4 FAQs about 2019 Medicare rates
Some high-income enrollees of Medicare Part B may experience premium increases of 7.4 percent. According to Medicare managers, Medicare Part B premium increases will be held to about 1.1 percent for most enrollees in 2019. Read on to learn more.
Medicare managers announced last week that they will hold increases in Medicare Part B premiums to about 1.1 percent for most enrollees in 2019. For some high-income enrollees, however, premiums will rise 7.4 percent.
Medicare Part B is the component of the traditional Medicare program that covers physician services and hospital outpatient care.
Here’s a look at how the monthly Part B premiums will change, by annual income level:
- Individuals earning less than $85,000, and couples earning less than $170,000:$135.50 in 2019, from $134 this year.
- Individuals earnings $160,000 to $500,000, and couples earning $320,000 to $750,000: $433.40 in 2019, from $428.60 this year.
- Individuals earning $500,000 or more, and couples earning $750,000 or more: $460.50 in 2019, from $428.60 this year.
The annual Medicare Part B deductible will increase by 1.1 percent, to $185.
Another component of the traditional Medicare program, Medicare Part A, covers inpatient hospital bills.
Medicare managers use payroll taxes to cover most of the cost of running the Medicare Part A program. Few Medicare Part A enrollees pay premiums for that coverage. But, for the enrollees who do have to pay premiums for Medicare Part A coverage, the full premium will increase 3.6 percent, to $437 per month.
The Medicare Part A deductible for inpatient hospital care will increase 1.8 percent, to $1,340.
Why are high earners paying so much more for Medicare Part B?
Congress has been increasing the share of Medicare costs that high earners pay in recent years.
For 2018, the top annual income category for Medicare Part B rate-setting purposes was for $160,000 and over for individuals, and for $320,000 and over for couples. Premiums from those Medicare Part B enrollees are supposed to cover 80 percent of their Part B claims.
In the Balanced Budget Act of 2018, Congress added a new annual income category: for individuals earning $500,000 or more and couples earning $750,000 or more. Premiums from Part B enrollees in that income category are supposed to cover 85 percent of those enrollees’ Part B claims.
Who do these rate increases actually affect?
Medicare now has about 60 million enrollees of all kinds, according to the CMS Medicare Enrollment Dashboard.
About 21 million are in Medicare Advantage plans and other plans with separate premium-setting processes.
About 38 million are in the traditional Medicare Part A, the Medicare Part B program, or both the Medicare Part A and the Medicare Part B programs. CMS refers to the traditional Medicare Part A-Medicare Part B program as Original Medicare. The rate increases have a direct effect on the Original Medicare enrollees’ costs.
How do the Medicare increases compare with the Social Security cost-of-living adjustment (COLA)?
The Social Security Administration recently announced that the 2019 Social Security COLA will be 2.8 percent.
That means the size of the COLA will be greater than the increase in Medicare premiums for all Medicare enrollees other than the highest-income Medicare Part B enrollees and the enrollees who pay the full cost of the Medicare Part A premiums.
Why should financial professionals care about Original Medicare premiums?
For consumers who already have traditional Medicare coverage, the Part A and Part B premiums may affect how much they have to spend on other insurance products and related products, such as Medicare supplement insurance coverage.
For retirement income planning clients, Medicare costs are something to factor into income needs calculations.
Because access to Medicare coverage is critical to all but the very wealthiest retirees, knowledge about how to get and keep eligibility for Medicare coverage on the most favorable possible terms is of keen interest to many consumers ages 50 and older. Some consumers may like to get information about that topic from their insurance agents, financial planners and other advisors.
Resources
Officials at the Centers for Medicare and Medicaid Services, the agency that runs Medicare, are preparing to publish the official 2019 Medicare rate notices in the Federal Register on Wednesday. A preview copy of the Part A notice is available here, and a preview copy of the Part B notice is available here.
SOURCE: Bell, A. (16 October 2018) "4 FAQs about 2019 Medicare rates" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/10/16/medicare-posts-2019-rates-pinches-high-earners-412/
Upper-income Seniors Face Medicare Hike
Source: https://www.benefitspro.com
By Ricardo Alonso-Zaldivar - Associated Press
President Barack Obama's new plan to raise Medicare premiums for upper-income seniors would create five new income brackets to squeeze more revenue for the government from the top tiers of retirees.
The administration revealed details of the plan on April 12th after Health and Human Services Secretary Kathleen Sebelius testified before the Congress on the president's budget. The details had not been provided when the budget was released earlier in the week.
The idea of "means testing" has been part of Medicare since the George W. Bush administration, but ramping it up is bound to stir controversy. Republicans are intrigued, but most Democrats don't like the idea.
The plan itself is complicated. The bottom line is not: more money for the government.
Obama's new budget calls for raising $50 billion over 10 years by increasing monthly "income-related" premiums for outpatient and prescription drug coverage. The comparable number last year was $28 billion over the decade.
Currently, single beneficiaries making more than $85,000 a year and couples earning more than $170,000 pay higher premiums. Obama's plan would raise the premiums themselves and also freeze adjustments for inflation until 1 in 4 Medicare recipients were paying the higher charges. Right now, the higher monthly charges hit only about 1 in 20 Medicare recipients.
House Budget Committee Chairman Paul Ryan, R-Wis., asked Sebelius about the new proposal last Friday, noting that it would raise significantly more revenue. Part of the reason for the additional federal revenue is that Obama's 2014 budget projects an additional year of money from the proposals. The rest of the answer has to do with the administration's new brackets.
Starting in 2017, there would be nine income brackets on which the higher premiums would be charged. There are only four now.
If the proposal were in effect today, a retiree making $85,000 would pay about $168 a month for outpatient coverage, compared to $146.90 currently.
Under current law, the next bump up doesn't come until an individual makes more than $107,000. Under Obama's plan, it would come when that person crosses the line at $92,333. If the plan were in effect today, the beneficiary would pay about $195 a month for outpatient coverage under Medicare's Part B, rather than $146.90.
The top income step — currently more than $214,000 — would be lowered to $196,000. And individuals in the new top tier would pay 90 percent of the cost of their outpatient coverage, compared to 80 percent currently.
The administration did not provide a comparable table for the effects on married couples.
The impact on monthly premiums for prescription drug coverage is hard to calculate, since different plans on the market charge varying premiums.
Sebelius told lawmakers the Medicare proposals in the budget are intended to strike a balance between cutting health care spending to reduce the deficit and maintaining services for people who depend on them.
"This proposal would improve Medicare's long-term financial stability by reducing the federal subsidy for people who can afford to pay more for their coverage," said Medicare spokesman Brian Cook.
