The Obama administration and congressional leaders have finally reached a tentative budget agreement that will prevent a 52 percent spike in Medicare premiums for millions of Americans.
Without the bipartisan budget deal about 17 million Medicare recipients would see their Medicare Part B premiums soar from $104.90 to about $160, USA Today reports. Instead, those same Medicare beneficiaries, who represent about 30 percent of older Americans covered by Medicare, will see a 14 percent premium increase to $120 per month next year, plus a monthly surcharge of $3.
According to The Washington Post, the 17 million Medicare beneficiaries affected by the premium increase do not have their insurance payment automatically deducted from a Social Security check.
“Among this group are people who do not collect Social Security, will be enrolling in Medicare’s Part B next year for the first time, have incomes great enough that they are charged higher premiums, or are poor enough that they also qualify for Medicaid,” the Post said.
A provision of federal law that links Medicare premiums to Social Security benefits, which won’t increase for the third year in a row because of low inflation, is shielding the other 70 percent of Medicare beneficiaries from increased premiums.
“The unprecedented spike in Part B rates for the rest would have come about in order to keep the Medicare system in actuarial balance,” the Post explained.
A loan from the U.S. Treasury to the Medicare trust fund will cover the cost of Medicare Part B in the new budget deal, according to USA Today. The loan will be paid back over the next five years with slight increases ($3 per month) in Medicare premiums.
“The approach to financing … will allow premiums to increase more gradually, while spreading the cost over a longer period of time, and across a broader group of beneficiaries,” Tricia Neuman, senior vice president at the Kaiser Family Foundation, told USA Today.
Medicare Part B covers most health care service outside hospitals.
Although the budget deal wards off a massive increase in Medicare Part B premiums, it does little to address the long-term financial stability of Medicare.
“While we have concerns about the way in which the Part B cost-sharing resolution is paid for, we are glad people who rely on Medicare can breathe a bit easier — knowing their premiums and deductible will not skyrocket next year,” Judith Stein, founder and executive director of the Center for Medicare Advocacy, told USA Today.
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