Part B Premiums in 2010: Frozen for Many, Higher for Some

The result would be two levels of charges even for basic Part B premiums—the lower amount paid by three-fourths of enrollees, and the higher amount borne by the remaining fourth.

"Congress never anticipated a year when there would not be a Social Security COLA," says John Rother, AARP’s director of policy. "This new situation raises issues of fairness unless Congress makes some changes before the end of the year."

"To address this problem, one action the Congress might consider is to grant a flat Social Security COLA increase each year, during times of low inflation, to offset the impact of rising Medicare costs," Rother adds, "This would avoid the full burden of cost increases falling on a minority of beneficiaries and help keep Part B solvent in the long run."

About 7.5 million Medicare beneficiaries who don’t have their Part B premiums deducted from their Social Security checks are those whose premiums are paid for by their state Medicaid program. These low-income people are not affected—they still won’t pay the premiums themselves. But the states would have to pick up the tab for the higher premiums. This could affect the number of people covered by Medicaid if state governments, already strapped by falling revenue, cut back on services, consumer advocates say.

Everybody else who pays Part B premiums directly to Medicare by check will be affected by the higher amounts. These include people who, though enrolled in Medicare, have deferred collecting their Social Security benefits.

Also affected are many people newly enrolled in Part B who therefore did not have premiums deducted from their retirement checks the previous year. The hold-harmless calculation is made in November each year, CMS says. So anyone joining Part B in 2010 would have to pay the higher Part B premiums until November 2010 when they would become eligible for hold-harmless protection.

The hold-harmless provision applies only to Part B premiums and not to premiums for Part D drug coverage, which are also often withheld from enrollees’ Social Security checks. “If Part D premiums rise in 2010, the result would be that beneficiaries with Medicare drug coverage will still receive less money in their Social Security checks even if their Part B premiums don’t increase,” says Rother.

Patricia Barry is a senior editor at the AARP Bulletin and Bulletin Today.