Medicare premiums could rise for many retirees

Published on NewsOK Modified: December 20, 2012 at 11:11 am •  Published: December 20, 2012
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Medicare serves about 50 million Americans, including seniors and disabled people. Half have annual incomes below $22,500.

Technically, the program's outpatient and prescription coverage is optional. In practice, it's too good a deal to pass up. By law taxpayers cover 75 percent of the premiums, and beneficiaries pick up the remaining 25 percent.

That's the way it works for most people. Medicaid pays premiums for the poor, while people the government considers well-off shoulder an increasing share of premiums, starting at 35 percent and going all the way up to 80 percent for individuals making more than $214,000 and couples over $428,000.

Polls show that Americans clearly prefer raising premiums on wealthy beneficiaries as opposed to a general increase. However, few people are aware that the government is already collecting higher premiums from some beneficiaries. Very few know the details.

"I think wealth is in the eye of the beholder," said Tricia Neuman, a Medicare expert with the nonpartisan Kaiser Family Foundation. "This premium affects people with incomes starting at $85,000, but in the discussion over taxes $85,000 is not generally considered high income."

AARP says hiking the premium would be equivalent to a tax.

"This is a payment to the federal government based on your income, and that is a form of a tax," said David Certner, legislative policy director for the older people's lobby.

Not so, says Bixby. Even the wealthiest beneficiaries still get some subsidy under the plan, just not a 75 percent price break.

AARP also worries that charging seniors more based on income could taint Medicare as a welfare program, undercutting its political support.

James, the Philadelphia-area retiree, said the higher premium feels like a tax to him. "I'm making a payment to a government program," he said.

He said he figures he and his wife were probably pushed over the threshold because of distributions from retirement accounts that people in their 70s are required by law to take.

It's causing him to rethink how he feels about Medicare.