Medicare Premium Could Soar Next Year

[question everything]

(snip)

Earlier this week, the trustees of the Medicare Trust Fund gave participants some bad news: Several million of those who pay Part B premiums could see their monthly costs jump by more than half in 2016, thanks to a peculiarity in the law that sets premium amounts each year. To help you figure out whether your premiums might be at risk, let's take a closer look at this report to find out why premiums for some will be going up.

Medicare sets the amount of Part B premiums in part by looking at the expenses that the program incurs in any given year. Ordinarily, you'd expect Medicare premiums to rise gradually over time in order to reflect the steady increase in overall healthcare costs.

The problem that the Medicare Trustees Report highlights, however, is that current law doesn't allow Medicare to impose those higher premiums on all of its participants. In particular, there is what's known as a hold-harmless provision in the law governing premium setting that limits the dollar increase in Part B premiums to the amount by which that individual's Social Security benefits rose for the same year. This provision doesn't apply to everyone, as it generally applies to those Medicare participants who have their premium payments taken directly out of their monthly Social Security check. Still, about 70% of those who are enrolled in Part B qualify for hold-harmless treatment.

As a result of this hold-harmless provision, Medicare isn't allowed to pass on its full costs to all of its participants. If it could, the report says that Medicare participants who enroll in Part B and aren't subject to income-based surcharges would end up paying monthly premiums of $120.70. That in itself would be potentially painful for participants, with the rise amounting to about 15% compared to the 2014 baseline premium amount of $104.90.

Right now, though, most early projections anticipate that there won't be any cost-of-living increase made to monthly Social Security benefits next year, because most gauges of inflation have been flat to down over the past year because of the big drop in energy prices. With Social Security likely to remain unchanged, Medicare won't be able to pass on any of its added costs to beneficiaries who qualify for hold-harmless treatment.

In response, the hold-harmless provision will force Medicare to concentrate the burden of its cost increases onto the relatively small number of participants who don't qualify to have limits on higher premiums. Under the report's intermediate assumptions, the estimated monthly premium for 2016 would be $159.30, or 52% higher than the current 2014 level.

There are several groups of Medicare participants who don't get the benefit of the hold-harmless provision and therefore are at risk for higher premiums. First, those who are brand-new enrollees to the program for next year could potentially have to pay the higher premium amount. In addition, those who have incomes that are higher than $85,000 per year already have to pay income-based surcharges on top of the baseline Medicare premium, and that amount could be increased to reflect the added costs. Those who are eligible for dual benefits under Medicare and Medicaid could also see an impact, although they generally have their Part B premiums paid by state governments.

Perhaps most controversially, those who choose to pay their Medicare Part B premiums directly instead of having them deducted from Social Security payments would also be at risk of higher costs. This typically occurs among those Medicare recipients who haven't yet started taking Social Security benefits, and it's a particularly arbitrary distinction that makes little policy sense.

At this point, Medicare officials haven't made a final decision on how they will handle the issue.

More..

http://www.fool.com/retirement/general/2015/07/25/surprise-your-medicare-premium-could-soar-next-yea.aspx

[still_one]

1. Here is a response to the Motley Fool article. Some of it includes the inane responses from this

article, which are from right wing hacks, but it puts things nicely in perspective:

Rarely has so much trash been written in such a small space!!!
"Since COLA raises don't include food or gasoline
 Utterly false. Food and energy costs are included, and the varying price of gas is largely why there was a huge COLA a few yrs ago and no increase for two subsequent years.

The statement.
ALL the statements about "illegals" getting Social Security retirement benefits: absolutely false. Many pay in, but they can't get benefits even when they do. THEY PAY FOR US!!!
"

My personal Medicare monthly cost rose $55. last year. I'm 70 and my total costs to Medicare have been the $2 a month copay for years."
Garbage! Your Medicare payments didn't go up AT ALL last year unless your income is over $85,000.
"So the rich have to pay more"
False, the "rich" see no increase. They are already paying more. The increases are for other reasons. Read the article!
"I am assisting my 97 year old mother, who is BTW incredibly healthy. . . .Yet, health care providers find they can do things like give her monthly medical check-ups at a cost of $280 each."
Utterly false.

