Alert
Close

Think you know AARP? What you don't know about us may surprise you. Discover all the 'Real Possibilities'

HIGHLIGHTS

Close

REAL POSSIBILITIES

AARP Real Possibilities

DRIVER SAFETY

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

Contests and
Sweeps

Dream Vacation Sweepstakes

10 weeks. 10 amazing trips. Seize your chance to win!
See official rules. 

CHECK OUT OUR
NEW IPAD APP!

ATM Mobile App for iPhone and Ipad

Enjoy the best of AARP’s award-winning publications

on the go with the new

AARP ePubs iPad 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

Commented

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

What’s in Store for Medicare?

Pros and cons of current proposals to change it

Raising Medicare eligibility age to 67

Eligibility for Medicare has always been at age 65, except for younger people with disabilities. This proposal aims to gradually bring Medicare in line with Social Security, where full retirement age is now 66 and set to rise to 67 by 2027.

For: With more Americans living longer, and health spending on older people rising, we can't afford Medicare at age 65. Raising the eligibility age would reduce federal spending on Medicare by about 5 percent over the next 20 years.

Against: This proposal would increase other health care spending — especially costs for employer health plans and Medicaid — and uninsured people would pay full costs for a longer time. Medicare premiums would rise due to fewer people in the program to share costs.

Raising the Medicare payroll tax

This tax, which funds Medicare Part A hospital insurance, is currently 2.9 percent of all earnings (1.45 percent each for employers and employees; 2.9 percent for the self-employed). People who have paid this tax for a sufficient time do not pay monthly premiums for Part A.

For: Part A currently faces a small long-term deficit after 2024, when it's estimated that available funds will not fully pay for all services. Increasing the payroll tax by just 0.5 percent each for employers and employees would more than fix that problem, leaving a small surplus to act as a cushion against future shortfalls or fund extra benefits in Medicare.

Against: Raising the payroll tax would mean a higher rate of tax for each dollar earned by working Americans, slowing economic growth and increasing the tax burden on future generations. Even workers not earning enough to pay income taxes would pay this bigger tax.

Raising Medicare premiums for higher-income people

Most people pay monthly premiums for Part B, which covers doctors' services and outpatient care, and for Part D prescription drug coverage. The standard premiums pay for about 25 percent of the costs of these services, while Medicare pays the remaining 75 percent out of general tax revenues. People with incomes over a certain level — those whose tax returns show a modified adjusted gross income of $85,000 for a single person or $170,000 for a married couple — pay higher premiums.

For: The easiest way to bring in more money for Medicare would be to raise the premiums even more for higher income people — so that the wealthiest older people pay the full cost and receive no taxpayer-funded subsidy. Another option is to lower the income level at which the higher premium charge kicks in, so that more people have to pay it.

Against: Higher-income earners already have paid more into the Medicare program through higher payroll and income taxes, and now pay up to three times more for the same Part B and D coverage. If increased taxes make healthier and wealthier people drop out of the program, standard premiums would eventually become more expensive for everyone.

Next: Changing medigap supplemental insurance. »

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.

Medicare & Medicaid News

Discounts & Benefits

bring health To Life-Visual MD

AARP Bookstore

AARP Bookstore - woman reaches for book on bookshelf

VISIT THE HEALTH SECTION

Find titles on brain health, drug alternatives and losing weight. Do