Nation/World

Medicare premiums could rise for many retirees

WASHINGTON (AP) — They may not agree on much else, but there’s a change to Medicare that President Barack Obama and Republicans both support: Expand a little-known law so more retirees that the government considers well-off are required to pay higher monthly premiums.

It’s on the short list in the budget talks, raising $20 billion or more over 10 years.

That could come as a shock to many seniors who would have to pay the higher premiums and consider themselves comfortably middle-class, yet by no means wealthy.

It happened to Tom James. He and his wife recently got an official notice that they will have to start paying more for Medicare next year, about $1,000 for the two of them.

James is among some 2 million beneficiaries currently facing higher “income-related” premiums for outpatient care, or Medicare Part B. If the budget proposal goes through, that number would grow over time to 20 million.

“I was blindsided,” said James, a retired bank examiner who lives near Philadelphia. “The camel has got his nose in the tent now, and the question is how far do they want to go with that?”

Income-based premiums were introduced for outpatient care under former President George W. Bush and later expanded to the prescription benefit, or Medicare Part D, by Obama’s health care law. The idea now is to keep broadening their reach.

How would it work?

Think of it as two bites.

First, the current income-based premiums would be ratcheted up. Those surcharges are assessed on a sliding scale, and kick in for individual beneficiaries making more than $85,000, or $170,000 for couples.

Second, the number of beneficiaries who have to pay higher monthly premiums would be gradually expanded by a few hundred thousand people each year. That would be done by extending a temporary freeze on the income thresholds at which the higher premiums are assessed.

Without adjusting the thresholds for inflation, the share of beneficiaries on the hook for higher premiums would keep growing from 5 percent currently until it reached 25 percent, or 1 in 4 people with Medicare.

Backers of the idea — Obama administration officials, prominent Republicans in the House and Senate and nonpartisan experts — say it’s foolish for Medicare to keep subsidizing people who can pay their own way, particularly when the program faces long-range financial problems.

“What we’re talking about here is a premium structure that makes sense,” said Robert Bixby, executive director of the nonpartisan Concord Coalition, which advocates reducing the deficit. “Politicians have been afraid to charge full fare because of public reaction. But that time is coming to an end.”

Medicare serves about 50 million Americans, including seniors and disabled people. Half have annual incomes below $22,500.

Technically, the program’s outpatient and prescription coverage is optional. In practice, it’s too good a deal to pass up. By law taxpayers cover 75 percent of the premiums, and beneficiaries pick up the remaining 25 percent.

That’s the way it works for most people. Medicaid pays premiums for the poor, while people the government considers well-off shoulder an increasing share of premiums, starting at 35 percent and going all the way up to 80 percent for individuals making more than $214,000 and couples over $428,000.

Polls show that Americans clearly prefer raising premiums on wealthy beneficiaries as opposed to a general increase. However, few people are aware that the government is already collecting higher premiums from some beneficiaries. Very few know the details.

“I think wealth is in the eye of the beholder,” said Tricia Neuman, a Medicare expert with the nonpartisan Kaiser Family Foundation. “This premium affects people with incomes starting at $85,000, but in the discussion over taxes $85,000 is not generally considered high income.”

AARP says hiking the premium would be equivalent to a tax.

“This is a payment to the federal government based on your income, and that is a form of a tax,” said David Certner, legislative policy director for the older people’s lobby.

Not so, says Bixby. Even the wealthiest beneficiaries still get some subsidy under the plan, just not a 75 percent price break.

AARP also worries that charging seniors more based on income could taint Medicare as a welfare program, undercutting its political support.

James, the Philadelphia-area retiree, said the higher premium feels like a tax to him. “I’m making a payment to a government program,” he said.

He said he figures he and his wife were probably pushed over the threshold because of distributions from retirement accounts that people in their 70s are required by law to take.

It’s causing him to rethink how he feels about Medicare.



Click here to comment on this story »





Blogs

TGIF Wild Card — 2.5.16

I find myself eyeing my garden spot in the back yard every morning when I first wake up. I have plans for some changes there. But I did much of ...


The week that was…

Tonight’s “Idaho Reports” rounds up the happenings of the fourth week of this year’s legislative session, from Medicaid expansion to tax cuts. Melissa Davlin interviews House Health & Welfare Chairman ...


5 education reads found in the last 7 days

More education writing. This week covers imposter syndrome, (especially among high-achieving students of color) the five folk looking to run the Washington Office of Superintendent of Public Instruction (what a ...


Scouting the WSU opponent: Arizona State

Washington State's best chance to get out of the Pac-12 cellar comes when it takes on 11th-place Arizona State at 3:30 p.m. on Saturday. The Cougars lost a tight game ...





Sections


Profile

Contact the Spokesman

Main switchboard:
(509) 459-5000
Customer service:
(800) 338-8801
Newsroom:
(509) 459-5400
(800) 789-0029
Back to Spokesman Mobile