Medicare -Who Pays and How Much-Part I of a II Part Article

 (10/19/09)- Under the current formula of the Medicare law, payments to doctors are set for a cut of 21.5% in June, 2010 and about 5.5% in each of the next four years. The formula may say one thing, but realistically there has never been any cut of the payments to doctors since the Medicare law was passed.

Therefore the estimated savings of about $200 billion over the next 10 years to Medicare costs will never occur, and so health care legislation must provide for this shortfall.

The House committees have passed 3 versions of a proposed health care bill and the Senate committees have passed 2 versions of the bill. The House legislation includes a $228.5 billion provision to avert these cuts to doctors and permanently replace the payment formula so as to provide annual increases. The Senate Finance Committee bill provides $10.9 billion to avert the cuts for one year.

Senator Debbie Stabenow, Democrat of Michigan, introduced a bill to block the cuts and eliminate the existing formula, which defines a "sustainable growth rate" for Medicare spending on doctors.

(9/26/09)- The standard monthly premium for Medicare Part B is $96.40, which covers doctors' visits. Higher income individuals and families have to pay higher premiums. That premium will increase to $110.50 a month starting in January 2010.

The United States House of Representatives voted 406 to 18 to eliminate all premium increases for people who use Medicare Part B. The bill now goes to the U.S. Senate for approval.

Most beneficiaries have their Medicare premiums deducted from their Social Security benefit check. Since there will not be any increase in 2010 checks because there is no cost-of-living increase in the absence of inflation, Congress felt it would be unfair to increase the Part B premium for next year.

About three-fourths of the 42 million Medicare beneficiaries are already exempt from Part B premium increases whenever there is no increase in Social Security payments. The other one-quarter of the beneficiaries who are older or disabled would have faced monthly premium increases of $8 to $23.

As we point out in our item dated 8/30/09 below, this will be the first time since automatic increases were adopted in 1975 that there will not be an increase n the 2010 Social Security payment.

(8/30/09)- The trustees who oversee Social Security are projecting there won't be a cost-of-living adjustment, or COLA, for the next two years. That has not happened since automatic increases were adopted in 1975.

It would take a change in the law for Social Security benefits to be decreased. Premiums for Medicare Part D are expected to be increased in 2010, and this would in effect mean that beneficiaries who automatically have this premium deducted from their Social Security checks would therefore have a decrease in the actual amount that they receive.

COLA adjustments are pegged to inflation, which have been running at a negative number this year.

(8/18/09)- Social Security recalculates the premiums for Medicare Part B enrollees every fall. It uses "modified adjusted gross income", which is adjusted gross income plus tax exempt income.

It uses the most recent tax return provided to them by the Internal Revenue Service. As an example, it determined the 2009 premiums for Part B from the tax returns filed in 2008 for the 2007 tax year.

Social Security automatically makes the adjustment in the premium if you had a spike in income one year, which was followed by lower income the following year. You do not need to contact them to make the adjustment.

There are special exemptions for specific adverse developments that may effect your income in a given year.

You may remember that that all Medicare Part B premiums were the same until 2007. Part B covers doctors visits and outpatient services. Starting in 2007, higher income beneficiaries had to pay higher Part B premiums.

This year the standard premium for 2009 is $96.40 a month. If an individual's income is more than $85,000, or more than $170,000 for married couples who file a joint return, Part B premiums vary from $134.90 to $308.30 a month

(5/18//09)- As a follow-up to our item dated 3/13/09, the trustees reported that both the Medicare Trust Fund and the Social Security Trust Fund had deteriorated since last year's report. According to the latest figure, the Medicare fund is due to run out of money in 2017, two years earlier than last year's projection, and the Social Security Trust Fund is due to become exhausted in 2037, four years earlier than last year's projection.

Social Security and Medicare spending totaled over a trillion dollars last year, accounting for more than one-third of the federal budget.

The report factored in a cut of 21% in payments to Medicare doctors for their services, but keep in mind that there has never been a cut in doctor's payments since the Medicare program began.

The actuaries estimated that Social Security recipients would not receive a cost-of-living increase for the next two years, and that a quarter of the Medicare beneficiaries would pay higher than usual increases in monthly premiums, 8% in 2010 and 15% in 2011

The trustees predicted that there would be a 30% increase in the number of Medicare beneficiaries in the coming decade, to 58.8 million in 2018, from 45.2 million last year. They also predicted that average Medicare spending per beneficiary would increase more than 50%, to $17,000 in 2018, from $11,000 last year.

The trustees are the secretaries of labor, Treasury and health and human services, as well as the commissioner of Social Security

In December, nearly 51 million people received Social Security benefits, and 45.2 million received Medicare benefits.

