Possible Means Testing for Medicare

[Stevewc]

Good Morning Group,
I noticed in the Fast track House and Senate work going on in D C this week they mention some forms of Means Testing for Medicare in the future.
I want go back and list the news articles at this time but I'm sure some of you all have picked up on it.
This group has seen it coming and posted about it for years.
Hello to all and have a nice day.
Steve

 

[Midpack]

Something has to give sooner or later. If enacted, this little revenue side action would do very little to make Medicare solvent, but it opens the door - which is probably all they're after at this point...

If "they" ever take real steps to reign in health care costs (like every other developed nation), that would help everyone, seniors and all generations.

The Boehner-Pelosi measure would replace a 1990s formula that linked doctor pay to economic growth with a new one more focused on quality of care. It also would require means-testing of Medicare beneficiaries so higher income people pay higher premiums.

The legislation was designed to spare Medicare doctors a 21-percent pay cut effective April 1 under the existing payment formula. If the Senate does not act until mid-April, doctors might still be able to avoid pay cuts because Medicare doctors' claims generally take at least 14 days to be paid.

One of the government's largest social safety net programs, Medicare is health insurance that serves 54 million elderly and disabled people.

Under the plan, a Medicare recipient with annual income of between $133,000 and $160,000 would see their Medicare premium share increase from 50 to 65 percent, and a recipient with annual income between $160,000 and $214,000 would pay 75 percent rather than 65 percent.

But the conservative Heritage Foundation's Robert Moffit said this was "timid" reform affecting just 6 percent of the Medicare population.

U.S. House okays bipartisan bill to fix Medicare doctor payments | Reuters

 

[jim584672]

Once they get the foot in the door, watch out.

 

[Midpack]

Once they get the foot in the door, watch out.

Part B & D are already means tested...began in 2007.

 

[Fermion]

Need to specify the difference between income tested and assets tested.

Means testing via income is fairly easy to negotiate around. Means testing based on assets is a lot harder.

 

[Big_Hitter]

Isn't it income tested? Like ACA?

 

[jim584672]

Original Medicare was never income tested. It was based on Social Security credits.

 

[Peter]

Original Medicare was never income tested. It was based on Social Security credits.

As Midpack pointed out, parts B and D are already income tested:

Part B costs | Medicare.gov

Interestingly, the brackets quoted in the Reuters piece don't tie in with those in the above link.

 

[Big_Hitter]

I meant the bill - looks like it will make it income tested.


Good thing I don't plan on making 400K a year after I'm 65.


That would seriously bork my firecalc.

 

[athena53]

As Midpack pointed out, parts B and D are already income tested:

Part B costs | Medicare.gov

Yep- DH and I are paying the IRMA (Income-related monthly adjustment) on his Medicare B and D premiums because I was working till mid-2014. I can see that getting worse (higher adjustments, lower income thresholds), though. What stinks about this is that those of us who will get hit with these surcharges already paid tons more for Medicare A than the average. Over my career, my employers and I paid about $160K into Medicare. I'll get the same Medicare A coverage as someone who worked 40 quarters at Wal-Mart and I'll pay more for B and D.

 

[Big_Hitter]

We need to get more people to support us in retirement.

 

[calmloki]

We get to pay extra on our part B and D. In fact I managed to earn $2000 over a break point a couple years ago, which disturbed me. Response was to invest more in the market, where we can choose to take profit or not. Just can't keep myself from making money on deals that will show up on the AGI though - they come along and more than pay the increased Medicare premiums, so I just grit my teeth and bank the income. My medical care has so greatly exceeded my insurance and tax contributions I really have no room to complain.

 

[Tadpole]

The most important aspect of income or means tests is whether or not they are adjusted by some measure of wage increases or CPI-E. Also, as everyone knows, a test is just a way of decreasing benefits through the back door.

 

[meierlde]

The change in the bill is to increase the percentage of the average part B cost paid from 50 to 65% at the 133k per person income level. Note that it appears the average cost per part B recipient is about 436 per month.

 

[athena53]

We get to pay extra on our part B and D. In fact I managed to earn $2000 over a break point a couple years ago, which disturbed me.

This year we were barely under one of the AGI breakpoints because I added to my HSA for 2014, on top of what had been taken out of my payroll through May of last year when I retired. (The max was pro-rated since only I had the HDHP all year; DH started Medicare in June.) I can keep contributing since I'm 62 and on a private HDHP plan and plan to do so. Not many other ways to legitimately reduce your AGI and that figure is the basis for other important calculations such as the Medical Deductions threshold.

 

[M Paquette]

Just as an observation, even if a person had to come up with their own Part A contribution at about $400 a month (Medicare buy-in for someone with no credits), plus a high income Part B charge at, say, $600 a month, and a pretty fat Part D plan at $150 a month, that's $1150 a month for a pretty low deductible and copay insurance plan.

