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Higher Medicare Premium Costs May Cut Social Security Benefits Next Year
Alexandria, VA (June 6, 2006) - Higher Medicare premiums are likely to cut Social Security benefits for many seniors in 2007. The lower benefits may come as a surprise, warns TREA Senior Citizens League (TSCL), a national non-partisan seniors organization. "Medicare Part B premiums are expected to increase about five times faster than senior's Cost-Of-Living Adjustments (COLAs) next year,[1]" says Ralph McCutchen, Chairman of TSCL. Under current law, though, the Social Security benefits of most individuals are protected if the Part B premium increase exceeds the amount of their COLA. A provision of law lowers their Part B premium rate so that their Social Security check isn't cut by the premium increase.[2] "That protection is changing next year," McCutchen says. The 2006 Social Security Trustees report estimated that the COLA payable in 2007 would be about 2.3%. For retirees with an average benefit of $1002, that would increase monthly Social Security benefits by $23.[3] Meanwhile the Medicare Trustees estimate that the monthly Medicare Part B premium would rise from $88.50 today to $98.20 in 2007.[4] The estimated Part B premium increase, however, could go even higher if Congress were to make legislative changes increasing program costs this year.[5] "Two new changes in 2007 could reduce the amount of Social Security benefits that seniors receive," McCutchen explains. First, many seniors now have new Medicare Part D drug premiums automatically deducted from their Social Security benefits. Unlike Medicare Part B, there is no provision of law that protects Social Security benefits from reduction when Part D premiums rise more than a person's annual COLA.[6] Thus, for the first time, some seniors could see a reduction in the amount of Social Security they receive if their drug plan premium increases more than their COLA. In addition, starting in 2007, the government will begin to determine the Medicare Part B premium according to a person's income. The provision that protects their Social Security benefits from reduction will not apply to persons with incomes of more than $80,000 who are subject to "income related" or means tested premiums.[7] TSCL believes Medicare premiums and other senior health care costs are rising too quickly and that the COLA is failing to protect retirees' benefits because it does not accurately measure the portion of income that seniors must spend on those costs. The League supports legislation that would provide a more fair COLA by using a seniors' Consumer Price Index to calculate the annual adjustment. In addition, TSCL supports legislation that would repeal "income relating" or means testing, "The Medicare Part B Premium Fairness Act," introduced by Representative Nita Lowey (NY). "We urge seniors to contact your Representative in the House. Let him or her know how rapidly rising Medicare costs affect you. Please request that they support fair COLA legislation, and also co-sponsor H.R. 5147, "The Medicare Part B Premium Fairness Act." McCutchen asks. TSCL is a national group of politically active seniors concerned about the protection of their earned Social Security, Medicare, and other retirement benefits. TSCL members participate in a number of grassroots lobbying and public education campaigns designed to ensure governmental bodies, including the Social Security Administration and the Centers for Medicare and Medicaid Services, live up to their commitments. For more free information on our organization, please contact TREA Senior Citizens League, Department S613, 909 N. Washington St., Suite 300, Alexandria, VA 22314, or visit our website at: www.tscl.org. [1] 2006 Social Security Trustees Report, May 1, 2006, page 98 and 2006 Medicare Trustees Report, May 1, 2006, page 165. Distributed by The Senior Exchange, Inc. June 2006 | ||||||||
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