An old federal policy could cause more than 10 million Americans to get a higher Medicare bill next year.
A small provision in Medicare’s policy will lead to 15 million Americans facing more than 50 percent increases in their monthly premiums next year. A new bipartisan bill in the Senate would fix the problem, but its passage and how it would be funded is in the dark.
The federal government will release 2016 premiums for Medicare Part B in the next few weeks, but an increase appears to be imminent.
That’s because another entitlement program, Social Security, won’t dole out a cost-of-living-adjustment for recipients next year. It is the third time in the past 40 years that seniors won’t get an adjustment, according to an August report from the Center for Retirement Research at Boston University.
The reason is that inflation isn’t expected to increase enough to warrant an adjustment, the report said.
The decision has a huge impact on Medicare. Federal law includes a “hold-harmless” provision that limits a Medicare premium increase to the increase in an individual’s Social Security benefit, the report said. That means that if Social Security benefits are not raised, neither are Medicare premiums.
The provision was created to ensure that Medicare beneficiaries won’t face a reduction in their Social Security checks as Medicare premiums are automatically deducted from Social Security benefits.
However, the “hold-harmless” provision applies only to 70 percent of Medicare Part B beneficiaries, leaving 15 million beneficiaries facing a 52 percent increase. The reason the premiums will be raised is to help pay for the beneficiaries who will not see an increase, the center said.
The center estimates that premiums for those seniors would increase from $104 this year to $159 next year unless something is done.
Seniors who face an increase include people who don’t get Social Security, are enrolled in Medicare and Medicaid, new beneficiaries and high-income beneficiaries, according to a release from 10 Democratic senators pushing legislation to fix the problem.
The bill, called the Protecting Medicare Beneficiaries Act of 2015, would keep 2016 premiums for the 30 percent group at the same 2015 level.
Sens. Bob Casey, R-Pa., and Ron Wyden, D-Ore., are among those pushing the legislation.
“It is urgent that Congress take decisive action to ensure vulnerable Americans aren’t harmed by this archaic policy,” Wyden said recently.
But a looming question is how much will the bill cost and how it will be paid for.
It also is not clear whether the effort will get any Republican support, since the bill has no Republican co-sponsors.
Congress already has a jam-packed schedule this fall with decisions on the debt ceiling and government funding looming. In addition, House Republicans must elect a speaker.
Part B is basically supplemental health insurance that covers preventive services and pays for items such as medical equipment and ambulance services.
Nearly 48 million people were in Part B in 2013, according to the nonprofit advocacy group National Committee to Preserve Social Security and Medicare. 2013 was the latest year of data available.
