose Medicare premium is paid by Medicaid. |
$164.90 |
$174.70 |
| Part B (Medical Insurance) standard monthly premium:* |
|
|
| File an Individual Tax ReturnFile a Joint Tax Return |
|
|
| 0 to $97,000 annual income 0 to $194,000 annual income |
$164.90 |
$174.70 |
| $97,001 to $123,000 $194,001 to $246,000 |
$230.80 |
$244.60 |
| $123,001 to $153,000 $246,001 to $306,000 |
$329.70 |
$349.40 |
| $153,001 to $183,000 $306,001 to $366,000 |
$428.60 |
$454.20 |
| $183,001 to $500,000 $366,001 to $749,999 |
$527.50 |
$559.00 |
| $500,000 or more $750,000 or more |
$560.50 |
$594.00 |
| *Income brackets for beneficiaries based on their 2021 federal income tax return filing status and adjusted gross income in 2024 (2021 returns for 2023). |
|
|
| Medicare Part D (Prescription Drug Coverage) |
2023 |
2024 |
| Part D (Prescription Drug Coverage) monthly premium (estimate). |
$31.50 |
$34.50 |
| Part D monthly premium adjustment for high-income beneficiaries (paid to Medicare):* |
|
|
| File an Individual Tax Return File a Joint Tax Return |
|
|
| 0 to $97,000 annual income 0 to $194,000 annual income |
$0 |
$0 |
| $97,001 to $123,000 $194,001 to $246,000 |
+ $12.20 |
+ $12.90 |
| $123,001 to $153,000 $246,001 to $306,000 |
+ $31.50 |
+ $33.30 |
| $153,001 to $183,000 $306,001 to $366,000 |
+ $50.70 |
+ $53.80 |
| $183,001 to $500,000 $366,001 to $749,999 |
+ $70.00 |
+ $74.20 |
| $500,000 or more $750,000 or more |
$76.40 |
+ $81.00 |
| *Income brackets for beneficiaries based on their 2021 federal income tax return filing status and adjusted gross income in 2023 (2020 returns for 2022). |
|
|
| 2023 Figures Released February 2, 2022 |
2023 |
2024 |
| Part D deductible. |
$505 |
$545 |
| Part D initial benefit limit. |
$4,660 |
$5,030 |
| Part D catastrophic threshold. |
$7,400 |
$8,000 |
| Part D minimum cost-sharing for catastrophic coverage. Generic/Preferred: |
$4.15 |
$4.50 |
| Other: |
$10.35
|
$11.20 |
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This data is designed to help you or your employees properly prepare for a well-deserved retirement. After all, there’s nothing better than peace of mind when it comes to your employees’ financial security and healthcare coverage.