Baby Boomers and high-income seniors bear burden of Medicare increase

Most seniors will not see their premiums for Medicare Part B increase in 2010. That's because there is a "hold harmless" provision of Social Security that prevents Social Security payments from decreasing from one year to the next as a result of Medicare Part B increases. The intention of that provision was to protect seniors on a fixed-income from losing income if the premium for Part B increases.

Well, for the first time in 35 years, Social Security payments are not going up, because there will be no cost of living increase. That means Medicare Part B premiums can't go up either, but only if you've already been collecting Social Security and have Medicare Part B taken out of your Social Security check.

Baby Boomers who won't reach full retirement until age 66 and who waited to start Social Security at that age to get a higher payout may be sorry they waited. Also, high-income seniors -- with incomes greater than $85,000 for individuals and $170,000 for couples -- will pay more as well. Both groups will bear the brunt of the Medicare Part B increase.

Another group, those whose Medicare Part B premiums are not deducted from their Social Security check (about 19% of Social Security recipients), will pay the costs, but most of this third group also are on Medicaid, and Medicaid will pick up their tab.

What all this means is that 27% of those paying Medicare Part B will pay for 100% of the necessary increase in Medicare Part B premiums in 2010. For seniors who are Baby Boomers just starting Social Security -- about 2 million people in 2010 -- Medicare Part B will cost $110.50 per month, while the seniors who have been on Social Security will only pay $96.40 per month. If there's no increase in Social Security for 2010, projections are that the Medicare premium could go up to $120.20 per month for those new to Social Security.

If in 2012 there is finally a a Social Security payment increase, the Medicare Part B premium would then reset to $111.50 for all but the high-income seniors. High-income seniors pay even more than the Baby Boomers. In 2009, they were paying $125.25 per month, and that will go up to $143.65 in 2010. About 5% of those on Social Security are in the high-income group.

Congress did try to correct this inequity. The House of Representatives passed the Medicare Premium Fairness Act on September 24, 2009, by a vote of 406-18 to eliminate the premium increase for Medicare Part B in 2010 and maintain the $96.40 Medicare Part B premium for all. The estimated cost of $2.8 billion would be paid by allocating funds from the Medicare Improvement Fund. Unfortunately, the Senate Finance Committee is still sitting on that bill.

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