Proposed MediCare premium increase

[bondi688]

APNewsBreak: Upper income seniors' Medicare hike

Health and Human Services Secretary Kathleen Sebelius testified today before the Congress on the president's budget. The details had not been provided when the budget was released earlier in the week

" If the proposal passed , starting in 2017, there would be nine income brackets on which the higher premiums would be charged. 1 in 4 recipients will see the premium increased.

 

[Brett_Cameron]

Uh-oh! This would affect us.

 

[MichaelB]

For us Medicare is a great deal, much less expensive than private health care insurance. Our spending projections, however, assume healthcare will cost what it does now (full private rates) plus inflation. Still have 5 years to go, healthcare costs represent most of the projected public spending deficit, and means testing upper income individuals is hard to avoid when the numbers get that big.

 

[samclem]

I'm sure this is a misunderstanding, Secretary Sebelius was probably just misquoted.

". . . no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

This will all get straightened out by tomorrow.

 

[kmt1972]

I'm sure this is a misunderstanding, Secretary Sebelius was probably just misquoted.

". . . no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

This will all get straightened out by tomorrow.

While I share your sentiments, this is a premium increase and not a tax increase. I do oppose this proposed change though. I feel the medicare premium, like social security, should be a function of how much you paid into the system. The more you paid the greater the government subsidy in premium. As far as I am concerned, I am budgeting for the fact that when we do get medicare it will cost 5000 2013 inflation adjusted dollars a year for each one of us in which is really the highest bracket today plus some more. I might need to up that estimate given the fact that this system will eventually break down and premiums have another surge to pay for cost in the near future.

 

[ERhoosier]

...... healthcare costs represent most of the projected public spending deficit, and means testing upper income individuals is hard to avoid when the numbers get that big.

However part of the widespread public support for Medicare has been its universality. All-for-one-and-one-for-all. Now even conservative Fox News is reporting this big means-tested increase in Medicare premiums affecting (eventually) 25% of folks may begin to undermine political support for the Program. Scary thought, indeed.

Medicare hike in Obama budget could hit some in middle class | Fox News

 

[bondi688]

It is interesting the original AP breaking article was titled
Upper income seniors' MediCare hike

And the follow up article in Yahoo News is titled:
Medicare hike could also hit some in the middle class.

 

[haha]

Obama said that 25% of seniors will be paying the higher rates. Well, seniors overall are not a wealthy group. I imagine that almost any person who felt empowered to retire early, will fall into the upper 25%, and pay more.

If I understood what Michael B said, he expects that we will eventually pay the full cost of medical care. IMO, in America, this is effectively impossible. Given our costs over here, just imagine what a market rate health policy would cost for an 82 year old, or a 92 year old.

Industry lobbyists would not approve, but we would either have to get real reform of health insurance, or on turning 65 head of to whatever country is still backward enough to have some spare capacity.

Ha

 

[Bikerdude]

However part of the widespread public support for Medicare has been its universality. All-for-one-and-one-for-all. Now even conservative Fox News is reporting this big means-tested increase in Medicare premiums affecting (eventually) 25% of folks may begin to undermine political support for the Program. Scary thought, indeed.

Medicare hike in Obama budget could hit some in middle class | Fox News

The NM woman in the article was complaining that government required RMD's would push her over the income limit and increase not only her income taxes but also her medicare costs. She drives an 18 yr old car and lives in a modest 58 yr old home that needs improvements.

 

[kmt1972]

Obama said that 25% of seniors will be paying the higher rates. Well, seniors overall are not a wealthy group. I imagine that almost any person who felt empowered to retire early, will fall into the upper 25%, and pay more.

If I understood what Michael B said, he expects that we will eventually pay the full cost of medical care. IMO, in America, this is effectively impossible. Given our costs over here, just imagine what a market rate health policy would cost for an 82 year old, or a 92 year old.

Industry lobbyists would not approve, but we would either have to get real reform of health insurance, or on turning 65 head of to whatever country is still backward enough to have some spare capacity.

Ha

The result is obvious. Everyone will try to use class warfare camouflage and disguise their income to try to avoid these extra costs. Winners are the accountants.

 

[audreyh1]

The NM woman in the article was complaining that government required RMD's would push her over the income limit and increase not only her income taxes but also her medicare costs. She drives an 18 yr old car and lives in a modest 58 yr old home that needs improvements.

I'm trying to get my head around this.

She has enough money in tax-deferred accounts that it would push up her premiums slightly when she meets the government-mandated RMDs.

Yet she needs to make improvements in her home. But she doesn't want to touch her tax-deferred savings because it'll increase her annual expenses, even though it means even more annual income and some of that could pay for her home improvements.

No one ever promised folks the money could stay in tax-deferred accounts forever. They knew that one day the money would have to be withdrawn and income taxes paid on the withdrawal. I suppose the tough part is that more annual income means less subsidy on things like Medicare premiums. Back in the old days it wasn't means tested (at least not to the current degree).

On the whole, are seniors really a less wealthy group than younger folks? I really wonder about that.

 

[kmt1972]

I'm trying to get my head around this.

