Need Help in Understanding Medicare Premium Rules

[haha]

The following applies to year 2010, but the principles will apply going forward.

http://questions.medicare.gov/app/answers/detail/a_id/2262

Will my Medicare Part B premium increase in 2010?
Most Medicare beneficiaries will continue to pay the same $96.40 Part B premium amount in 2010. Beneficiaries who currently have the Social Security Administration (SSA) withhold their Part B premium and have incomes of $85,000 or less (or $170,000 or less for joint filers) will not have an increase in their Part B premium for 2010.
For all others, the standard Medicare Part B monthly premium will be $110.50 in 2010, which is a 15% increase over the 2009 premium. The Medicare Part B premium is increasing in 2010 due to possible increases in Part B costs. If your income is above $85,000 (single) or $170,000 (married couple), then your Medicare Part B premium may be higher than $110.50 per month. For additional details, see our FAQ titled: 2010 Part B Premium Amounts for Persons with Higher Income Levels. In 2010:
· New Part B beneficiaries will pay $110.50 (because they did not have the premium withheld from their Social Security benefit in the previous year).
· Beneficiaries who do not currently have the Part B premium withheld from their Social Security benefit will pay $110.50.
Higher-income beneficiaries pay $110.50 plus an additional amount, based on the income-related monthly adjustment amount (IRMAA.


As I remember, my first year on Medicare I paid the standard premium, and since I was not taking SS I had the Medicare premium deducted from my bank account. The next 2 years I was also paying from my bank account, and I had to pay the increased premium due to higher income. In 2009 I was getting SS payments the entire year, and I had my premium (also the higher level due to income) deducted from my SS payments. Then in 2010, my income was within the <=$85,000 limit for a single person to pay the base premium, so my deducted premium reverted to the $96.40 base rate.

I have recently stopped receiving SS payments (due to a payback), and I suppose that I will again be paying $110.50, rather than the $96.40 base rate. This is also true for anyone who in Medicare and not receiving SS, or whose SS payments started in the current year.

My 2010 income will also be below the $85,000 threshold that triggers payment surcharges, but I assume that next year (2011) I will have to pay whatever increased rate is assigned to the base rate payers who have not been having their pt.B premiums deducted from their SS checks. In 2011 I will become 70, so I will restart my SS payments and get my premiums deducted from these SS payments. My main question is, will my rate in 2012 and beyond revert to the base rate for those who are having their premiums deducted from their SS checks, or will I have a permanently higher base rate?


Ha

[Gotadimple]

Ha,
Best source for info on this is Social Security. They know the rules and can advise you.

-- Rita

[FurBall]

Interesting question. Here's what I think happens:

Each year, the Medicare rate is calculated and the SS COLA is calculated. If the Medicare increase would cause your SS to decrease, you stay as you were the previous year.

So, I think you keep the higher rate until there are enough COLAs for everyone else to catch up. If Medicare expenses continue to outpace Social Security COLAs it could be a long time before everyone is back to paying the same amount. In that scenario we would have people paying different rates based on the year they started Social Security. An interesting article that shows what could happen is at: http://aging.senate.gov/crs/ss20.pdf

It also seems that the Medicare Premium increases will need to be factored into decisions on how long to delay Social Security. The premium increases could erode some of the advantage of waiting to file.

The hold harmless clause reads:
) For any calendar year after 1988, if an individual is entitled to monthly benefits under section 202 or 223 or to a monthly annuity under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974[105] for November and December of the preceding year, if the monthly premium of the individual under this section for December and for January is deducted from those benefits under section 1840(a)(1) or section 1840(b)(1), and if the amount of the individual's premium is not adjusted for such January under subsection (i), the monthly premium otherwise determined under this section for an individual for that year shall not be increased, pursuant to this subsection, to the extent that such increase would reduce the amount of benefits payable to that individual for that December below the amount of benefits payable to that individual for that November (after the deduction of the premium under this section).

[haha]

Quote:

Originally Posted by FurBall Interesting question. Here's what I think happens: Each year, the Medicare rate is calculated and the SS COLA is calculated. If the Medicare increase would cause your SS to decrease, you stay as you were the previous year. So, I think you keep the higher rate until there are enough COLAs for everyone else to catch up. If Medicare expenses continue to outpace Social Security COLAs it could be a long time before everyone is back to paying the same amount.

