Thirty percent of Medicare Part B beneficiaries may soon find out that they are not protected against higher premiums, and all Medicare beneficiaries may see their Part B annual deductible jump by $76, to an estimated $223.
The deductible is the annual amount patients pay before Medicare kicks in. “This would affect all beneficiaries,” said Tricia Neuman of the Kaiser Family Foundation. “This kind of an increase is unprecedented.”
Under mounting pressure from seniors and labor groups, congressional leaders and the Obama administration are rushing to find a way to avert a huge Medicare premium increase of 50 percent or more for nearly a third of the 50 million elderly Americans who are reliant on Medicare for their physician care and other health services. The cost of avoiding such big premium increases, $7.5 billion by some estimates.
House Speaker John Boehner (R-OH), House Minority Leader Nancy Pelosi (D-CA) and White House officials have been scrambling behind the scenes to spare millions of seniors the expense of huge Medicare Part B premium hikes. While the problem pales in comparison to the larger budget issues, including highway spending and debt ceiling challenges, lawmakers are super sensitive to the concerns of seniors heading into the crucial 2016 election year.
The administration has criticized commercial insurance companies for seeking rate increases much smaller than this. Under federal law, Medicare premiums are linked closely to Social Security benefits. Inflation has been so low that Social Security beneficiaries may not receive a cost-of-living adjustment next year, federal officials said.
In order to minimize this impact, years ago Congress passed a “Hold Harmless” rule. This says that if a senior’s Part B Medicare premium goes up more than their Social Security check, they do not have to pay the increase. Instead, their premium will be the same what they paid the previous year. (In this case, 2015.) However, this only applies to 70% of retirees. The remaining 30% have to bear the entire increase. This includes:
A- New retirees, i.e. those who will start receiving Social Security benefits in 2016.
B- Individuals who are enrolled in Medicare, but do not receive Social Security, such as some federal, state and municipal retirees.
C- “Dual” beneficiaries. These are low-income seniors whose entire Part “B” premium is picked up by Medicaid, the joint federal-state insurance program.
D- “Wealthy” retirees who already pay more for Medicare based upon their income.
This last category represents 6% of seniors. Their Part “B” premium is based on a multiple of the base premium. For instance, according to the CRR, this year a couple whose joint income was $170,000- $214,000 each paid $146.90 for Medicare Part “B”. Next year, each will see this jump to $223/month.
At the top end of the income scale, a couple whose annual income exceeds $438,000 will each see their Part “B” premium jump from $337.70 to $509.90/month- $12,000/year!
Some 70 national organizations, including AARP, labor groups and health insurance company trade associations, sent a letter to Republican and Democratic congressional leaders last week urging prompt action to block or mitigate the looming premium increases. “Older adults and people with disabilities cannot shoulder these unprecedented increases,” Joe Baker, president of the Medicare Rights Center, told The New York Times.
Short of congressional or Department of Health and Human Services intervention at this point, roughly 15 million seniors, first-time beneficiaries or those currently claiming both Medicare and Medicaid coverage will see their premiums jump from $104.90 per month to $159.30 for individuals, according to an analysis by the Center for Retirement Research at Boston College. Higher-income couples would pay multiples of that increase.
The cost to Congress of averting such a premium hike is substantial – ranging from $2.8 billion to $7.5 billion, depending on calculations and budgetary baselines used in the computations. An aide to Boehner said on Tuesday that the speaker – who retires from Congress at the end of the month and is trying to complete a lot of budget business – is insisting that the cost of the bailout be offset by cuts in other programs.