Medicare premiums going up, Social Security checks going down

Many seniors will see their Social Security check go down because their Medicare Part D (prescription plans) and their Medicare Part C (also known as Medicare Advantage) plans are expected to go up in cost. Since Social Security is not expected to provide a cost of living increase (COLA) this year for the first time in 25 years, this rise in medical premiums will actually mean many seniors will get a lower Social Security check because premiums for most seniors are taken out of this check.

Congress is considering a one time payment of $250 for singles and $500 for couples to help offset the rising costs seniors face for medical care, prescription drugs, energy and food. But whether or not that will really cover a senior's increases will depend upon where they live and who their Medicare provider is.

The Kaiser Family Foundation reports that Medicare Part D plans are expected to increase an average of 7% plus about 60% of available plans will have an annual deductible in 2010 ($310 is standard). Only 45% had an annual deductible last year.

In addition fewer Medicare Part D programs will be offering coverage in the doughnut hole. Once spending for a senior's drugs tops $2,830 (and that includes both what the senior pays and the insurer pays), the senior enters the doughnut hole and can't get out of it until spending reaches $6,440. Not many seniors escape the doughnut hole once they get into it. When in the doughnut hole, seniors get no coverage for their prescription drugs.

Seniors who also sign up for Medicare Advantage, rather than stay on traditional Medicare, likely will also face premium increases. The average premium will go up to $39. That's a $7 increase from last year. About 600,000 seniors, which represents about 7% of those on Medicare Advantage, will have to change plans because some companies are getting out of the Medicare business. The government tightened regulations because of complaints from seniors. Those in private-fee-for-service plans may need to look for a new plan. If your plan is closing down you will likely get something in the mail this month if you haven't already received it.

Right now the government is paying more to the Medicare Advantage plans for the seniors they cover than is paid for seniors who stay in traditional Medicare. Congress did that to get the program started but now the government is looking to bring the costs back in line. Federal funding for Medicare Advantage was cut by 4% this year and Congressional Democrats are looking to eliminate another $130 billion in funding for Medicare Advantage over the next 10 years to help pay for its plans to insure Americans who are uninsured.

You'll be able to search for Medicare Part D and Medicare Advantage plans in November at You can sign up for the plans between November 15 and December 31. But do be careful about picking the right plan for you. If you do have a chronic illness, such as diabetes or need dialysis, your coverage may not be as good on a Medicare Advantage plan as it would be on traditional Medicare. If you are seeing certain doctors that you want to continue to see or taking medication that you want to continue to take, always make a call to the providers you are considering and make sure your doctors and medications will not have to change if you sign up for a new plan.

I had a good friend who signed up for a Medicare Advantage plan in Florida. About a month after he signed up he was diagnosed with renal failure and found out that the Medicare Advantage program he chose did not fully cover the costs of dialysis. Luckily he was still able to switch back to traditional Medicare. Be careful because many of the Medicare Advantage plans are designed to save money for healthy seniors, but not for those with chronic illnesses. The plans can't cherry pick the way other insurers do by refusing someone because of pre-existing conditions, so instead they do essentially the same thing by not offering full coverage for those with certain chronic illnesses.

Even if you are happy with your current Medicare Part D provider, you should still do a search for providers in 2010. Providers will be raising their premiums and many will be making changes to their formularies (list of drugs they cover). You may have coverage for your drugs this year, but you may find the drugs you take could cost more with the same provider next year because they changed their reimbursement levels for that drug by moving it from Tier 1 position (lowest co-pay) to a Tier 3 position (much higher co-pay). In my new book, the Pocket Idiot's Guide to Medicare Part D, I show you how to pick the best plan for you and show you how to use the online Medicare tool to find the one that will be the lowest cost.

Lita Epstein has written more than 25 books including The "Pocket Idiot's Guide to Medicare Part D" and "The Complete Idiot's Guide to Social Security and Medicare."
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