That is kind of what I figured, and I will check with SS as Gotadimple suggested.

Ha

[Gotadimple]

All this just makes my head spin. Another reason to delay filing for as long as possible.

-- Rita

[haha]

Quote:

Originally Posted by Gotadimple All this just makes my head spin. Another reason to delay filing for as long as possible. -- Rita

My European friends can hardly believe the complexity of our retirement and medical care "systems".

Ha

[ERD50]

Quote:

Originally Posted by haha My European friends can hardly believe the complexity of our retirement and medical care "systems". Ha

Maybe that helps explain why I read that many Europeans also seem amazed at our resistance to expanded govt health care? Things are just different here.

-ERD50

[haha]

Quote:

Originally Posted by ERD50 Maybe that helps explain why I read that many Europeans also seem amazed at our resistance to expanded govt health care? Things are just different here. -ERD50

Different or not, we will get some much more comprehensive system, I would guess within 10 years. Otherwise, the wheels are just going to come off. Obie and Nancy have hugely expanded demand, without putting any reforms on the supply train. How long can we go on paying twice as much for drugs as a Dane would? How long can many of our physician specialists make multiples of what they would be making in other advanced countries? And rationing or some sort of demand control, of course it is coming. Just wait until we see our medical insurance premiums after Obie-care fully kicks in. Currently, we pay and pay and pay, and have a life expectancy about #20 in the world- as I remember somewhere around level with Cuba

It appears that incumbents are getting shellacked in the primaries. We haven't seen anything yet. Wait until it fully dawns on people that we are being treated as livestock by our congressmen and their employers in the pharma, insurance, and of course banking industries. The system is simialr to the Masai method of ranching- evey now and then bleed your cattle. Not enough to kill them, just enough to get the blood and let them live to make some more blood for their masters to bleed.

Middle class Americans are incredibly passive, but I would suppose that even we have our limits.

Ha

[yakers]

Middle class people see through the pharma, insurance and banking 'industries' and get radicalized? I want some of what ever you are drinking Ha. The tea party folks are pushing for laizze faire not reining in robber barons.

[haha]

Quote:

Originally Posted by yakers Middle class people see through the pharma, insurance and banking 'industries' and get radicalized? I want some of what ever you are drinking Ha. The tea party folks are pushing for laizze faire not reining in robber barons.

I agree with what you are saying Yakers, I stopped by my favoite zinc bar this afternoon, so maybe it is the Cognac talking.

But unfortunately, or fortunately however you look at it, the tea partiers will likely make things worse, and since the nation is approaching a real crisis, we'll have to try door number two.

One problem is that we as a nation are quite stupid. I think over half of us believe in angels and ghosts.

Ha

[FUEGO]

Quote:

Originally Posted by haha One problem is that we as a nation are quite stupid. I think over half of us believe in angels and ghosts.

And at least half of us are of below average intellect!

[Moemg]

I was just thinking about the complexity of the medical insurance industry today . I am having a simple outpatient procedure next week so I read my health care book from cover to cover and it's amazing how they complicate it . After reading everything I do not have a clue as to what my covered costs are . Plus each year they put in got you clauses . You do not call when you are admitted to the hospital - Got you pay $500 . The Doctor finds your Appendix is inflamed while doing another procedure - Got you for a big chunk of money !

[FIREd]

As someone who is used to the streamlined European health and retirement systems, the American health and retirement systems sure feel very complex. While I think I now master the US retirement system for the most part (except perhaps the ins/outs of public and private pensions), the US health care system still puzzles me. It's very piecemeal. For a routine procedure like an endoscopy, I have to fill the same health history and health insurance information forms 3 times (at the generalist, at the specialist and at the hospital). I then receive 5 different bills: the hospital, the specialist, the anesthesiologist, the lab that analyzed the biopsy, and the generalist that referred me to the specialist. I can't imagine how many bills I would receive if I had a serious health problem! My health care insurance booklet is thicker than my local phone book, so who knows what is covered and what is not. It's nearly impossible to figure out in advance how much it's gonna end up costing me. For Europeans who are used to a centralized nanny state, it's no wonder they find the whole system nerve wracking and bewildering.

I also find that medical billing is fraught with errors/fraud. I caught my dentist routinely overcharging my insurance company for services not rendered. When I confronted her, her answer was, "so what, as long as they pay for it and you don't"... Appalling. My wife's doctor insists that a 36-year old woman in perfectly good health should get blood work done every 3 months. Of course DW has to pay for an office visit and lab work every time. If DW does not comply, her doctor threatens to drop her as a patient. That's racket, pure and simple.