Similar HMO coverage for a 65 and up senior not eligible for Medicare in my area lists at $1141.50 a month. It would appear that even with some sort of means adjustment the prices are not terribly out of line.

 

[Options]

It's for this reason I like that FRIP uses an 8% inflation rate for projected healthcare expenses which the user cannot manually override. I use the same projections in ESPlanner as well. Anyone who fails to make contingency plans for possible cuts to pensions, SS, and Medicare, as well as lowered expected returns is in danger of encountering some very unpleasant surprises in the future. To badly paraphrase Wade Pfau, this is a lousy time to retire (but I'm going to do it anyway).

 

[Big_Hitter]

To badly paraphrase Wade Pfau, this is a lousy time to retire (but I'm going to do it anyway).

sometimes you just have to pull the chute - good luck!

 

[Hermit]

We need to get more people to support us in retirement.

When I retired, I was less than $500 over the break point for Medicare when it started a year and a half later. I called Medicare and told them I had retired and no longer had that much income. They told me to fill out a form and mail it in. It would take them 45 days to make a determination. About 45 days later I called and was told I had filled out the wrong form. (I filled out the form I was told to fill out.) Was told to fill out another form and it would take 45 days for them to determine my status. This form took about 10 pages of substantiating data to prove my case. The first form was dutifully scanned into my records and I was never notified that it was the wrong form. I am sure the second form and data was also scanned into my records. Just this week I was informed that I would not have to pay the added amount for Medicare.

The amount of bureaucratic effort that went into simply determining my income was extreme to say the least. I would bet this goes on every time anyone changes anything with Medicare or Social Security.

The good thing is such a law would put a lot more people to work!

 

[Tadpole]

Well, Hermit, I would imagine I have spent about 20 hours talking with Medicare in the past few months. Even so, there are still two me's and two Medicare B withdrawals, one from my pension check and one from my SS check. Yes, this two tailed tadpole has two Medicare numbers and no one seems willing to just cancel one of the two. (Even though they promise to do so each time I call.) By the way, did you know that if you call to check on these things, they get to reset their deadline to a start time of the most recent call?

 

[Brett_Cameron]

We handled the change in Income-related monthly adjustment at the Social Security office. Had to take copy of tax return showing reduction in income. The ruling was immediate and they refunded the adjustment amount for the current year.

Seemed pretty efficient.

 

[meierlde]

Well, Hermit, I would imagine I have spent about 20 hours talking with Medicare in the past few months. Even so, there are still two me's and two Medicare B withdrawals, one from my pension check and one from my SS check. Yes, this two tailed tadpole has two Medicare numbers and no one seems willing to just cancel one of the two. (Even though they promise to do so each time I call.) By the way, did you know that if you call to check on these things, they get to reset their deadline to a start time of the most recent call?

Call your congresspersons local office. This is one of the things they handle, and a call from a staffer goes thru different channels. Or you senator whichever you like. It tends to get better service.

 

[Hermit]

... By the way, did you know that if you call to check on these things, they get to reset their deadline to a start time of the most recent call?

Somehow, that does not surprise me!

 

[ERhoosier]

Similar HMO coverage for a 65 and up senior not eligible for Medicare in my area lists at $1141.50 a month. It would appear that even with some sort of means adjustment the prices are not terribly out of line....

Not a fair financial comparison. Any analysis of comparative "price" of Medicare should include amortization of the Medicare income taxes paid over all of one's w#rking years. Plus the higher cost of medical services forced on other insured (and self-pay) patients during that w#rking lifetime due to historically low Medicare payment rates- even below the cost of care delivery in many cases. (Most hospitals and docs would literally be bankrupt on 100% Medicare practice). And don't forget to add on cost of a Medicare Supplement plan since Medicare Advantage is being eased out in many areas by ACA funding cuts (er...."cost savings" ).

And IMHO it would be a huge financial planning mistake to think those IRMAs won't rise dramatically over coming years, including both lowering the income thresholds and increasing rates. That is unless the Feds enact some meaningful health care cost containment strategies

 

[M Paquette]

Not a fair financial comparison. Any analysis of comparative "price" of Medicare should include amortization of the Medicare income taxes paid over all of one's w#rking years...

Speed readers...

That pay-in is what buys you Part A coverage, a bit over $400 a month. You might not have noticed, but I was talking about the equivalent cost of Medicare for someone who did not have Medicare credits, but had to use the 'buy-in' option.

Just as an observation, even if a person had to come up with their own Part A contribution at about $400 a month (Medicare buy-in for someone with no credits), plus a high income Part B charge at, say, $600 a month, and a pretty fat Part D plan at $150 a month, that's $1150 a month for a pretty low deductible and copay insurance plan.

Next time, I'll bracket it with the <BLINK> tag...