The House is working on bipartisan Medicare legislation that would increase premiums and out-of-pocket spending for millions of beneficiaries. The legislation contains three changes proposed in President Obama’s fiscal 2014 budget — increased premiums that higher-income beneficiaries pay for Medicare Parts B and D, and, for new enrollees, higher Part B deductibles and a new $100 co-payment for each episode of home health care services. Here’s how the provisions would impact Medicare beneficiaries:
Increase the premiums that higher-income beneficiaries pay. Under current law, individuals with incomes of $85,000 or below pay 25% of the Medicare Part B premium ($104.90 in 2013). Seniors with incomes higher than $85,000 pay 35% to as much as 80% for people with incomes above $213,000.
The proposal would boost the 35% premium tier to 40% — and the 80% tier to 90%. The number of income brackets would increase from 5 to 9, nudging seniors into higher premium brackets. In addition, the highest premium bracket would be lowered, and would apply to people with incomes of more than $196,000 instead of $213,000. Income thresholds would be fixed until 25% of all Medicare beneficiaries would be subject to higher premiums. The Congressional Budget Office (CBO) estimates the change would cost senior and disabled beneficiaries an additional $56.3 billion in higher premiums in the first ten years alone.
Increase the Part B deductible for new enrollees. Deductibles are the amount that beneficiaries must pay out-of-pocket before coverage begins. In 2013, the Medicare Part B deductible is $147, but unlike other types of health insurance it increases annually at the same rate as premiums. The legislation would apply a $25 increase to the Part B deductible in 2017, 2019 and 2021 for new beneficiaries who enroll after January 1, 2017. Deductibles would also continue to increase in tandem with the rate of premium increases.
If the legislation were to pass, TSCL believes there would be significant inequities in deductibles between Medicare beneficiaries close to each other in age. Consider for example two sisters born one year apart. The older enrolls in Medicare prior to January 1, 2017. The other enrolls in 2017. In 25 years the older sister who enrolled prior to 2017 would have an estimated deductible of $814, but the younger who enrolled a year later would pay $1,135.
Establish a copayment for home health services. The legislation would establish a co-payment for home health services of $100 starting in 2017 for new enrollees. Currently, home healthcare is one of the only benefits in Medicare that does not have any beneficiary cost - sharing. Under the proposal, there would be no change for Medicare beneficiaries enrolled prior to January 1, 2017. New enrollees, however, would pay the new co-payment and it would increase every year. Over 20 years, a $100 co-payment would grow to an estimated $414. The proposed legislation would exempt the copay, if the needed home healthcare is directly preceded by a hospital stay.
TSCL believes that Congress is looking the wrong way for Medicare savings. "Congress should be cutting Medicare fraud, not cutting our Medicare benefits!" says TSCL Executive Director Shannon Benton.
Sources: Discussion Draft of Medicare Beneficiary Proposals, House Ways and Means Committee, July 19, 2013. "The President's And Other Bipartisan Proposals To Reform Medicare: Modernizing Beneficiary Cost-Sharing, House Ways and Means, Committee, July 19, 2013.