She has enough money in tax-deferred accounts that it would push up her premiums slightly when she meets the government-mandated RMDs.

Yet she needs to make improvements in her home. But she doesn't want to touch her tax-deferred savings because it'll increase her annual expenses, even though it means even more annual income and some of that could pay for her home improvements.

No one ever promised folks the money could stay in tax-deferred accounts forever? They knew that one day the money would have to be withdrawn and income taxes paid on the withdrawal. I suppose the tough part is that more annual income means less subsidy on things like Medicare premiums. Back in the old days it wasn't means tested (at least not to the current degree).

If I understand correct, for 401K for example, there are rules that once you hit 70 there are minimal annual withdraw rates per year.

 

[MichaelB]

If I understood what Michael B said, he expects that we will eventually pay the full cost of medical care. IMO, in America, this is effectively impossible. Given our costs over here, just imagine what a market rate health policy would cost for an 82 year old, or a 92 year old.

I explained myself poorly. My household is currently paying the full rate - unsubsidized, not underwritten and fully priced for age. Medicare prices are lower and subsidized, but I do not personally expect to receive this benefit and have budgeted what we are currently paying plus inflation.

Industry lobbyists would not approve, but we would either have to get real reform of health insurance, or on turning 65 head of to whatever country is still backward enough to have some spare capacity.

Ha

Well, something pretty drastic needs to happen, because healthcare costs will otherwise bankrupt us.

 

[audreyh1]

If I understand correct, for 401K for example, there are rules that once you hit 70 there are minimal annual withdraw rates per year.

Yes, that's correct - you have to start withdrawing the tax-deferred money the year you reach 70 1/2 and pay income taxes on it. There is a minimal % you must withdraw every year for the rest of your life.

I guess what people don't like is that money is counted as income for Medicare premium rates and taxes on Social Security. It wasn't counted as income when it was deferred, but now the appreciated amount has to be counted as income when it's withdrawn. That was the deal on tax-deferred retirement savings.

 

[REWahoo]

There is a minimal % you must withdraw every year for the rest of your life.

Further, that % increases each year, beginning at 3.7% at age 71 and gradually increasing to a whopping 52.6% at age 115.

 

[gerrym51]

Yes, that's correct - you have to start withdrawing the tax-deferred money the year you reach 71 and pay income taxes on it. There is a minimal % you must withdraw every year for the rest of your life.

I guess what people don't like is that money is counted as income for Medicare premium rates and taxes on Social Security. It wasn't counted as income when it was deferred, but now the appreciated amount has to be counted as income when it's withdrawn. That was the deal on tax-deferred retirement savings.

actually its 70 and 1/2. that might or might not be the year you turn 71.

 

[audreyh1]

Further, that % increases each year, beginning at 3.7% at age 71 and gradually increasing to a whopping 52.6% at age 115.

Oh no! At that rate you might run out of money! Wait.......

 

[MichaelB]

On the whole, are seniors really a less wealthy group than younger folks? I really wonder about that.

Very difficult to say. So many studies don't consider the value of SS or housing assets. I suspect that including these and other pension annuities there is considerable wealth in seniors, but it is probably not distributed well. The target group here is the top quartile.

 

[audreyh1]

actually its 70 and 1/2. that might or might not be the year you turn 71.

I had already corrected the above (it was just a rounding error anyway )

 

[bondi688]

'The target group here is the top quartile"
And it is that group that paid the most into the MediCare system because they paid MediCare Tax with no cap to the last dollar earned. In return, they have to pay the highest premium and get the least in coverage in retirement.

 

[audreyh1]

Very difficult to say. So many studies don't consider the value of SS or housing assets. I suspect that including these and other pension annuities there is considerable wealth in seniors, but it is probably not distributed well. The target group here is the top quartile.

I see lots of wealthy seniors. I would suspect that the top 25% might be quite better off than younger folks in general. Or maybe it's a smaller percent than 25.

 

[bondi688]

I see lots of wealthy seniors. I would suspect that the top 25% might be quite better off than younger folks in general. Or maybe it's a smaller percent than 25.

The wealthy seniors achieved that through a lifetime of working, saving and investing. They already will pay more in income tax by virtue of the fact that they saved the money for their retirement. How many times should the system turns on them to ask them to shoulder more because they have saved for themselves and their families?

 

[audreyh1]

The wealthy seniors achieved that through a lifetime of working, saving and investing. They already will pay more in income tax by virtue of the fact that they saved the money for their retirement. How many times should the system turns on them to ask them to shoulder more because they have saved for themselves and their families?

So you would rather see Medicare premiums raised across the board than only for the top 25% in annual income?

 

[bondi688]

So you would rather see Medicare premiums raised across the board than only for the top 25% in annual income?

Why do they have more in income, was it manna from heaven? As I said before, those same people had contributed most into the MediCare system through MediCare tax which had no cap. How many times should the same group be asked to bear the lion share of the burden when their only "fault" was that they worked hard, saved more? Is it fair in your opinion?

 

[Bikerdude]

Further, that % increases each year, beginning at 3.7% at age 71 and gradually increasing to a whopping 52.6% at age 115.

I'll buy the beer for you to cry in on your 115th.