If all they are doing is BP or similar it is at best a Level 1, existing patient visit and Medicare pays nowhere near $280. Check-ups aren't covered anyway.
If you think there's fraud, report it to the Medicare fraud line.
"People really need to examine their annual doctor visit and outpatient cost to determine if they really need part B coverage. . . .. My wife and I however, in our case, were paying a premium of $ 377/mo since we didn't reside in the US for more than 20 years."
Horrible advice. Medical prices in the US can use up tens of $thousands in no time at all.

Medicare fixes prices that can be charged. Without Medicare, you'll pay whatever anybody wants to charge.
Your absence from the US caused a penalty of 10% per year of late registration, but you ought to check back with Medicare. Some foreign national health plans or employer-based health coverage abroad (group health plan) and/or membership in foreign "mutuelle" insurance qualifies for "creditable" coverage and nullifies the penalty. However, this will not be known by the people who answer the phones for Medicare, since they are contractors who basically read the Medicare and You book.
For the definition of a Group Heal Plan, see the official Social Security manual at:
https://secure.ssa.gov/apps10/poms.nsf/lnx/0600805266.
You might be able to get all your wrongly collected extra premiums back.


"Every president/congress since the SS program began has used the excess SS money for other expenditures."
FALSE, FALSE, FALSE! SSA invests in guaranteed bonds as required by law. These bonds pay good interest and repay principal. They protect Funds from losing huge sums to inflation.



(Just a side note, the fool is not very good at picking stocks either)

[SheilaT]

2. It seems to me that the Motley Fool is a rather unreliable

source for many things.

I read this article and found it confusing and misleading. The Part B monthly premium generally rises a little bit each year. Plus, if you make enough money, you pay more for Part B. Nonetheless, it's an amazing bargain. I'm on an Advantage Plan, where my Part B money goes directly to a company and they cover all sorts of things that regular Medicare's Part B doesn't. I even get a $50/month allowance to buy various over-the-counter things. I got a brand new electronic bathroom scale two months ago. Wow. No money out of my pocket.

I am on Medicare, although not yet collecting Social Security -- I plan to put that off until I'm 70. I pay my Part B as a direct withdrawal from my checking account, the same way several other of my bills are paid. I do love electronic banking.

[question everything]

3. That allowance is nice

Never heard of it, though I think mine, too is Advantage. Pays for my gym membership. All I pay is $25 a year, instead of about $40 a month!

As for the point of the article, if it comes to pass, you may want to reconsider waiting to age 70. Perhaps talk to a Social Security agent.

We were really lucky. After we both turned 66, we got a letter inviting me to apply. We were getting ready to fold a consulting business. The letter suggested to find info on the web but we decided to go to our suburban office to see whether one of us would be better off getting half of the other, etc. On our drive I read the letter, again, where it suggested to make an appointment. Oops.

Still, I really don't know how many agents there are there. She worked with us for a long time, preparing spreadsheet, looking at breakeven analysis and we concluded that we would be better off collecting our own individual benefits, and, we also got retroactive payment from the last birthday which was six months worth!

Depending on your income, of course, but if Medicare payment really will rise that much, it may be a wash waiting for age 70.

[SheilaT]

4. Correction of a sort.

I will be collecting on my ex's SS starting next month. I've made the application already. I am 66, my full retirement age, he turned 62 in June, and I filed that month, which was the earliest I could file. I will get 50% of what his SS would be at age 66 for him, regardless of when he might choose to file. When I turn 70, I will then start collecting my own full amount, which will be several hundred dollars more than my divorced spouse amount.

If he predeceases me, I get to collect his full amount, which will be more than mine.

People have been telling scary stories about SS being on the edge of collapse for a very long time. Some 45 years ago, co-workers would assure me it wouldn't be around when we retired. It's bad enough the full retirement age has been raised. It should never be raised again. Perhaps the age at which you can first collect could be lowered, although you'd then take an enormous hit in the monthly benefit. Most people would be better off getting a minimum wage job instead.

If you haven't had a chance to read Get What's Yours, The Secrets to Maxing Out Your Social Security by Laurence J. Kotlifoff, Philip Moeller, and Paul Solman, you should. One of the things they stress is that looking at a breakeven point is often quite foolish, although in your case it may make sense.