Medicare's 2012 premium increase is less than expected

Updated 40m ago

WASHINGTON – Medicare's basic monthly premium will rise significantly less than expected next year, the government announced Thursday.

The new Part B premium for outpatient care will be $99.90 a month for 2012, or about $7 less than projected as recently as May.

So, most seniors will pay an additional $3.50 a month next year, instead of $10.20, as forecast earlier.

Medicare's Part B annual deductible, the amount beneficiaries pay before their coverage begins, will also drop next year to $140, a decrease of $22.

Some younger retirees who enrolled recently have been paying premiums of up to $115.40 a month. They will get a sizable break next year.

Premiums have been frozen at the 2008 level of $96.40 a month for about three-fourths of Medicare beneficiaries. That was due to the lack of a Social Security cost-of-living adjustment during the depths of the economic downturn. But Social Security recently announced a raise in monthly checks averaging $39 for 2012.

The Medicare news means the majority of seniors will have to fork over only a small part of their long-awaited COLA for higher Medicare premiums.

Earlier this year, officials had announced that premiums for Medicare's prescription benefit would remain unchanged for 2012, on average. Similarly, average premiums for popular Medicare Advantage plans will dip slightly in 2012. But those announcements do not have as much impact. Averages used by the government don't reflect individual experiences. And fewer beneficiaries are enrolled in either of those two benefits.

The Part B premium is one number that most of the 49 million people on Medicare can connect with.

Upper-income retirees pay more, and premiums for low-income beneficiaries are covered by Medicaid. But middle-class beneficiaries on tight budgets watch the Part B figure.

In a statement accompanying release of the Medicare premiums, Health and Human Services Secretary Kathleen Sebelius said seniors have nothing to fear from the new health care law.

"The Affordable Care Act is helping to keep Medicare strong and affordable," she said. "People with Medicare are seeing higher quality benefits, better health care choices and lower costs."

A leading nonpartisan expert on Medicare said she doubted election-year politics are behind the lower-than-expected premiums for 2012.

"Changes in premiums are obviously important to seniors but the numbers are based on what the law requires, and determined by independent actuaries, rather than politics," said Tricia Neuman of the Kaiser Family Foundation.

"It has been an odd several years because of what has been going on with the (Social Security) COLA," said Neuman. "Not everybody was paying in the standard amount. Because more people are contributing, the effect of that is that the amount should go down."

Indeed, baby boomers who signed up for Medicare this year and were paying $115.40 a month will save $15.50 a month next year, an annual total of $186.

HHS also said the 2012 premium figure takes into account a fix for the biggest problem hanging over Medicare. Unless Congress acts by the end of the year, doctors will be hit with a 30% pay cut. But the department said since Congress is almost certain to override that cut, that cost has been factored in to the premium calculations. ... 50956350/1