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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (328447)	10/11/2009 1:19:53 AM
From: KLP	Read Replies (1) \| Respond to of 793928

Kiplinger: An October Surprise for Seniors? Brace yourself for no increase in your Social Security check next year. And some seniors’ checks may even shrink. By Mary Beth Franklin September 30, 2009 For the first time since annual cost-of-living adjustments became automatic nearly 35 years ago, seniors will not get a raise in their Social Security benefits in 2010. And unless Congress steps in, some beneficiaries will receive smaller Social Security checks next year because the Medicare Part B premium, which most retirees have deducted from their monthly checks, is scheduled to increase, resulting in a net decline in benefits for some. The House voted overwhelmingly last week to freeze Medicare Part B premiums at current levels to prevent beneficiaries from suffering a cut in cash flow. The Senate hasn’t acted yet, but Senate Finance Committee chairman Max Baucus (D-Mont.) is looking into the issue and could act as early as this week. Without congressional approval, Part B premiums, which pay for doctor visits and outpatient services for the nation’s elderly and disabled, are expected to rise from $96.40 per month this year to $104.20 per month in 2010. The $7.80-a-month hike won’t affect most of Social Security’s more than 50 million beneficiaries -- 75% of them are protected by a “hold-harmless” provision that prevents Social Security checks from declining from one year to the next. But the remaining beneficiaries will be forced to carry more than their fair share of the burden: The entire cost increase will be spread over those not protected by the hold-harmless rule. “The Part B premium increase is higher than it would be otherwise because the costs are spread across a smaller share of beneficiaries rather than across the entire Medicare population,” the Kaiser Family Foundation says in a new report. Wealthier seniors who have income of more than $85,000 for individuals and more than $170,000 for married couples in 2009, who already pay a surcharge for their Part B benefits, would be among the 25% of beneficiaries slated to pay the higher premium in 2010. So would the approximately two million people who are expected to enroll in Medicare for the first time next year. Low-income Americans, who qualify for both Medicare and Medicaid services, will also be affected -- but only indirectly. Medicaid, the health-care program for the poor funded jointly by the federal and state governments, will pay the higher Medicare premium on their behalf -- a bitter pill for cash-strapped states trying to balance their own budgets. No inflation, no COLA Normally, Social Security benefits increase each year to keep pace with inflation. The cost-of-living adjustment is based on the formula triggered by changes in the consumer price index between the third quarter of the previous year and the third quarter of the current year. But rather than increasing as usual, consumer prices fell during the July-through-September quarter this year compared with a year earlier. As a result, the Social Security and Medicare trustees project no increase in Social Security benefits in 2010. The official announcement of 2010 benefits is expected in mid October. At the same time, the monthly Medicare Part B premium is projected to increase to $104.20 next year and to $120.20 in 2011. The result could be a net decline in Social Security benefits for some retirees. That would be a stark change from this year, when retirees received a huge 5.8% increase in their Social Security benefits for 2009 -- the largest increase in more than 25 years -- while their Medicare Part B premium held steady at the 2008 level. Because consumer prices jumped so steeply in the third quarter of 2008 -- largely reflecting high gasoline prices that subsequently declined -- it could take another year or two for consumer prices to rise beyond that previous high point. As a result, the trustees project there may be no increase in Social Security benefits again in 2011 and only a modest hike in 2012, further exacerbating the problem of stagnant retirement income amid rising health-care costs. State of confusion Establishing different Part B premiums for different groups of Medicare beneficiaries is bound to lead to confusion, warns the Kaiser Family Foundation. For example, let’s assume Bob turned 66 in 2009, when he started to collect Social Security benefits and enrolled in Medicare Part B. Although Medicare Part B is scheduled to increase in 2010, Bob will not pay a higher premium if he does not receive a cost-of-living adjustment in his Social Security benefits. He will continue to pay $96.40 per month for Part B next year. Bob’s younger wife, Mary, faces a different situation, however. Mary will turn 66 in January 2010, when she will start collecting Social Security benefits and enroll in Medicare. She will pay the higher Medicare Part B premium of $104.20 per month -- $7.80 more per month for the same services her husband receives -- because as a new enrollee, she is not protected by the hold-harmless provision. But wait, there’s more. The hold- harmless provision does not apply to Part D premiums for the voluntary Medicare prescription-drug program. So Medicare beneficiaries who are enrolled in Part D could see a reduction in their Social Security benefits in 2010 if the premiums for their prescription-drug benefits increase from 2009 to 2010. Part D premiums are often deducted from Social Security benefits, too. So far, Congress has not addressed this issue. Seniors can add, drop or change their prescription-drug plans for next year during the open-enrollment period that begins November 15 and runs through December 31, 2009. For details, see the Medicare Web site. ________________________________________ This page printed from: kiplinger.com All contents © 2009 The Kiplinger Washington Editors