The Medicare Part B monthly premium will be $99.90 in 2012. This will mean a small increase for the majority of Medicare beneficiaries who have been paying $96.40 since 2009. Those who began their Medicare coverage in 2010 or 2011 have been paying $110.50 or $115.40, so their Part B premium will go down.
For people receiving Social Security, the Part B premium is taken out of their monthly check. Because there was no cost of living adjustment (COLA) in 2010 or 2011, the Part B premium was not raised for those already in the Medicare system. Starting in January 2012, Social Security recipients will be getting 3.6% more in their check each month. That means $36 for a person receiving $1,000 per month.
PART B PREMIUM SHOULD BE $300.
The bad news for Medicare is that the Part B premium really should be much higher, because $99.90 times 47 million Medicare beneficiaries equals just 25% of the total money spent under Part B. This means that 75% of Medicare Part B expenditures are paid through the federal government’s general fund. And this is what politicians are fighting over as they seek to cut the federal budget. Republicans want to cut the amount of general revenue funds that go to Medicare – but how to do that without hurting seniors is the trillion dollar question.
PART A BUDGET IS MOSTLY BALANCED
Medicare Part A covers hospitalization, skilled nursing facility charges, home health care, and hospice. Payroll taxes go directly to the Part A TRUST fund, and tax revenues covered all Part A expenditures up until 2008. Since 2008, the trust fund has had to use some of its surplus saved up from previous years to balance the Part A budget.
PART B BUDGET IS NOT BALANCED
The Part B budget is way out of balance because Part B premium revenues cover only 25% of Part B expenditures. Part B covers things such as doctor services, lab tests, diagnostic tests, physical therapy, chemotherapy and radiation therapy.
During the Bush Administration, Congress approved higher Part B premiums for Medicare beneficiaries earning more than $85,000 as an individual or $170.000 as a couple. Premiums are based on a sliding scale for income up to $214,000 for an individual and $428,000 for a couple. The highest Part B premium will be $319.70 in 2012.
About 5 percent of Medicare beneficiaries now pay a higher premium based on their income. Under some budget-cutting plans, 25% of seniors would pay a higher Part B premium in the future.
TO SUMMARIZE: The Part B premium should be $319.70, but 95% of folks on Medicare are getting a 75% discount. This is what the fight over Medicare is all about. And, with baby boomers turning 65 at a rate of 10,000 per day, the number of people covered by Medicare is growing faster than ever before and will make the revenue to expense gap even wider.