Medicare Premiums To Increase For Some In 2010

After not rising last year, the basic premium for Medicare Part B will shoot up 15 percent to $110.50 a month in 2010 from $96.40 in 2008 and 2009. But most beneficiaries will be exempted from paying this increase. Whether the rest will be able to avoid it as well remains to be seen.

The explanation is somewhat complicated. It all started when the Social Security Administration announced that there would be no cost of living benefit rise for Social Security recipients in 2010. A “hold-harmless” provision in the Medicare law prohibits Part B premiums from rising more than that year’s cost of living increase in Social Security benefits. Since there is no Social Security increase, most beneficiaries — 73 percent — will not have to pay any increased Part B premiums because of the hold-harmless provision. Those covered by the provision will continue to pay Part B premiums of $96.40 per month in 2010.

But this hold-harmless protection does not apply to the other 27 percent of beneficiaries — about 12 million in all — who either:

• do not have their Part B premiums withheld from their Social Security checks, or

• pay a higher Part B premium surcharge based on high income (see below), or

• are newly enrolled in Part B.

The U.S. House of Representatives overwhelmingly passed a bill that would void the 15 percent Part B premium increase for all Medicare beneficiaries, and it awaits action in the Senate. The Obama administration has urged the Senate to go along with the House.

Medicare Part B covers physician services as well as qualifying out-patient hospital care, durable medical equipment, and certain home health services, among other services. But whether or not Congress keeps the cost of Medicare Part B level for all, other beneficiary costs of the Medicare program are scheduled to rise next year. Here are all the new Medicare figures for 2010:

• Basic Part B premium: $110.50/month

• Part B deductible: $155 (was $135)

• Part A deductible: $1,100 (was $1,068)

• Co-payment for hospital stay days 61-90: $275/day (was $267)

• Co-payment for hospital stay days 91 and beyond: $550/day (was $534)

• Skilled nursing facility co-payment, days 21-100: $137.50/day (was $133.50)

As directed by the 2003 Medicare law, higher-income beneficiaries will pay higher Part B premiums. Following are those amounts for 2010:

• Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $154.70.

• Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $221.

• Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $287.30.

• Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $353.60.

• Rates differ for beneficiaries who are married but file a separate tax return from their spouse:

• Those with incomes between $85,000 and $128,000 will pay a monthly premium of $287.30.

• Those with incomes greater than $128,000 will pay a monthly premium of $353.60.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a 2008 tax return is used to determine the monthly Part B premium in 2010. Income is calculated by taking a senior’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a senior’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. But, as noted above, all this may be academic for 2010 if Congress acts to hold down Part B premiums for all beneficiaries.

For more information from Medicare on the 2010 increases, click here.