|
||||||||
Massive Medicare Premium Hike Will Gobble Up COLAs
Rising gasoline and energy costs are driving inflation higher than the government previously thought it would be. The Congressional Budget Office (CBO) recently revised its January estimate of the 2005 Cost-of-Living Adjustment (COLA) upward from 1.5% to 2.7%. The Social Security Administration is expected to announce the 2005 COLA on October 19th. The Department of Health and Human Services, however, recently announced that the Medicare Part B premium increase would be $11.60 per month rising from $66.60 to $78.20 making it the largest increase in dollar terms since the program began. The 17.5% Medicare premium increase could offset most, if not all, of the COLA increase for many beneficiaries. Under current law, Medicare beneficiaries are protected by a rule that prevents Medicare Part B premiums from exceeding the amount of their annual COLAs. If the Part B premium increase is higher than the amount of their COLA, they do not have to pay the excess portion of the premium. This prevents them from winding up with a lower Social Security check. For example, say a Notch Baby in 2004 receives a $400 per month benefit prior to having the $66.60 per month Medicare Part B premium deducted. Her monthly check after deducting the premium is $333.40. An estimated 2.7% COLA would increase her monthly benefit by $10.80 per month in 2005 to $410.80. But the Medicare Part B premium will increase $11.60 per month, 80 cents more than her COLA. The 80 cent excess premium increase will be waived. Our Notch Baby’s benefit check after deducting the Medicare premium will not be reduced below the 2004 level. Our Notch Baby will continue to receive $333.40 a month in Social Security benefits in 2005 and continue to receive her Medicare Part B coverage. According to new report released by Joint Economic Committee Democrats, Medicare recipients won’t enjoy the same protection for the new prescription drug coverage, “Medicare Part D” that’s to start in 2006. The report states, “seniors are exposed to the possibility that large increases in medical costs, especially unchecked prescription drug costs, could eat up a large piece of their Social Security COLA and even cut their Social Security benefit.” Senator Tom Daschle (SD) and Representative Nancy Pelosi (CA) and a number of other Members of Congress have introduced legislation to protect COLAs from being eroded by rising Medicare premiums. The Social Security COLA Protection Act of 2004 would ensure that no more than 25 percent of a Medicare recipient’s annual COLA could be taken away by increases in Medicare premiums. TSCL works to protect the earned benefits of seniors, and will continue to do so. Many seniors rely primarily on Social Security for their livelihood, and we must do everything possible to keep seniors out of poverty. Sources: “September 2004, The Budget and Economic Outlook, An Update,” CBO, September 2004. “Rising Medicare Premiums Undermine the Social Security COLA,” Representative Pete Stark, Joint Economic Committee Democrats, July 2004. “Medicare Part B Premium Increase/COLA Rule,” 2004 Medicare Explained, CCH Incorporated, pages 79 & 80. September 2004 | ||||||||
|
|
||||||||
