Congress Moves to Limit Medicare Premium Hikes

Oct 6, 2020 / Amanda Chase, Horsesmouth Assistant Editor

Congress has made a move to head off a potential premium spike for some Medicare beneficiaries. As part of a short-term government funding bill passed by the Senate on Wednesday and signed by President Trump, any increase in Medicare Part B premiums for 2021 would be capped at 25% of what it otherwise would be for 2021. While it’s still uncertain what the standard premium would be for 2021—it is based on an actuarial formula and typically revealed in early November for the next year—estimates have proved tricky this year due to economic upheaval from the coronavirus pandemic.

“One thing that’s really hard about this year is that there’s been increased costs from treating Covid, but decreased cost from people delaying care or avoiding being in hospitals or doctors offices,” said Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center. “Normally, we’d pretty much know by this time what the premium will be.”

The Medicare trustees forecasted in April that the standard 2021 Part B premium would rise to $153.30 in 2021 from $144.60 this year ($8.70 more monthly, or a 6% increase). However, the trustees’ report noted that the impacts of Covid-19 were unknown and therefore could not be factored into the estimates. While many of Medicare’s 62.7 million beneficiaries are protected from large Part B premium hikes, others—those who pay the Income-Related Monthly Adjustment Amount—are not. And those higher-income beneficiaries already pay extra each month.

If a Part B premium increase would eat up more than a Social Security recipient’s COLA in any given year, the person is “held harmless” and won’t see their Social Security benefits go down. (Their Part B premiums generally are withheld from their Social Security payments.) It’s uncertain what the Social Security COLA for 2021 will be. The Senior Citizens League, a nonpartisan advocacy group for older Americans, is estimating it will be 1.3%.

Medicare Part B premiums are among the fastest-growing costs in retirement, up 218% from 2000 through 2020, said Mary Johnson, Social Security and Medicare policy analyst for the Senior Citizens League. That compares to cumulative inflation of about 54%, according to the Bureau of Labor Statistics.

You can find the entire article at CNBC.com.

 

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