[haha]

Quote:

Originally Posted by Gotadimple Ha, Best source for info on this is Social Security. They know the rules and can advise you. -- Rita

(I am going to temporarily re-direct this thread to the original question)

Rita- I went in to my SS office downtown and the guy really had no idea what I was asking him. I might have done a little better had I gone to the North Seattle office, as I think they deal more often with something beyond immigrants getting their first SS card and whacked- out people trying to get more SSI. The waiting room at downtown SS office is a lot like the ER waiting room at Harbor General on Saturday night.

Anyway, after thinking it over, and pricing a COLA annuity from Vanguard giving me the same income as the increment from the payback, I decided that the Medicare premium angle was just a detail not really worth using up any time.

The dominant issue is that taking SS at 70 is a raging good deal for a single man, an even better deal for a single woman, and I think even better for various configurations of married people, although I didn't spend any time thinking about this last situation.

Anyone who can who is not terminally ill IMO should take SS at 70. I believe that this also dominates the payback and restart plan, as that might disapprear. It may be that at times of high real interest rates the commercial annuities would be much more competitively priced, and that might make them rate above SS, as they are less susceptible to political messing around, although less dollar secure in other ways.

I have have thought a little about why so many people prefer to start 62, or 66, rather than waiting until 70. I think it may be due to the well known loss aversion in the human psyche. People think, "what if I die early, I will have forgone all that money."

So what amigo, you are dead! The issue should be what makes a person more secure during the later part of his life, not some sort of mental stop loss on the SS account.

Ha

[Ed_The_Gypsy]

Quote:

Rita- I went in to my SS office downtown and the guy really had no idea what I was asking him.

My experience also.

In our town there is an office with a lobby and offices in the back. In the lobby, they answered questions I didn't ask and didn't answer the ones I asked. I was told that they would not address some questions until I actually file for benefits, at which time I go in the back room and all is revealed. (Sounds like a get-rich real estate seminar or a TV preacher, doesn't it?)

I am inclined to avoid anything fancy based on this experience.

[Moemg]

Quote:

Originally Posted by haha The dominant issue is that taking SS at 70 is a raging good deal for a single man, an even better deal for a single woman, and I think even better for various configurations of married people, although I didn't spend any time thinking about this last situation. Anyone who can who is not terminally ill IMO should take SS at 70. I believe that this also dominates the payback and restart plan, as that might disapprear. It may be that at times of high real interest rates the commercial annuities would be much more competitively priced, and that might make them rate above SS, as they are less susceptible to political messing around, although less dollar secure in other ways. I have have thought a little about why so many people prefer to start 62, or 66, rather than waiting until 70. I think it may be due to the well known loss aversion in the human psyche. People think, "what if I die early, I will have forgone all that money." So what amigo, you are dead! The issue should be what makes a person more secure during the later part of his life, not some sort of mental stop loss on the SS account. Ha

Ha ,While I agree that in your case it is smart to delay SS I do not think that is the case for most older males . You are healthy and so far have no medical problems so the chance of you living a long time is high . You'll need those larger SS payments since you'll be one of the rare guys left that are still on their feet and willing to dance .

[Gotadimple]

Quote:

Originally Posted by haha Rita- I went in to my SS office downtown and the guy really had no idea what I was asking him. I might have done a little better had I gone to the North Seattle office, as I think they deal more often with something beyond immigrants getting their first SS card and whacked- out people trying to get more SSI. The waiting room at downtown SS office is a lot like the ER waiting room at Harbor General on Saturday night. Ha

Been there . . . totally agree.

-- Rita

[haha]

Quote:

Originally Posted by Moemg Ha ,While I agree that in your case it is smart to delay SS I do not think that is the case for most older males . You are healthy and so far have no medical problems so the chance of you living a long time is high . You'll need those larger SS payments since you'll be one of the rare guys left that are still on their feet and willing to dance .

Well, thank you for the compliment. Still, at 62 my Dad had moderately controlled diabetes and had only 6 years of sobriety, so expecting an early death, he took his SS as soon as he could. (I think 62)

Twenty five years later he was still was drawing his (reduced) SS!

Still, I guess no blanket prescription can be given.

Ha