Medicare Premiums Are On The Rise
Stanley Feld M.D, FACP,MACE
President Obama’s campaign’s many promises have turned out to be false. His pledge to not raise taxes for people earning less than $250,000 has turned out to be a lie.
“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes,”
President Obama, September 12, 2008
Many seniors live on a fixed income. Many live on interest and capital gains from their retirement plans in addition to social security benefits.
In 2003 congress passed the “The Medicare Modernization Act. (MMA)” The act is known for establishing Medicare Part D, a prescription drug benefit managed by private insurance.
Medicare Part D has turned out to be a cash cow for the healthcare insurance industry. It has not been a tremendous benefit to seniors. Medicare Part D’s premiums have been increasing each year. Medicare Part D’s premiums are paid for with after tax dollars.
The MMA also made significant changes to Medicare Part B. Most seniors were not aware of the changes to Medicare or implications for Medicare Part B coverage at the time of passage of the bill to law.
Medicare Part B premiums are based on means testing or the modified adjusted income (MAGI.)
Under the previous law, all Medicare beneficiaries were required to pay a premium equal to about 25 percent of Medicare Part B program's total costs. The remaining 75 percent of the programs costs were financed through general revenues.
The MMA through MAGI, however, radically altered this formula by linking premiums to seniors’ income. Included in income is salary, earned interest, pension distributions, annuities, bond distributions, capital gains and social security income.
The more seniors earn from any source the more they pay in Medicare premiums.
As a result, wealthier seniors pay a disproportionately higher premium than other seniors.
Means testing is done automatically. CMS connects to the Internal Revenue tax returns of seniors and calculates the MAGI for the following year.
This is “redistribution of wealth” plain and simple. This means testing results in the higher income seniors paying premiums ranging from 35 to 80 percent of the Medicare program's total costs per person aside from the senior already paying into the system during his working days.
In 2011 single taxpayers with MAGI up to $80,000 pay no surcharges for their Medicare Part B. Joint filing taxpayers with MAGI up to $160,000 MAGI will not pay a surcharge.
An individual who makes over $80,000 per year had a rate increase from $98.20 to $109.80. A senior couple making over $160,000 per year experienced a rate increase from $111.16 for each individual to $153.72 per month for a total of 317.44 per month or $3809.28 per year.
The $3809.28 is deducted from their social security distribution. The premiums are paid with pre tax dollars. Medicare Part D and Part F premiums are paid with post tax dollars.
The basic Medicare rates have increased yearly since 2007 and are scheduled to continue to increase through 2015.
President Obama raised the rates above the schedule Medicare premium for 2012 from $153.72 per person to $161.50. This represents a “hidden” tax increase by the Obama administration for people under earning under $250,000.
It gets worse. People earning $200,000 to $300,000 experience an increase from $130.60 to $219.60 per month per individual as a result of means testing.
Seniors in the top bracket will have their Medicare premium increased of from $169.49 to $369.36. President Obama has increased this premium $18.00 per month per individual above the scheduled increase.
The increase in Medicare premiums represent an increase in taxes for seniors that worked hard all their life in order to have extra money to enjoy retirement.
President Obama’s fib is not surprising when we look at his attitude toward people who were productive and earned extra wealth.
President Obama believes in “redistribution of wealth” with government control of the redistribution. He does not believe in economic incentives for individuals to earn money and save it for retirement.
President Obama’s beliefs are not compatible with the American Dream. His beliefs will lead to the destruction of American’s innovative entrepreneurial spirit.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.