Medicare premium jump lower than usual

WASHINGTON – Elderly and disabled people will see their Medicare premiums rise 3.1 percent next year to $96.40 a month – the lowest increase in six years.

The good news is temporary, though.

The formula used to calculate the premium assumes that physicians will take a 10 percent cut in their reimbursement rates next year, an unlikely occurrence. If, as expected, Congress acts to offset some of that pay cut or to eliminate it, premiums in future years would go up.

Another factor in the lower-than-usual premium increase was the fixing of an accounting error that otherwise would have added $2.50 to beneficiaries’ monthly premiums in 2008.

Medicare pays for most of the health care received by about 43 million people. The program’s expenses have soared in recent years as health care costs go up faster than most other segments of the economy and as more people join the program.

Beneficiaries will be most concerned about expenses in two key segments of Medicare:

First, there is Medicare Part A, which covers inpatient hospital and hospice care as well as short stays in nursing homes. For this program, participants don’t pay a monthly premium. However, they do pay a deductible when they have to go to the hospital. That deductible will increase from $992 to $1024 next year.

Second, there is Medicare Part B, which covers services received at a doctor’s office and in outpatient settings and medical equipment. About a quarter of the revenue for this program comes from beneficiaries’ monthly premiums. The vast majority of participants will pay the $96.40 premium next year, though wealthier participants will pay more.