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Deal to ease premium hike for Medicare Part B may be a temporary fix

The federal budget agreement finalized earlier this month staved off an unprecedented spike in Medicare premiums for higher-income seniors and those choosing to delay Social Security. But some experts say the eye-popping rate hikes could return in 2017. [AP photo]

The federal budget agreement finalized earlier this month staved off an unprecedented spike in Medicare premiums for higher-income seniors and those choosing to delay Social Security. But some experts say the eye-popping rate hikes could return in 2017. [AP photo]

The federal budget agreement finalized this month staved off an unprecedented spike in Medicare premiums for higher-income seniors and those choosing to delay Social Security.

But some experts say the eye-popping rate hikes could return in 2017.

"The fix won't last," said Joseph Antos, a scholar at the conservative American Enterprise Institute who predicted "a very large number of people could see their premiums go up."

At issue: the monthly premiums for Medicare Part B, which covers doctors visits and outpatient hospital services.

Not all 52 million beneficiaries were bracing for an increase.

About 70 percent were shielded by a "hold harmless" provision, which keeps Part B premiums from rising if Social Security recipients do not receive a cost-of-living adjustment.

The remaining 30 percent — new enrollees, seniors who delay receiving Social Security benefits, higher-income enrollees who already pay higher premiums and those who are also eligible for Medicaid — would have been left to shoulder the projected premium hike. For individuals earning more than $214,000, the payment would have climbed from $335.70 to $509.80, according to some projections.

"The 52 percent increase would have been unprecedented in Medicare's history and a real spike in premiums," said Tricia Neuman, director of the Kaiser Family Foundation's Program on Medicare Policy. "That's what drove attention to this issue and led Congress to intervene."

In late October, congressional leaders hammered out a plan to limit the increases to 16 percent. It was signed into law by President Barack Obama this month.

Under the budget deal, the standard premium for beneficiaries not protected by the hold harmless provision will increase from $104.90 to $121.80, instead of the $159.30 that was originally projected.

Higher-income seniors will see larger increases.

An individual whose income is between $85,000 and $107,000 will pay a premium of $170.50, according to the Centers for Medicare & Medicaid. The monthly rate for seniors earning more than $214,000 will be $389.80.

The deal came as a relief to Randy Peirick of Oldsmar. His wife, Debbie, who isn't planning to file for her Social Security benefits until 2016, thought she would have to pay $159.30.

"It's obviously better than we expected," he said.

But some experts believe the issue could arise again next year.

Antos, of the American Enterprise Institute, pointed out that the fix will apply in 2017 if there is no cost-of-living increase. The more likely scenario, he said, is a small cost-of-living adjustment, which would limit the amount Part B premiums could rise.

"If it is a small COLA increase — and it is the typical increase in Part B costs — we're going to see another one of these gaps," he said. "The budget fix doesn't address that."

Antos said Congress should consider making changes to the hold harmless provision, and in the longer term, consider ways to rein in Medicare spending.

"We are seeing an upsurge in Part B spending, and it's going to stay that way until we make some reforms," he said.

But Neuman, of the Kaiser foundation, isn't convinced the premiums will skyrocket. She said the Part B premium increase could be larger than the Social Security adjustment for a small number of enrollees, but most would be protected by the hold harmless provision.

"Based on the outlook for now, 2017 is looking like it will be more of a typical year," she said.

Medicare Part B is optional. Beneficiaries can pair it with a Part D prescription drug plan, or select a privately managed Medicare Advantage plan instead.

Open enrollment for 2016 coverage runs through Dec. 7.

Contact Kathleen McGrory at [email protected] or (727) 893-8330. Follow @kmcgrory.

2016 Medicare

Part B premiums

Standard premium for those held harmless: $104.90

Standard premium: $121.80

Those with $85,000 to $107,000 in income: $170.50

Those with $107,000 to $160,000 in income: $243.60

Those with $160,000 to $214,000 in income: $316.70

Those with income above $214,000: $389.80

Source: Centers for Medicare & Medicaid Services

Deal to ease premium hike for Medicare Part B may be a temporary fix 11/22/15 [Last modified: Sunday, November 22, 2015 10:24pm]
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