Medicare Part B premiums to be income adjusted

[Elderdude]

According to the "Medicare and You" handbook for 2007, to be mailed in November, in 2007, seniors who earn $80,000 to $100,000 a year will pay rates about 28.3% of the Medicare Part B total premium cost vs 25% now, increased to 31.6% in 2008, and 35% in 2009. Even higher rates are set for higher income bracket tiers up to $150,000, $200,000, and above.

Robert Hayes, the director of the Medicare Rights Center, said, "This was slipped in, in the dead of night, behind closed doors." He was referring to a provision of the 2003 Medicare Modernization Act. A Republican led conference committee added the measure to the Medicare care bill even though neither the House nor the Senate version contained it. 

 

[Nords]

According to the "Medicare and You" handbook for 2007, to be mailed in November, in 2007, seniors who earn $80,000 to $100,000 a year will pay rates about 28.3% of the Medicare Part B total premium cost vs 25% now, increased to 31.6% in 2008, and 35% in 2009.

Would that be earned income or unearned?

 

[d]

reduced and means-tested benefits: such tactics are to be expected in view of the currently unsustainable medicare/social-security program(s).

 

[Cb]

Well, I think it's encouraging that SOMETHING is being done. Any reasonable person would acknowledge that both Medicare & SS are headed for trouble. (a less reasonable person might acknowledge that they are in all likelihood headed for trouble but quickly point at Iraq as "rationale" to leave his own entitlements alone)

There are only so many levers they can pull - means testing, trimming benefits, and raises employment taxes are the primary ones.
Means testing is the least politically-charged...just wait until we begin the inevitable discussions about benefit reductions and increases in employent taxes...

Cb

 

[REWahoo]

From yesterday's Seattle Times:

How it will work

The surcharge for 2007 will be computed by the Social Security Administration, using income data obtained by the Internal Revenue Service (IRS) from tax returns for 2005.

If an individual has modified adjusted gross income of $80,000 to $100,000, the surcharge will be 13.3 percent, which adds about $13 to the monthly premium, for a total of about $111.50. For a single person with income of more than $200,000, the surcharge will be 73.3 percent, or about $72 a month, for a total premium of about $170.50.

When the transition is complete in January 2009, according to Medicare actuaries, the total premium for a person with income of $80,000 to $100,000 will be 1.4 times the standard premium. A person with income of $100,000 to $150,000 will pay twice the standard premium. A person with income of $150,000 to $200,000 will pay 2.6 times the standard premium, and a beneficiary with more than $200,000 of income will pay 3.2 times the standard amount.

If the basic premium rises 10 percent a year — a relatively conservative forecast — the most affluent beneficiaries will be paying premiums of more than $375 a month in 2009.

Under current law, the $80,000 threshold and the income brackets will be adjusted each year to keep pace with inflation, as measured by the Consumer Price Index.

 

[Nords]

If an individual has modified adjusted gross income of $80,000 to $100,000, the surcharge will be 13.3 percent, which adds about $13 to the monthly premium, for a total of about $111.50. For a single person with income of more than $200,000, the surcharge will be 73.3 percent, or about $72 a month, for a total premium of about $170.50.

Looks like yet another reason, admittedly a minor consideration, to convert that conventional IRA to a Roth...

 

[astromeria]

My friend the retired NYC teacher gets reimbursed for her own and her husband's monthly medicare payments as a retirement benefit. Their income is over $80k...this coud get...interesting. Note that no other retired teachers I know get this particular benefit--it must be quite unusual.

 

[FIRE'd@51]

Note that the $80,000 threshold is for an individual. The threshold for a married couple is $160,000. Both thresholds will be indexed for inflation.

 

[astromeria]

Sorry, didn't read carefully. In either case, I have nothing to worry about : 8)

 

[MasterBlaster]

Note that the $80,000 threshold is for an individual.  The threshold for a married couple is $160,000.  Both thresholds will be indexed for inflation.

