Tuesday October 20, 2015
Action Needed to Stop Steep Hike in Medicare Costs
By David Lipschutz, Senior Policy Attorney
Center for Medicare Advocacy
Due to a number of converging factors, 2016 Medicare Part B premiums are projected to dramatically increase for some Medicare beneficiaries, and the Part B deductible is projected to dramatically increase for everyone – unless Congress acts to fix it.
On October 15th – the same day that the Medicare Open Enrollment period began, which allows people to make changes to their Medicare Advantage and Part D plans – the Social Security Administration announced that there will be no Cost of Living Adjustment (COLA) for 2016. Although the Medicare program has not yet released the official 2016 Part B premium and deductible amounts, this announcement makes it much more likely that these unprecedented increases will occur.
According to the 2015 Medicare Trustees Report, Part B premiums are expected to increase for 30% of beneficiaries by 52% – from $104.90 to $159.30 per month. The trustees also predict that this increase will be accompanied by an increase in the Part B deductible for everyone – up to $223 from $147.
Because there will be no COLA next year, 70% of beneficiaries who have their Part B premiums deducted from their Social Security checks will be protected by a “hold harmless” provision of the Medicare statute, meaning their premiums will stay at the same rate next year ($104.90).
That means the increased costs will be borne by the 30% of individuals described below, rather than a lower amount spread across the entire Medicare population.
The 30% of affected individuals are: o those who will be new Medicare enrollees in 2016; o those with income-related premiums (incomes higher than $85,000 for individuals); o those beneficiaries who pay their premiums directly instead of having it deducted from their Social Security checks (or those who don’t collect Social Security, such as certain government employees); and o individuals dually eligible for Medicare and Medicaid (these costs will be paid for by state Medicaid agencies rather than individuals).
There is no “hold harmless” provision that applies to the deductible, so the projected increase from $147 in 2015 to $223 in 2016 (an increase of $76) will apply to all Medicare beneficiaries. While many Medicare beneficiaries have supplemental or other coverage that includes coverage of the deductible, state Medicaid agencies, employer plans, and certain Medigap plan carriers will pay these increased costs which could, among other things, affect premiums. Those without any supplemental coverage that covers the Part B deductible will pay the full amount.
It will take action by Congress in order to prevent these steep increases from occurring. So far, bills have been introduced in both the House and Senate that would hold everyone “harmless” from these premium and deductible increases: “Protecting Medicare Beneficiaries Act of 2015” (S. 2148) introduced by Senator Ron Wyden, and “Medicare Premium Fairness Act of 2015” (H.R. 3696) introduced by Rep. Dina Titus. Whether and when Congress will act, remains to be seen.