I sent the below letter to the editor shortly after my first letter was published and I noticed that the Medicare information had been updated online with the new means testing rules, which were created by Congress to "save" Medicare and they are now required by law. In theory, if you make enough money, you will be paying the full cost of the Medicare premium with no subsidy from taxpayers -- it is phased in over a range of income levels. (See my original letter: Thomas Kraemer, "Letter: Why my check will be less," Gazette-Times, Jan. 10, 2017, p.A6, posted Jan. 5, 2017 and also see previous post Medicare premium rises faster than inflation despite 'single payer' method (1/1/17)
The medicare.gov HTML web page now has a detailed explanation of how Medicare health insurance premiums for 2017 were calculated for each individual Social Security beneficiary; however, the printed brochure and online PDF file still contain old information.
The Medicare Part A medical insurance can cost up to $413 per month, but nothing if you worked and paid the taxes for it.
The optional Medicare Part B medical insurance typically costs $134 per month, if you enrolled for the first time in 2017, but much less for most people who were previously covered because their increase was limited by the small cost of living increase this year.
However, Part B can cost much as $428.60 per month, based on your 2015 federal tax return income, and infinitely more if you owe a penalty for signing up late.
The optional Medicare Part D drug plan costs are determined by the private providers, but many plans cost less than $40 per month.
It is still unclear who is paying the subsidy for the actual health care costs for each Medicare beneficiary of approximately $11,000 per year.
This discussion traces back to a previous letter writer's question asking why many Social Security beneficiaries this year did not see any increase in their monthly check, and the short answer is it is because the Medicare health insurance premium went up more than the cost-of-living increase for many people, and Congress legislated that nobody would get an increase bigger than their individual COLA.
Listed below are links to the sources of information summarized in my letter above:
- "Part A costs: How much does Part A cost?" medicare.gov accessed Jan. 9, 2017 -- says, "You usually don't pay a monthly premium for Medicare Part A (Hospital Insurance) coverage if you or your spouse paid Medicare taxes while working. This is sometimes called "premium-free Part A. . . If you buy Part A, you'll pay up to $413 each month in 2017."
- "Part B costs," medicare.gov accessed Jan. 9, 2017 says, "If you don't sign up for Part B when you're first eligible, you may have to pay a late enrollment penalty. . . Most people will pay the standard premium amount. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago . . The standard Part B premium amount in 2017 is $134 (or higher depending on your income)."
- "Part B late enrollment penalty," medicare.gov accessed Jan. 9, 2017
The reason for so much confusion is because the annual letter sent to beneficiaries by Social Security did not explain how the Medicare premium was calculated and I could not find any more information online, at least initially, until right after my first letter was published. Two other letter writers also speculated that the reason for seeing no increase in Social Security checks, despite a 0.3 percent cost-pf-living adjustment was due to it being limited by the rules:
- Raan Young, "Letter: What happened to your benefit check," gazettetimes.com posted Jan. 9, 2017
- John Brenan, "Letter: Where the increase went," gazettetimes.com posted Jan. 5, 2017
Also, see the new letter by Mike Huntington, M.D.," Letter: Congress could gut health care," gazettetimes.com posted Jan. 9, 2017 that expresses concern over the repeal of Obamacare, which President Trump says he won't repeal until thye have a replacement in a few years -- a topic for another post.