Beneficiaries will soon be notified of the increase in their Medicare Part B premium for 2007.  Most seniors will pay a monthly premium of $93.50 for their Part B doctors’ and hospital outpatient coverage next year, an increase of 5.6% over 2006.  But some 1.5 million beneficiaries are in for dramatically different news.  Their premium will be higher — a whole lot higher than their neighbor’s.  A new means test will make some seniors pay an even bigger share of the Part B cost than other seniors, as the federal government begins to calculate Medicare Part B premiums based on income.  Those affected, beneficiaries with incomes over $80,000 will pay— 20% to 83% more than they paid in 2006.

TSCL is highly concerned and questions how the federal government will ensure that the premiums are fairly and accurately determined.  The 2003 legislation that mandated means testing requires the use, and sharing between government agencies of, income tax return information.  "Substantial numbers of taxpayers have been plagued over the years by erroneous notices from the IRS,” observes Ralph McCutchen, Chairman of TREA (The) Senior Citizens League.  “We are concerned that seniors could be unfairly overcharged for their Medicare premiums or have enormous difficulties contesting and correcting errors.” 

Recently numerous “glitches” under Medicare Part D suggests the risk of errors and incorrect premium charges is not only quite high, but could create a huge mess for beneficiaries.  One so-called “data processing error” for example, led the Centers for Medicare and Medicaid Services (CMS) to incorrectly send 230,000 Medicare recipients a “refund” of several months’ worth of premiums they had paid for prescription drug coverage, averaging about $213 each.  Adding to the confusion, beneficiaries also received a letter from the Social Security Administration stating the agency would no longer deduct their drug premiums from their monthly Social Security benefits — even though beneficiaries had not requested an end to the service.  Those affected received letters explaining the glitch and telling them that the money had to be returned. 

A few weeks later, however, a federal judge stepped in, ordering the federal government to halt efforts to recover the money saying that seniors might qualify for waivers because repayment would cause them hardship.  The federal judge said that any money already paid to the government “must be immediately returned to the beneficiaries so they may decide whether to request a waiver.”

Other beneficiaries have also encountered serious problems.  The Associated Press reported that some beneficiaries have had too much money deducted from their Social Security benefits to pay for Part D drug premiums, others have had premiums withheld but the government never forwarded the money to the insurers.  In yet other cases low-income beneficiaries, eligible for the government’s “Extra Help” with their premiums, have been overcharged for their premiums.  Means testing, however, will apply only to Part B premiums, not to Part D drug premiums in 2007.

 TSCL recommends that Medicare beneficiaries carefully review notices of the Medicare Part B premium for accuracy.  In addition, if you want more information as to how your premium was determined and whether it is the correct amount, look for instructions and the phone number to call on your notice.  TSCL supports Representative Nita Lowey’s (NY) “Medicare Part B Premium Fairness Act,” H.R. 5147, which would repeal means testing.

Sources: “Medicare Premiums and Deductibles for 2007,” CMS, September 12, 2006.  “Strong Medicine,” Laurie McGinley, The Wall Street Journal, August 21, 2006.  “Data Processing Error” Was A Medicare Slip-Up, Christopher Lee, The Washington Post, August 24, 2006. “Medicare Trying To Reduce Errors,” Kevin Freking, The Associated Press, September 7, 2006. “Judge Halts Effort to Recoup Mistaken Medicare Refunds,” Robert Pear, The New York Times, September 29, 2006.

November 2006