Q: Two people I know have two different Medicare Part B premiums. One pays the new premium of $93.50, the other $ 79.00, and I pay $93.50. The one with $79.00 has been paying this amount for the last two years. Can you tell me why? — M.
A: Your acquaintance who pays $79 per month for the Part B likely has an extremely low Social Security benefit. If so, in recent years the increase in the Medicare Part B premium exceeded that individual's Cost-Of-Living Adjustment (COLA).
A little-known provision of law protects benefits of most people who have their Part B premiums automatically deducted from their monthly Social Security payment. The Part B premium increase may not exceed the amount of their COLA. When it does, the federal government reduces the amount of the Part B premium to prevent a reduction in benefits. The federal government appears to have adjusted the Medicare premium your acquaintance pays to prevent such a reduction.
Your acquaintance receives enormously valuable savings this way on Part B premiums due to this benefit protection. On the other hand, because the Part B premium requires all of that person's COLA, his or her net Social Security benefit, the amount after deduction for the Medicare Part B premium, has stopped increasing. Thus unless your acquaintance has other sources of retirement income, he or she may be having quite a struggle keeping up with all other rising costs.
Your can help by signing TSCL's Petition to Congress Opposing Means Testing for Medicare Premiums
Seniors with incomes greater than $80,000 for the first time this year also pay different Part B premiums, depending on their incomes. The provision of law that protects Social Security benefits from reduction does not apply to people who pay these higher "income-based" or Means Tested Part B premiums. The following chart illustrates.
2007 "Means Tested" Part B Premiums Income:*
* The government uses modified adjusted gross income from 2005 tax returns.
Source: *Medicare Premiums and Deductibles for 2007, Centers for Medicare and Medicaid Services, September 12, 2006.
March 2007
