Medicare Premium May Jump 17%, COLA Just 1.1%

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Medicare Premium May Jump 17%, COLA Just 1.1%

Seniors will be hit by a one-two punch next year. Recently the Medicare and Social Security Trustees released their 2004 annual reports estimating that Medicare premiums will jump a staggering 17%, or $11.50 per month — from $66.60 in 2004 to $78.10 in 2005. On the other hand, seniors will receive virtually no help from Cost-Of-Living Adjustments (COLAs), which Social Security Trustees estimate will increase by about just 1.1%. Seniors receiving an average benefit (about $922 monthly this year) would receive just $10.14 per month more in Social Security — not enough to cover the jump in Medicare premiums.

New Medicare prescription drug legislation is partly responsible for the big increase. Even though the main drug benefit does not start until 2006, provisions in the legislation give immediate higher reimbursements to doctors, Health Maintenance Organizations (HMOs), and hospitals, driving up program costs correspondingly. Seniors pay 25% of the Medicare Part B premium and the government pays the other 75%.

Look for further details in the July/August 2004 issue of TSCL’s The Social Security and Medicare Advisor.

Sources: The 2004 Medicare Trustees Report, March 23, 2004. The 2004 Social Security Trustees Report, March 23, 2004.

June 2004