Medicare Says Over 70 Percent of Senior Citizens
Will Not See Part B Increase in 2010
CMS lays out the fees and charges seniors will see
in 2010 for basic Medicare; mostly impacts those with higher incomes
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Oct. 21, 2009 – Senior citizens, many worried about
their economic fortunes in 2010, when they will not see their Social
Security benefit increase, are getting good news from Medicare - most
seniors covered by Medicare will not see an increase in their Part B
monthly premium. The Centers for Medicare & Medicaid Services (CMS),
says this is due to a “hold
harmless” provision in the law.
This provision will allow for 73 percent of
beneficiaries to be protected from the increase, which will raise the 2010
Part B monthly premium from $96.40 to $110.50.
This monthly premium paid by beneficiaries enrolled
in Medicare Part B covers a portion of the cost of physicians’ services,
outpatient hospital services, certain home health services, durable
medical equipment, and other items.
“The Administration continues to urge Congressional
action that would protect all beneficiaries from higher Part B premiums
and eliminate the inequity of a high premium for the remaining 27
percent of beneficiaries,” according to a Fact Sheet issued by the CMS.
By law, CMS is required to announce the Part A
deductibles and Part B premium amount annually in a notice that is
published in the Federal Register.
Under the Medicare law, the standard premium is set
to cover approximately one-fourth of the average cost of Part B services
incurred by beneficiaries aged 65 and over. The remaining Part B costs
are financed by Federal general revenues.
In calculating the monthly Part B premium each
year, the CMS Office of the Actuary includes a contingency margin to
provide for possible variation between actual and projected costs. The
size of the contingency margin estimated to be needed for 2010 is
affected by two main factors.
● First, the current law formula for physician
fees, which will result in a reduction in physician fees of
approximately 21 percent in 2010 and is projected to cause additional
reductions in subsequent years, is one factor affecting the 2010
contingency margin. For each year from 2003 through 2009, Congress has
acted to prevent physician fee reductions from occurring.
In recognition of the strong possibility of
increases in Part B expenditures that would result from similar
legislation to override the decreases in physician fees in 2010 or later
years, it is appropriate to maintain a significantly larger Part B
contingency reserve than would otherwise be necessary. The asset level
projected for the end of 2009 is not adequate to accommodate this
contingency.
● Second, the Social Security Administration
announced there would be no increase in Social Security benefits for
2010. As a result of the hold-harmless provision, the increase in the
Part B premium for 2010 will be paid by only a small percentage of
Part B enrollees. Most Part B enrollees will pay the same monthly
premium that they paid in 2009, which was $96.40.
27% not covered by hold-harmless provision
Approximately 27 percent of beneficiaries are not
subject to the hold-harmless provision because they fall into one of the
following categories:
► new enrollees during the year (3 percent),
► they are subject to the income-related additional premium amount (5
percent),
► they do not have their Part B premiums withheld from social
security benefit payments (19 percent),
► they qualify for both Medicare and Medicaid and have their Part B
premiums paid on their behalf by Medicaid (17 percent).
Income now a factor in determining who pays
As required in the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA), beginning in 2007 the
Part B premium a beneficiary pays each month is based on his or her
annual income.
Specifically, if a beneficiary’s “modified adjusted
gross income” is greater than the legislated threshold amounts ($85,000
in 2010 for a beneficiary filing an individual income tax return or
married and filing a separate return, and $170,000 for a beneficiary
filing a joint tax return) the beneficiary is responsible for a larger
portion of the estimated total cost of Part B benefit coverage.
In addition to the standard 25 percent premium,
such beneficiaries now pay an income-related monthly adjustment amount.
These income-related Part B premiums were phased-in over three years,
beginning in 2007.
About 5 percent of current Part B enrollees are
expected to be subject to the higher premium amounts
The 2010 Part B monthly premium rates to be paid by
beneficiaries who file an individual tax return (including those who are
single, head of household, qualifying widow(er) with dependent child, or
married filing separately who lived apart from their spouse for the
entire taxable year), or who file a joint tax return are:
Chart Showing Monthly Adjustment by Income
Level
Beneficiaries who file an individual tax return with income:
Beneficiaries who file a joint tax return with income:
Income-related monthly adjustment amount
Total
monthly premium amount
Less than
or equal to $85,000
Less than or
equal to $170,000
$0.00
$110.50
Greater than
$85,000 and less than or equal to $107,000
Greater than
$170,000 and less than or equal to $214,000
$44.20
$154.70
Greater than
$107,000 and less than or equal to $160,000
Greater than
$214,000 and less than or equal to $320,000
$110.50
$221.00
Greater than
$160,000 and less than or equal to $214,000
Greater than
$320,000 and less than or equal to $428,000
$176.80
$287.30
Greater than
$214,000
Greater than
$428,000
$243.10
$353.60
In addition, the monthly premium rates to be paid
by beneficiaries who are married, but file a separate return from their
spouse and lived with their spouse at any time during the taxable year
are:
Beneficiaries who are married but file a separate tax return
from their spouse:
Income-related monthly adjustment amount
Total
monthly premium amount
Less than or
equal to $85,000
$0.00
$110.50
Greater than
$85,000 and less than or equal to $129,000
$176.80
$287.30
Greater than
$129,000
$243.10
$353.60
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Dec. 31
Each year drug and other plans change what they cost and what they
cover. The next general open enrollment starts on November 15, 2009.
During this time, people with Medicare can add, drop or change their
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2010 coverage.
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The Part B deductible was increased to $110 in 2005
and, as a result of the Medicare Modernization Act, is currently indexed
to the annual percentage increase in the Part B actuarial rate for aged
beneficiaries. In 2010, the Part B deductible will be $155.
Part A Premium and Deductible
CMS has also announced the Part A deductible and
premium for 2010. Medicare Part A pays for inpatient hospital, skilled
nursing facility, hospice, and certain home health care services.
The $1,100 deductible for 2010, paid by the
beneficiary when admitted as a hospital inpatient, is an increase of $32
from $1,068 in 2009.
Beneficiaries must pay an additional $275 per day
for days 61 through 90 in 2010, and $550 for lifetime reserve days. The
corresponding amounts in 2009 are $267 and $534, respectively. Daily
coinsurance for the 21st through 100th day in a skilled nursing facility
will be $137.50 in 2010, up from $133.50 in 2009.
Part A not charged those with 40 quarters of
Medicare-covered employment
Approximately 99 percent of Medicare beneficiaries
do not have to pay a premium for Part A services because they have at
least 40 quarters of Medicare-covered employment (or are the spouse or
widow(er) of such a person).
However, other seniors and certain people under age
65 with disabilities who have fewer than 30 quarters of coverage may
obtain Part A coverage by paying a monthly premium set according to a
statutory formula. This premium will be $461 per month for 2010, an
increase of $18 from 2009. A reduced premium applies in the case of
individuals with 30 to 39 quarters of coverage, who will pay a premium
of $254 in 2010, compared to $244 in 2009.
Keep up with the latest news for senior citizens, baby
boomers
Action stops insurance increase for about 27% of
senior citizens, others protected already; Seniors won’t see COLA for
2010