Three Groups that Will Soon Face Higher Medicare Premiums

by independencenw | Aug 24, 2009 | social security

Via US News and World Report

Most Medicare beneficiaries won’t pay higher premiums for Part B medical insurance coverage next year. Under current law, Part B premiums cannot rise faster than Social Security annual cost-of-living increases. And the Congressional Budget Office predicts there will be no cost-of-living increases for Social Security recipients in 2010 and 2011. But the law doesn’t protect all Medicare recipients from elevated health insurance costs. About 75 percent of people will be protected from the premium increase, according to Juliette Cubanski, a policy analyst at the Kaiser Family Foundation. The remaining 25 percent of Medicare recipients will face larger than normal premium increases because the costs are spread across a smaller share of beneficiaries. Here is who will have to pay greater Medicare premiums in the near future.

Medicaid recipients. Medicaid, which is funded by states and the federal government, already pays Medicare part B premiums for low-income individuals who qualify for both government programs. Medicaid will absorb the larger premiums for the 17 percent of Medicare beneficiaries who are also eligible for Medicaid. “The individual doesn’t pay the higher cost of the Part B premium, but the state does,” says Cubanski.

High income retirees. Seniors with a modified adjusted gross income above $85,000 for individuals and $170,000 for couples in 2009 already pay steeper premiums than other retirees. The wealthiest 5 percent of Medicare beneficiaries aren’t exempt from further Part B premium hikes.

New enrollees. Retirees who sign up for Social Security and/or Part B medical coverage for the first time next year will also face higher premiums than existing Medicare recipients. While most Medicare Part B recipients currently pay $96.40 per month and will continue to be charged the same premium amount next year, costs are likely to increase for a quarter of retirees to $104.20 monthly in 2010 and $120.20 in 2011, according to the Medicare Trustees.

Current law does not protect Medicare Part D prescription drug coverage recipients from premium increases in years when there is no Social Security cost-of-living adjustment. Retirees who experience increases in their Part D premiums could receive smaller Social Security checks next year.

Living on social security? No cost-of-living increase for you next year

by independencenw | Aug 24, 2009 | social security

From KATU.com

For the first time in more than 30 years, Social Security recipients won’t be getting a cost-of-living adjustment. That increase is pegged to inflation, which has been negative this year.

Negative inflation is a good thing for consumers shopping for groceries and other staples, since it means lowered costs on many of the items we buy every day. But what is good news for the rest of us equals bad news for those expecting the same 5.8 percent raise they got January 2009 for their Social Security benefits starting January 2010. That’s because a negative inflation rate means there will be no Social Security increase come 2010.

The lack of an increase is expected to be especially hard on older people who spend a disproportionate amount of their income on health care. Health care costs continue to rise faster than inflation.

For more information, you can go to Social Security Online to find out how cost-of-living adjustments are calculated. In general, that resource tells you that a cost-of-living increase is equal to the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the next. If there is no CPI-W increase, there is no cost-of-living increase either.

This is the first time in a generation that there will be no adjustment this next January. While benefits would not go lower, the deductions for Medicare and especially the prescription drug plan written under the Bush administration, will go up. Since millions of seniors have those benefits deducted from their social security check, come January those millions will get a smaller amount for each regular Social Security check.