EXECUTIVE DIRECTOR, FAMILIES USA
At the end of October, people with Medicare got a welcome bit of news. The agency that runs Medicare announced that Part B premiums will increase by less than expected. In 2012, Medicare premiums for most people will increase by only $3.50 a month, from the $96.40 a month now to $99.90 a month. While this will be the first increase in Medicare premiums in several years, it should be noted that this new premium is considerably lower than the $107 that had been predicted last spring.
Premiums were frozen in 2010 and 2011 because there has been no cost-of-living increase in Social Security benefits for the past two years due to the slow economy. When Social Security benefits do not increase, under federal law there can be no increase in Medicare premiums. Happily, in 2012, Social Security benefits will at last increase, by 3.6 percent starting in January. To put this in real terms – the average Social Security benefit for a retiree in 2011 is $1,186 per month. That will increase in 2012 by about $43 per month. Of that increase, only $3.50 will go towards Medicare premiums. It should be remembered that for most people, their Medicare premium is automatically deducted from their Social Security payments. The rest stays in people’s pockets, giving them some real financial help in these tough times.
Some important details:
1) Most people who have joined Medicare in 2010 or 2011 will actually see a premium decrease. Their premiums have been unusually high in order to offset the freeze in everyone else’s Medicare premiums during the past two years.
2) If you’re in a Medicare Advantage plan, your plan may charge an additional premium.
3) If you have Medicare Part D prescription drug coverage, you pay a separate additional premium set by your plan.
4) Finally, high-income people (those whose annual incomes are above $85,000 for an individual or $170,000 for a couple) pay higher premiums.
This very modest Medicare premium increase is particularly impressive considering that Medicare coverage has actually gotten better in the past year. In 2011, thanks to the Affordable Care Act, Medicare started covering most preventive services for free as well as offering an annual wellness visit. Prescription drug coverage has also improved. Yet costs have remained under control.
So what’s going on? Some of the lower-than-expected costs are due to simple math. With Social Security benefits finally increasing, the costs of Medicare can be spread more evenly across all beneficiaries. But that’s only part of the story. The Affordable Care Act made a lot of changes to Medicare and the health care system to make costs more manageable. Fully implementing these changes will take years, but it looks like they are already having an effect. Medicare’s overpayments to private insurance companies are dropping. Efforts to eliminate unnecessary care, like better discharge planning so that people don’t need to return to the hospital after surgery, are starting to take root around the country. And stepped up prosecution of the criminals who defraud Medicare is paying dividends.
If you have limited income, check to see if you might qualify for additional help with your Part B or Part D premiums and costs. You can get information from your State Health Insurance Assistance Program (SHIP), which you can find by calling 1-800-MEDICARE and asking for a referral, or go to the Social Security website: www.ssa.gov/ prescriptionhelp. We still have a long way to go before health care is affordable for everyone. But as we head into 2012, there are some encouraging signs that we’re on the right track.