Well that's the threshold now. I have absolutely no faith that once the crunch hits that these ceilings come down dramatically.

...Stay Tuned...

 

[lets-retire]

Or the CPI linked adjustment is .5 less than the actual CPI, similar to the military's CPI linked pay raises.

 

[d]

i've a nagging suspicion that both medicare and social security programs will eventually become primarily methods of income redistribution within generational groups

 

[Rich_by_the_Bay]

i've a nagging suspicion that both medicare and social security programs will eventually become primarily methods of income redistribution within generational groups

Me, too.

Gotta go read Ben Stein's book again. His cynical, chicken little, doomsday mentality is racking up a pretty good record so far. Might have to defer FIRE to build in a little overkill if this keeps up.

 

[REWahoo]

Might have to defer FIRE to build in a little overkill if this keeps up.

Doc, I've been doing some armchair psychoanalysis via your message posting. I'm going to go way out on a limb here and predict you will reach FI, but you will never RE.

Not that there's anything wrong with that, of course...

 

[dmpi]

Its just more "soak the rich" thinking. Do high-income people use more medicare resources than poor people? High income people have already paid more medicare taxes during the working years.... this is the thanks they get. 

 

[Rich_by_the_Bay]

Doc, I've been doing some armchair psychoanalysis via your message posting. I'm going to go way out on a limb here and predict you will reach FI, but you will never RE.

Not that there's anything wrong with that, of course...

You're good, REWahoo. Darn good.

Help me through this. Please .

Had to laugh cause at dinner tonight I was saying to Lynn that I might like to retire a year earlier than our original 2009 plan. She just rolled her eyes.

What am I doing wrong ?

 

[astromeria]

Its just more "soak the rich" thinking. Do high-income people use more medicare resources than poor people?

Maybe. Poor people often can't get their act together to go for medical care, or have no tranportation, or are afraid. High-income people make a lot more use of air traffic control, the SEC, FDIC, and on and on. I suspect that high-income people actually absorb more govt resources than the poor, per capita.

 

[dmpi]

Maybe. Poor people often can't get their act together to go for medical care, or have no tranportation, or are afraid. High-income people make a lot more use of air traffic control, the SEC, FDIC, and on and on. I suspect that high-income people actually absorb more govt resources than the poor, per capita.

In general hi-income people are healthier than low income people. Since Medicare will provide the same care for anyone, it logically follows that low income people will use more Medicare resources per person. 

Below is a breakdown of the federal budget. For National debt & Net Interest, high income people & low income people are equal users. For the other categories it’s hard for me to believe that hi-income people can possible use any more of that resource than a low income people.
Also high-income people put much more into SSI that they get back. That’s a well known fact.
 
2004 breakdown of the federal budget:
1. SSI, Medicare, and other retirements - 36%
2. National Defense - 23%
3. Net Interest on the debt - 7%
4. Physical, human and community development - 10%
5. Social Programs - 21%
6. Law Enforcement and general Government - 3%

 

[maddythebeagle]

Its just more "soak the rich" thinking. Do high-income people use more medicare resources than poor people? High income people have already paid more medicare taxes during the working years.... this is the thanks they get.   

maybe....but I really doubt that the baby boomers have really paid for the medicare resources that they will be rec'ing....the whole demographic shift and the aging population, blah, blah, blah....better they pay for it than shifting the costs on the working stiffs and uninsured ....

 

[youbet]

maybe....but I really doubt that the baby boomers have really paid for the medicare resources that they will be rec'ing....the whole demographic shift and the aging population, blah, blah, blah....better they pay for it than shifting the costs on the working stiffs and uninsured ....

Just curious........ How can medicare costs be shifted to the uninsured? I thought if you were paying medicare premiums, you would be insured by medicare.

 

[Nords]

You're good, REWahoo. Darn good.
Help me through this. Please .
What am I doing wrong  ?

You and Martha are going to have to form a splinter group: "ER... someday. No, really."