Increase in Medicare Part B Premiums May Not Happen

Due to a bipartisan budget deal seniors may not have to worry about the increase in Medicare Part B premiums. The article below by Robert Powell from USA Today talks about what seniors can expect in upcoming Medicare Part B changes.


Budget proposal could mean no 52% jump in Medicare Part B premiums

Millions of Medicare recipients bracing for a 52% premium increase are one step away from breathing a sigh of relief thanks to a bipartisan budget deal the House passed on Wednesday. The Senate is due to vote soon.

“The deal, if it gets through Congress, will substantially reduce the increase in Medicare premiums and deductibles that would otherwise take effect in 2016,” says Tricia Neuman, a senior vice president at the Kaiser Family Foundation in Washington, D.C.

Without the deal, some 30% of 54 million Medicare beneficiaries would have seen Part B premiums jump 52% in 2016, from a base rate $104.90 per month to $159.30. With the proposed budget deal, about 17 million beneficiaries would see their Part B premiums rise 14% instead, to a new base rate of $120 per month in 2016, plus a $3-per-month surcharge.

According to Katy Votava, president of in Rochester, N.Y., higher-income beneficiaries — those subject to Medicare’s income-related monthly adjustment amount — will pay more than $120. Although those numbers have not been released, Votava calculates a range from about $168 to $384, plus the surcharge.

AARP, a non-profit, non-partisan organization that represents the interests of some 38 million Americans 50 and older and their families, was among those praising the proposed legislation.

“Congress is helping to prevent financial hardship for many beneficiaries at a time when there is no Social Security cost-of-living adjustment,” Jo Ann Jenkins, chief executive officer of AARP, wrote in a letter to the Senate and House leadership.

The cost of Medicare Part B part of the proposed legislation — about $12 billion, according to a National Journal report — would be covered by a loan from the Treasury and paid back over time by a gradual increase in Medicare Part B premiums.

“The approach to financing …  will allow premiums to increase more gradually, while spreading the cost over a longer period of time, and across a broader group of beneficiaries,” Neuman says. However, Votava calls it  “a kick-the-can strategy, as it does not address the long-term financial stability of Medicare.”

Judith Stein, founder and executive director of the Center for Medicare Advocacy, also offers a mixed review. “While we have concerns about the way in which the Part B cost-sharing resolution is paid for, we are glad people who rely on Medicare can breathe a bit easier – knowing their premiums and deductible will not skyrocket next year.”

Part B covers most medically necessary doctors’ services, preventive care, durable medical equipment, outpatient services, lab tests, X-rays, mental health care and some home health and ambulance services. Rate increases for the program are capped by law to the amount of the Social Security cost-of-living adjustment (COLA).

That provision came into play on Oct. 15, when the government announced there would be no COLA in 2016. No COLA meant no increase in Part B premiums for the 70% of Medicare beneficiaries who are considered held harmless, but a big increase for the remaining 30%.

The 30% not held harmless includes new enrollees who start benefits in 2016; enrollees who don’t receive a Social Security benefit check; enrollees subject to the income-related premium adjustment; and dual Medicare-Medicaidbeneficiaries, whose premiums are paid by state Medicaid programs.

In addition to smoothing out the Medicare premium bump, the budget deal also addresses a big cut in Social Security disability payments that was on the horizon. It re-allocates payroll taxes among Social Security program trust funds to ensure solvency of the disability insurance program. The disability insurance trust fund was on pace to run dry in 2016, and millions of Americans were going to get an automatic 19% reduction in their Social Security disability insurance benefits.

But the news isn’t all good for benefit recipients.  The House’s new budget bill also contains a provision that could cut off benefits to millions of households now receiving them. According to a report by Laurence Kotlikoff, co-author of Get What’s Yours: The Secrets to Maxing Out Your Social Security, in six months, benefits now being received by spouses, divorced spouses or children on the work record of a spouse, ex-spouse or parent who has suspended his or her benefits will be eliminated until the worker restarts his or her retirement benefit.

“I’ve never heard of a change in Social Security law that eliminates benefits for people already collecting, but this is what’s in this bill,” Kotlikoff wrote in his report. “This will cost millions of households tens of thousands of dollars. Worse, it will induce those who have suspended their benefits in order to collect higher benefits at 70 to restart their benefits at permanently lower levels in order to maintain their family’s immediate living standards.”

5:38 p.m. EDT October 28, 2015
Robert Powell, Special for USA TODAY

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY