Alert
Close

Introducing AARP RealPad: The Wi-Fi Tablet That Makes It Easy to Share, Learn, Connect and Play. Learn more

HIGHLIGHTS

Open
10,000 Games Galore Sweepstakes from AARP

AUTO BUYING PROGRAM

AARP Auto Buying Program

DRIVER SAFETY

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

Contests and
Sweeps

Safe Driving in 2014 Sweepstakes

Learn how AARP Driver Safety can help you stay safe—and enter for a chance to win $1,000. See official rules. 

Download the ipad App

AARP-iPad-ePub-app

KEEP BRAIN ACTIVE!

AARP Games - Play Now!

AARP Books

Medicare for Dummies book cover

Get the answers you need, from Patricia Barry, AARP's Ask Ms. Medicare

Most Popular

Viewed

Nothing has been viewed

share your Thoughts

Reader stories help us fine-tune our education efforts and strengthen our calls for action on issues that matter most to you. We read and learn from every story and may use yours (with permission) to brief legislators, inspire other readers and more. Please share your story with us. Do

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

More bad news for many retirees: no cost-of-living increases in Social Security in 2010.

For the first time in 35 years, older Americans will receive no cost-of-living increases (COLA) in their Social Security checks in 2010 according to Congressional Budget Office estimates. The forecast is based on expected low inflation, in contrast to 2009 when the COLA added 5.8 percent to Social Security benefits.

Next year's zero COLA is bad news enough for many retirees living on fixed incomes during a recession. But millions of them also face much higher Medicare Part B premiums next year.

Under an obscure “hold-harmless” provision of federal law, basic Part B premiums in any year cannot rise higher than that year’s COLA. So a zero COLA means that the basic premium (currently $96.40 a month) must stay the same. “The intent of the policy is to protect the amount of the Social Security payment from being reduced by an increase in premium costs,” says Peter Ashkenaz, spokesman for the Centers for Medicare & Medicaid Services (CMS).

The hold-harmless policy gives this protection to the majority of people enrolled in Medicare Part B who also receive Social Security, Railroad Retirement or Civil Service retiree benefits.

But it does not apply to one in four (or about 11 million) beneficiaries who:

  • do not have their Part B premiums withheld from their Social Security checks, or
  • pay a higher Part B premium based on higher income, or
  • are newly enrolled in Part B.

Premium amounts are normally set so that beneficiaries actually pay for only about 25 percent of the costs of Part B benefits, which cover doctors’ visits and other outpatient services. The remainder is paid out of federal funds. Next year, if the premium is frozen for most beneficiaries but costs rise, the shortfall in revenue for that 25 percent falls on the wallets of the one in four beneficiaries not protected by the hold-harmless provision.

"In the absence of a Social Security COLA, unless Part B premiums are increased substantially on those who are not held harmless, the Supplemental Medical Insurance trust fund, which finances Part B, is at risk of exhaustion," according to an analysis by the Congressional Research Service.

For these beneficiaries, the basic Part B premium could rise to $119 a month in 2010, according to Congressional Budget Office projections. And if zero Social Security COLAs continue in later years, as CBO expects, it could rise to $128 by 2012. For people with incomes over $85,000 a year who already pay higher premiums—surcharges of between $38.50 and $211.90 a month in 2009—these amounts would be far more.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Reading eyeglasses eyemed 6 membership benefit health

Members save 25% on orders of $200 or more and get 25% off lens upgrades at glasses.com.

AARP/Walgreens Wellness Bus Stops in Clarksdale, MS

Members can get exclusive points offers from Walgreens and Duane Reade.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.