Medicare Costs More For Some Beneficiaries

Medicare Costs More For Some Beneficiaries

The January 8, 2010, issue of the Oast & Hook News discussed Medicare premiums for 2010, and stated that some beneficiaries would pay higher part B premiums in 2010.  Most beneficiaries will not see an increase in 2010 because of the Social Security Act's "hold harmless" provision.  This provision means that Medicare cannot pass along a premium increase to Social Security recipients that is higher than the Social Security annual cost-of-living adjustment.  There is no Social Security increase expected for 2010, so Medicare cannot charge beneficiaries receiving Social Security any extra premiums.

Medicare Part B premium revenues are intended to cover approximately 25% of the average cost of Medicare Part B services received by enrollees age 65 years and older.  The premiums are set by the Department of Health and Human Services.  Because 73% of Medicare Part B beneficiaries also receive Social Security and therefore have no premium increase, the remaining 27% of Medicare recipients must make up the difference with higher premiums in order to cover increased costs of Part B services.  According to a Kaiser Family Foundation report, "The Part B premium increase is higher than it would otherwise be because the costs are spread over a smaller share of beneficiaries." 

A recent Wall Street Journal article stated that the beneficiaries affected by the premium increases include the 3% of the Medicare Part B recipients who will turn age 65 years this year, as well as the 2% of Part B recipients who are not yet receiving Social Security because they are waiting to reach their full retirement age to begin receiving Social Security.  Those individuals will pay a minimum of $110.50 per month in premiums, up from $96.40 per month.  This inequity is expected to extend into 2011, if there is no Social Security cost-of-living adjustment next year.  Higher income individuals who are subject to larger monthly Part B premiums and lower-income enrollees whose premiums are paid by Medicaid are also no covered under the hold harmless provision.  Some individuals who are subject to the higher premiums have expressed unhappiness with the result.  Richard Braden, age 66 years, was laid off in 2008, but delayed signing up for Social Security until he reached his full retirement age in December 2009.  Because he was not receiving Social Security in November 2009 (as required to be covered by the hold harmless provision), he must pay the higher Part B premium this year.  "It really bothers me that I'm being penalized for waiting [to receive Social Security]."  His family lives on their savings and his wife's salary.  Oast & Hook will keep readers of the Oast & Hook News informed about further developments with this issue.

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