New budget changes up Social Security, Medicare

President Obama signed into law a bipartisan budget bill last week that has wide-ranging financial implications for Social Security and Medicare recipients.

uFILE AND SUSPEND. Currently, a married person — typically the higher wage earner in a couple — who’s at least full retirement age could file for his or her own Social Security benefits and then immediately suspend those benefits while the spouse could file for spousal benefits. By doing this, the higher wage earner’s benefits would grow 8% per year. In the meantime, the couple still get a Social Security check, and down the road the surviving spouse could get a higher benefit.

That option ends for new filers in May, so if you’re interested, now’s the time to apply. People already using this strategy will be grandfathered in until age 70.

uRESTRICTED APPLICATION. This also is being phased out. Currently, individuals eligible for both a spousal benefit and a retirement benefit based on his or her own work record could choose to elect only a spousal benefit at full re- tirement age, according to Social Security Timing. That would let them collect a higher benefit later.

Under the new law, however, only those born Jan. 1, 1954, or earlier can use this option. Anyone younger just automatically gets the larger of the two benefits.

uSOCIAL SECURITY DISABILITY. The Social Security Disability trust was on pace to run out of money next year and, as a result, millions of Americans were going to receive an automatic 19% reduction in their disability benefits in the fourth quarter of 2016. The new law fixes that by shifting payroll tax revenue from one Social Security trust fund to another.

uMEDICARE PART B. Some 30% of Medicare beneficiaries were expecting a 52% increase in their Medicare Part B medical insurance premiums and deductible in 2016.

Under the new law, those beneficiaries — an estimated 17 million — will pay $120 per month, instead of $159.30, for Part B. The other 70% will continue to pay the same premium in 2016 as they did in 2015, $104.90.

All beneficiaries, however, will have to pay an extra $3 per month to help pay down a loan to offset the lost revenue.