Q. I heard that the Medicare Part B premium was going to go up to $120 in 2013 and $247 in 2014 as part of Obamacare, and that this was kept under wraps so as not to influence the outcome of the 2012 election. True or false?
A. I've been sitting on this question for awhile awaiting the announcement of the 2013 Medicare Part B premium. Now it's time to answer. And the answer is that everything you heard was a fiction.
Per a law that has been in effect now for 15 years and has nothing whatsoever to do with the Affordable Care Act, every fall Medicare sets the Part B premium for the coming calendar year at a level that will cover exactly 25 percent of Part B's projected costs. So right off you can see that there is no way that the health reform law, enacted in 2010, could have set premiums three and four years in advance, which, once again, it did not.
Medicare recently announced what the 2013 Part B premium will be. It's $104.90 (not $120). This represents about a five percent increase over 2012's premium of $99.90.
You didn't ask, but should also be aware that higher-income Medicare beneficiaries must pay more than this standard Part B premium, thanks to the same 2003 law that established Medicare Advantage and the Part D prescription drug benefit. These higher premiums in 2013, by income level and filing status, will be:
- $146.90 for incomes between $85,001 and $107,000 (single) and between $170,001 and $214,000 (joint)
- $209.80 for incomes between $107,001 and $160,000 (single) and between $214,001 and $320,000 (joint)
- $272.70 for incomes between $160,001 and $214,000 (single) and $320,001 and $428,000 (joint)
- $335.80 for incomes above $214,000 (single) and $428,000 (joint)
Right now, about five percent of Medicare beneficiaries are paying these higher premiums. But in the next few years, that percentage is going to increase steadily, because of a provision that was put in the Affordable Care Act (but, needless to say, never a secret kept under wraps).
Here's what's happening. The 2003 law that set up these high-income premium surcharges also stated that the income thresholds were to increase every year to account for general inflation. But the Affordable Care Act freezes the thresholds at their current level through 2019, which will over the next six years snare more and more beneficiaries as incomes in general rise (or at least we hope they do). The Kaiser Family Foundation estimates that by 2019, about 14 percent of Medicare beneficiaries will be paying these higher premiums.
A silver lining in this scenario is that as of 2020, the freeze disappears and at that point, the income thresholds will be re-indexed to where they would have been if the freeze had never happened in the first place.