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Why some on Medicare, but not all, will be hit so hard

By Steve Twedt, Pittsburgh Post-Gazette on

Published in Senior Living Features

For those considering retirement, the advice has always been: Hold off applying for Social Security as long as possible because your monthly benefit will grow every year, perhaps by 8 percent, until age 70.

Such advice could be turned upside down this year for some Medicare beneficiaries.

Starting next year, premium increases for Medicare Part B plans, which cover doctor visits, outpatient procedures, X-rays and other tests, could increase more than 50 percent for about 30 percent of beneficiaries -- from $104.90 to $159.30 per month.

Combined with a deductible increase, the out-of-pocket expense for the year could be about $725, a significant financial blow for anyone on a fixed income.

Why are a few being hit so hard?

The 70 percent of those on Medicare who will be exempted are collecting Social Security and have their premiums deducted from their monthly checks. Under a "hold harmless" provision in Medicare regulations, that blocks Part B increases in years when the Social Security Administration offers no cost of living adjustment, as it is doing for 2016.

But that means the other 30 percent of beneficiaries -- an estimated 70,000 people in Allegheny County and 15 million nationwide -- pick up the financial slack, resulting in the 52 percent increase. Had there been an increase in the cost of living adjustment, everyone would have shared the pain. Some estimate monthly increases might be in the $15-$18 range instead of $50-$55.

Advocates for seniors say they are advising people to ride out the cost if possible, as they believe Social Security will likely authorize a cost of living adjustment next year.

"If someone could afford the increase for a year, over their lifetime they're likely to be better off" to delay taking Social Security, said Ray Landis, advocacy manager for AARP Pennsylvania.

But, he cautioned, that calculation would be based on an average life expectancy -- "and nobody is average."

"I think the first notion is to try to ride it out," agreed Alfred Chiplin, senior policy attorney for the Connecticut-based Center for Medicare Advocacy Inc., "but there are always tradeoffs. It's never perfect and, if you guess wrong, then what?"

The risk is that if Medicare Part B continues to see significant year-over-year hikes. If there's no cost of living adjustment by Social Security, any advantage to taking Social Security benefits later could be wiped out.

 

Since the first cost of living adjustment in 1975, there has been a zero increase only three times, including next year. All three have occurred since 2010.

There is a way for those not yet taking Social Security to avoid next year's increase, but time is running short to become eligible.

Because "hold harmless" protection does not cover those in their first year of Medicare, those people should apply early enough to receive the first Social Security check before Jan. 1, said Bill McKendree, coordinator for the county Apprise program that helps seniors choose a Medicare plan. Waiting until December or even late November to apply may be too late.

Also ineligible are individuals earning at least $85,000 a year ($170,000 for a couple) and those whose premiums are paid by their state Medicaid agency.

U.S. Bob Casey, D-Pa., has co-sponsored a bill, S. 2148, that would prevent a Part B premium increase in 2016, "but there's no provision for paying for it," said Mr. Landis, "so whether that is really a feasible bill is not clear." Earlier this month, Mr. Casey's staff estimated the cost would be "in the high single-figure billions or low double-figure billions."

A spokeswoman for the senator on Thursday said funding for this bill and other legislation is being negotiated "as part of the end of year budget."

Steve Twedt: stwedt@post-gazette.com or 412-263-1963.

(c)2015 the Pittsburgh Post-Gazette

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