Three Groups that Will Soon Face Higher Medicare Premiums

Most Medicare beneficiaries won’t pay higher premiums for Part B medical insurance coverage next year. Under current law, Part B premiums cannot rise faster than Social Security annual cost-of-living increases. And the Congressional Budget Office predicts there will be no cost-of-living increases for Social Security recipients in 2010 and 2011. But the law doesn’t protect all Medicare recipients from elevated health insurance costs. About 75 percent of people will be protected from the premium increase, according to Juliette Cubanski, a policy analyst at the Kaiser Family Foundation. The remaining 25 percent of Medicare recipients will face larger than normal premium increases because the costs are spread across a smaller share of beneficiaries. Here is who will have to pay greater Medicare premiums in the near future.

Medicaid recipients. Medicaid, which is funded by states and the federal government, already pays Medicare part B premiums for low-income individuals who qualify for both government programs. Medicaid will absorb the larger premiums for the 17 percent of Medicare beneficiaries who are also eligible for Medicaid. “The individual doesn’t pay the higher cost of the Part B premium, but the state does,” says Cubanski.

High-income retirees. Seniors with a modified adjusted gross income above $85,000 for individuals and $170,000 for couples in 2009 already pay steeper premiums than other retirees. The wealthiest 5 percent of Medicare beneficiaries aren’t exempt from further Part B premium hikes.

New enrollees. Retirees who sign up for Social Security and/or Part B medical coverage for the first time next year will also face higher premiums than existing Medicare recipients. While most Medicare Part B recipients currently pay $96.40 per month and will continue to be charged the same premium amount next year, costs are likely to increase for a quarter of retirees to $104.20 monthly in 2010 and $120.20 in 2011, according to the Medicare Trustees.

Current law does not protect Medicare Part D prescription drug coverage recipients from premium increases in years when there is no Social Security cost-of-living adjustment. Retirees who experience increases in their Part D premiums could receive smaller Social Security checks next year.