Addressing the rising premium myth

As new healthcare changes come into practice as a result of the Affordable Care Act, there are many rumors and myths about what the new law will mean for Medicare recipients. Perhaps one of the most troublesome worries is that premiums will rise and healthcare services will become too expensive or unavailable. However, many of the changes for Medicare are beneficial to seniors, including expanded services offered at no extra cost to patients. Additionally, premiums will not increase next year.

2014 premiums
For Part A of Medicare, seniors do not need to pay a premium and many enjoy the benefits of hospital care for free. Part B however, does require a premium and covers a much broader range of medical services, including doctor visits, ambulance services, clinical research, medical supplies and equipment and any testing for a diagnosis.

Under Part B, most seniors receive quality healthcare at an affordable monthly rate. In 2013, the premium monthly rate for seniors reached $104.90. The yearly deductible was just $147. The Centers for Medicare and Medicaid recently announced that premiums for Part B would not rise in 2014, remaining at their 2013 levels. For many seniors, this announcement provided great relief. 

Since 2010, rumors have circulated, spreading incorrect information about what the Affordable Care Act will really mean for Medicare. Unfortunately, this false information is still going around and confusing healthcare recipients. Part B premiums are established as part of a formula that Congress created many years ago, where Medicare beneficiaries pay 25 percent of Part B premiums and Medicare picks up the remaining 75 percent. This formula is not affected by the Affordable Care Act and will not be in years to come.

What may happen over time is that premiums may actually be lowered, as the Affordable Care Act aims to reduce the costs of Medicare and healthcare in the long run. At any rate, the plan to lower healthcare costs will help keep Part B premiums at the same level.

New changes 

There was however, one change for Part B premiums for seniors who earn a higher income – over $85,000 for a single person and $170,000 for a married couple. Since 2007, Medicare beneficiaries who fall into this category have paid a higher surcharge for their premiums. Most Medicare recipients do not pay this extra fee.

People who are considered to be in the high-income bracket may see this surcharge increase in the future, as well as higher prices for Part D prescription drug plans. The new surcharge for drug coverage is a practice from the Affordable Care Act. The income range for this group will remain the same through 2019, and it is expected that more seniors will fall into this category over the coming years. Fewer than 1 in 20 Medicare beneficiaries fall into the high-income bracket.

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2014-03-26T08:32:26+00:00 February 24th, 2014|Finance & Planning, Senior Health Insurance|Comments Off on Addressing the rising premium myth