Posts Tagged ‘COLA’

Some Medicare Recipients Will See a Rise in 2010 Premiums

OCTOBER 26, 2009  VOLUME 16, NUMBER 59

The Medicare program has announced its 2010 premium and coinsurance rates. As predicted, an anticipated increase in medical costs will mean a steep rise in Medicare-related premiums, but federal law protects most recipients from having to pay the new rates. One effect of changes in Medicare rate-setting over the last few years will be seen more clearly in 2010. Not long ago, every Medicare beneficiary could expect to pay the same portion of his or her medical costs. Those days are over, and a confusing system of co-payments, deductibles and premiums has now gotten more confusing.

Medicare has set the annual premium increase for Part B insurance at 15%, which translates into a 2010 premium of $110.50 per month. Nearly three-quarters of Medicare beneficiaries, however, will not have to pay that higher amount. Congress limited current Medicare beneficiaries’ premium increases to no more than their Social Security cost-of-living adjustment. Since Social Security announced two months ago that there will not be a COLA increase in 2010, that means that most Medicare beneficiaries will continue to pay $96.40 per month for Part B.

Who will pay the higher figure? Three groups of people:

  1. People who have been receiving Medicare but have not had Part B premiums deducted from their Social Security checks, for whatever reason, are not protected from the increased premiums.
  2. New Medicare beneficiaries are not protected, either. If you start receiving Medicare benefits in 2010 for the first time, you will pay the higher rate.
  3. Wealthy Medicare beneficiaries are not protected from increases. If a single person makes more than $85,000 per year, or a married couple more than $170,000, they will see the increase in their Part B premiums.

Wealthy Medicare beneficiaries actually get a double dose of increased premiums. Not only are they not protected from the 2010 increase, but they may also have to pay higher premiums based on their income levels. For the wealthiest Medicare beneficiaries — those whose individual income is over $214,000, or couples whose income is over $428,000 — the new Part B premium will be $353.60 per month.

Income for these calculations is determined by reference to the beneficiary’s 2008 income tax return. For those whose income has dropped since that year, it is possible to request a revision based on a later year’s tax returns.

Other premiums, co-payments and deductibles are also set to increase in 2010. Among the increases: an anticipated typical rise by about $2 in monthly Part D (drug plan) premiums nationwide.

Social Security Probably Won’t Have a Cost of Living Increase

AUGUST 24, 2009  VOLUME 16, NUMBER 52

According to the Trustees of the Social Security and Medicaid trust funds, it looks like the annual cost-of-living adjustment (COLA) for Social Security next year will be, well, zero. In other words retirees, those on Social Security Disability and even Supplemental Security Income recipients will see no increase in their Social Security checks in 2010.

A summary of the Trustee’s report is available online, and it makes for interesting reading. The Trustees have provided explanations, figures, projections and calculations — and also some calculations of the real-world effect of those projections on individual beneficiaries and the funds as a whole.

If the no-COLA projections are correct, it would be the first year without an increase since COLAs were introduced in 1975 (you can see the history of COLAs since 1975 in a chart maintained by the Social Security Administration). The law mandating COLAs does not allow for reductions in Social Security benefits, so at least no one will see any automatic decreases.

Well, that’s not quite correct. Some recipient’s checks will go down, since their Medicare Part B premiums may increase — though only about one-quarter of Social Security recipients will be affected by that possibility. For the rest, Part B premiums are not permitted to increase by more than the COLA amount. With no COLA projected, that means no increase in Part B premiums. For those whose premiums are indexed for income, however, that may mean large increases in Part B premiums.

In addition, Medicare Part D (the drug benefit) premiums are expected to increase slightly for most Social Security beneficiaries. Since those premiums are automatically deducted from Social Security, the effect for most recipients will be a decrease in their monthly checks.

The culprit, of course, is mostly the recession and the general economic slowdown. Despite the lack of a COLA, most Social Security beneficiaries are actually paying more for their basic needs this year — partly because they pay more for health care, where costs have not held steady or decreased as they have for many consumer goods.

The projections are murkier for next year, of course, but the Trustees predict that there will likely be no COLA in 2011, either. Their planning assumes only a small COLA in 2012.

The final numbers will not be released for another two months, but anyone receiving Social Security benefits should assume that they will not be seeing any increase next year. That will be a significant change from last October, when Social Security announced a 5.8% COLA — the largest since 1982 (see the Social Security chart, which provides year-by-year figures for the COLAs).

What effect does the lack of a COLA have on the Social Security and Medicare trust funds? The Trustees predict that Social Security’s trust fund is adequately funded for the next ten years, but that beginning in 2014 (two years earlier than estimated last year) payouts will begin to exceed the fund’s value. The hospital insurance portion of Medicare’s fund looks even bleaker; it will begin being spent down in 2011 and run out in 2017.

Legislative Changes

JUNE 27, 1994 VOLUME 1, NUMBER 31

The 1994 session of the Arizona legislature ended in mid-April. Most of the new laws adopted during that session will become effective in about three weeks, and newspaper articles about those changes should begin appearing soon.

Several new laws are of particular importance to the elderly and disabled. The changes include:

Private Fiduciaries
Senate Bill 1103 directed the Arizona Supreme Court to develop a system for registration and regulation of private fiduciaries. Any person or organization serving as guardian, conservator or personal representative of a person or estate, unless related to the ward or decedent, must meet the Supreme Court’s standards.

In response to the new law, the Supreme Court has established a committee to draw up minimum standards, disciplinary rules and other regulatory provisions. It is unlikely that the rules will be ready by July 16 (the next meeting of the Committee is set for August 1), but some protection will be provided for incapacitated adults, children with substantial estates and heirs in the near future.

Pima County representatives on the Supreme Court committee include Robert Fleming, Hon. William Sherrill (the presiding Pima County probate judge) and Eleanor terHorst (the Court’s Probate Law Counsel). Any of the three would be happy to hear from concerned citizens, particularly those with first-hand knowledge of abuses and concerns with private fiduciaries in the past, or with suggestions for protective regulations.

Age Discrimination Cap Removed
Senate Bill 1226 removes the present cap of age 70 from Arizona’s Age Discrimination in Employment Act. Older employees are now protected from discrimination under the law.

Investment Advisors
After particularly complicated legislative wrangling, House Bill 2271 passed both houses and was signed by the Governor. This legislation creates a regulatory structure for investment advisors, requiring them to register with the Arizona Corporation Commission. Minimum qualifications were also established, and a mechanism to report abuses and suspend advisors from practice.

Respite Care
House Bill 2317 created a pilot project to provide respite care for the frail elderly. The primary focus of this legislation is on attempting to show whether respite care permits caregivers to function in their home-care roles for a longer period. Only $75,000 was allocated, and the pilot project was limited to Maricopa County, but it may signal an acknowledgement on the part of legislators that respite care is an important issue for the future, and perhaps a willingness to expand such a program.

State Retirement COLAs
Senate Bill 1058 introduced the concept of an automatic (or perhaps semi-automatic) cost of living adjustment to the Arizona State Retirement System. COLAs will be limited to half the increase in the Consumer Price Index (or 3%, whichever is less) and will only be available in years when funds are available (according to a formula adopted as part of the law). The COLA legislation automatically ends in five years.

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