Newspapers Examine Medicare Part B Premiums, Medicare Advantage Plans

January 5, 2007 – 9:28 pm | posted in Medicare

Two newspapers last week examined issues regarding changes to Medicare for 2007. Summaries appear below.

• Washington Post: The Post examined how some Medicare beneficiaries “will get an unwelcome surprise” when they learn that their 2007 Part B premiums will increase under new “means-testing” rules (Kaufman, Washington Post, 12/28/06). Under the rules, which were ordered in a provision of the 2003 Medicare law, higher-income Medicare beneficiaries in 2007 for the first time will be required to pay higher Part B premiums (Kaiser Daily Health Policy Report, 9/13/06). Individuals with incomes of more than $80,000 and married couples with combined incomes of more than $160,000 will have to pay the higher premiums. The Social Security Administration will use incomes reported in beneficiaries’ 2005 tax returns to determine whether they are required to pay the higher premiums. According to the Post, some beneficiaries might not be aware that capital gains from house sales and withdrawals from individual retirement accounts in 2005 will affect their 2007 premiums. SSA last month sent letters to beneficiaries explaining the changes. SSA spokesperson Mark Hinkle said that certain “life-changing events” — such as divorce, death of a spouse or job loss — could reduce a beneficiary’s premiums but that capital gains from house sales and IRA withdrawals are treated the same as any other income. Hinkle said that a small number of beneficiaries would have to pay higher 2007 premiums because of capitals gains reported in 2005 but that those beneficiaries’ premiums would decrease in future years if they show no further capital gains on subsequent tax returns. Shannon Benton, executive director of the Senior Citizens League, in a statement said, “We are concerned that our members are just now finding out that the government is suddenly increasing seniors’ Part B premiums without adequate warning” (Washington Post, 12/28/06).
• Philadelphia Inquirer: The Inquirer last week examined how some insurers that sponsor Medicare Advantage plans have increased premiums or reduced benefits for the 2007 plan year. According to the Inquirer, insurers nationwide “are struggling with an increasingly difficult funding model for Medicare managed care plans.” MA plans, which account for about 13% of Medicare enrollment, cover hospital care, doctor visits, prescription drugs, and some extra services such as vision and dental care. The government pays insurers a set amount for each beneficiary enrolled in MA plans, and beneficiaries pay a monthly premium. Some insurers have increased premiums for the 2007 plan more drastically than in the past, the Inquirer reports. For example, Independence Blue Cross, which sponsors MA plans in Pennsylvania, increased premiums between 54% and 93% for 2007. Dan Lyons, senior vice president for government programs at Independence Blue Cross, said the increase is necessary because government contributions to MA plans have not kept pace with rising medical costs (Von Bergen, Philadelphia Inquirer, 12/29/06).

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