The federal government recently announced that the "standard" Medicare Part B premium will increase to $93.50 per month for most seniors and the disabled. Most beneficiaries have their Medicare Part B (doctors' and hospital outpatient) premiums automatically deducted from their Social Security check.  "But you probably didn't know that a provision of law protects most Social Security recipients from a reduction in benefits when the annual increase in Medicare Part B premium exceeds the Cost-of-Living Adjustment (COLA) dollar amount that a person receives," says Ralph McCutchen, Chairman of TREA Senior Citizens League.

The law adjusts the premium increase so that benefits don't get cut when the Medicare Part B premium increase is higher than the COLA.  Some 1.5 million Medicare beneficiaries will lose this protection in 2007.  Starting in January of next year, the government will require beneficiaries with incomes of more than $80,000 to pay much higher Medicare Part B premiums.  "Those affected will pay premiums that are about 20% to 83% more than they paid in 2006," McCutchen says.  "The special protection that currently prevents Social Security benefits from reduction when the Medicare premium increases more than the Social Security COLA will not apply to persons affected by means testing," he explains.

According to an analysis by TREA Senior Citizens League, this change is likely to have the greatest impact on beneficiaries whose Social Security benefits are just average (at or below $1000 in 2006) but whose overall income is higher than $80,000.  Beneficiaries with incomes of more than $80,000 will pay a monthly Part B premium that ranges from $106 to as much as $162.10.  Some of these retirees may see reductions in their Social Security checks starting in January of next year to cover higher Medicare Part B premiums. 

The problem of shrinking Social Security checks presumably will get a lot worse in just a few short years.  "If Medicare premiums continue to grow at the average double-digit pace, those persons affected by Means Testing will shortly need a substantial portion of their Social Security check just to cover the Medicare Part B premium," says McCutchen.

TSCL is highly concerned that if Medicare premiums become a "bad deal," younger, and healthier seniors may drop out of Medicare.  If this happens, it's likely the oldest and sickest who would be left behind.  Because they require more health care services, this would drive up program costs and future premiums for everyone else, no matter what their income. 

"Means Testing of Part B premiums was never part of the original House or Senate versions of the 2003 Medicare Modernization legislation passed by elected lawmakers," McCutchen points out. "This highly controversial change was inserted into the bill at the final stages of negotiation, behind tightly closed doors.  TSCL believes this is just a start, and that Congress is likely to expand Means Testing.  TSCL supports legislation that would repeal means testing, "The Medicare Part B Premium Fairness Act," introduced by Representative Nita Lowey (NY), H.R. 5147.

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With 1.2 million members, TREA Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Located just outside Washington, D.C., its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for.  Please visit www.SeniorsLeague.org or call 1-800-333-8725 for more information.

Distributed by The Senior Exchange, Inc.
Serving The Mature American With Timely, Low-Cost, Self-Help Information

September 2006