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Steep Medicare Premium Increase Expected - Part B Deductible to Climb
Medicare is expected to announce a steep premium increase of 17% for 2005, and the higher out-of-pocket costs won�t stop there. Under recently passed Medicare drug legislation, the Medicare Part B deductible will increase for the first time since 1991, from $100 to $110. What makes this increase so unusual is that, under the new law, the deductible will continue to increase annually � by the same percentage as the Medicare Part B premium. TSCL is highly concerned because we know of no other traditional or private managed care insurance plans in which the deductible increases annually in such a manner. If, for example, Medicare Part B premiums continue to increase by 11.5% annually as they have averaged for the past four years, the deductible would rise to $152 by 2008, an increase of more than 50% in just four years. Under current law, a special rule provides some protection to Medicare beneficiaries who have their Medicare Part B premiums automatically deducted from their Social Security payments. This provision limits the amount of increase in the Part B premium to the amount of the annual dollar increase of the Cost-Of-Living Adjustment (COLA). As a result, these seniors pay a lower Part B premium, and they don�t wind up with a lower Social Security check. Most Medicare beneficiaries will not have protection against increases in the Medicare Part B deductible, which is paid directly out-of-pocket. Currently, only 3 out of 12 standardized Medigap plans under traditional Medicare cover the Part B deductible. One of those plans, Plan J, which also covers prescription drugs, will no longer be offered starting in 2006 (although beneficiaries who currently have coverage under that plan will be allowed to renew it). Recently, The New York Times reported that people over the age of 65 have the fastest growing share of personal bankruptcy filings than any age group � most often caused by medical bills. Some 84% of you who responded to our �2004 Advisor Senior Survey� in the February issue of this newsletter say you are �highly concerned� that you may not be able to afford coverage in a few years as premiums, deductibles and drug costs rise. TSCL is monitoring the effect of the new law. We are continuing to work for measures that would better contain rising Medicare costs and would limit out-of-pocket spending increases of current beneficiaries. In addition, we are concerned about recent reports that employers will drop their former employees from coverage � something we lobbied to prevent prior to the bill�s passage. Sources: 2004 Medicare Trustees Report, March 23, 2004, pages 152, 164. �As Bills Mount, Debts on Homes Rise For Elderly,� Jennifer Bayot, The New York Times, July 4, 2004. August 2004 | ||||||||
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