If you go back to our item dated 5/6/07 you will see that the estimates that year increased for the time frame before the both funds would become exhausted because we were in a healthier economic environment at that time than the one we are in now. If you have more people working, you have more people paying into Medicare and Social Security, as well as the payments to those funds from their employers. Please see our item just below this one to see how much of your payroll goes into these funds.

(5/14/09)- Did you know that as an employee you pay 6.2% of your earning (up to $106,800 this year) for Social Security, and 1.45% of your income (with no limits) for Medicare? Did you know that your employer pays an equal amount for you? If you are self-employed, that will mean you have to pay the total of 15.3% yourself.

(3/13/09)- The Medicare and Social Security Trustees are due to issue their yearly report shortly, but it will come as no shock that the health of the financial system for Medicare is deteriorating badly. To quote from our item dated:

" (4/4/08)- The trustees of the Medicare and Social Security Trust Funds issued the required yearly report as to the financial health of these trusts. For the data on last year's report please see our item dated 5/6/07. The figures in this year's report were exactly the same as they were in the prior year's report, with the Medicare Trust being exhausted by 2019 and the Social Security Trust running out of funds in 2041.

The trustees said Medicare's hospital insurance trust fund would pay out more in benefits than it receives in taxes and other dedicated revenues this year. Social Security costs will exceed tax revenues starting in 2017. The government will then have to draw on assets of the Social Security trust funds to meet its obligations."

Richard S. Foster, the chief Medicare actuary, now says the recession will speed exhaustion of the trust fund by as much as 3 years. Most of the money in the trust fund comes from payroll taxes, and with unemployment rising sharply and wage growth slowing perceptively, the amount generated from tax revenues will be much lower than previously estimated.

(3/5/09)- The question often arises as to "how can the company that I used to work for, walk away from the written guarantee that it gave me that it would cover my health-care costs under the company plan for the rest of my life." Although it is not the answer that you want to hear, unfortunately the courts have ruled that companies can do exactly that, and it is legal.

Many of the U.S. companies are doing this, especially in light of the difficult economic environment that we find ourselves in today. Some of these companies are giving up-front payments to help retirees meet the cost of signing up with Medicare, or obtaining the health-care coverage on their own, but this practice is being done by more and more of the U.S. companies.

Medicare Part B covers doctor visits and other medical services and starts with a monthly premium of $96.40, and rises according to your income level.

You must sign up for Medicare Part B anytime within a time frame of three months before your 65th birthday, the month of your birthday, or three months after your birthday, or else there is a late enrollment penalty that you would be faced with having to pay.

If you are still working, eligible for Medicare, and your employer has at least 20 employees, you can keep your workplace health insurance as your primary coverage. If your employer has fewer than 20 employees, your employer coverage generally will become secondary to Medicare.

(2/22/09)- The Centers for Medicare and Medicaid Services (CMS) has tentatively decided that it would not pay for virtual colonoscopies, which is fomally known as CT colonography. The ruling is based, it said, that there was "insufficient evidence" to conclude that virtual colonoscopy "improves outcomes in Medicare beneficiaries."

The agency will take public comments for 30 days before it will issue a final ruling.

The United States Preventive Services Task Force (USPSTF), which advises the government on preventive procedures, said last year that there was insufficient evidence to assess the benefits and harms of the CT technique.

If polyps are detected by virtual colonoscopies, a patient would typically undergo a regular colonoscopy to have them removed.

(11/12/08)- Medicare will no longer pay hospitals for the added costs incurred by patients for certain events that are on the "do no harm" list. Officials believe that the regulations could apply to several hundred thousand hospital stays, by the 12.5 million beneficiaries, who are covered by Medicare.

There are now four states including New York that have announced that they will not pay, under the Medicaid program, for as many as 28 "never events". So have some of the countries leading health insurers including WellPoint, Aetna, Cigna and Blue Cross.

The items on the Medicare "do no harm" list are:

(9/29/08)- The average premium that a Medicare beneficiary who opts for a standalone drug plan will increase 24% to $37 a month, up from $30 this year, according to Avalere Health LLC, a Washington D.C. consulting firm.

The average premium for the 10 most-popular plans will increase 31%. The average monthly premium for Humana Inc.'s basic plan, will rise to $40.83 in 2009 from $25.52 this year, and $9.51 in 2006, the cheapest plan that year. Humana has 3.4 million people enrolled in Medicare drug plans.

UnitedHealth Group Inc. is the nation's largest Medicare drug plan insurer with 5.4 million enrollees. Their most popular plan with 2.7 million participants is their "preferred" plan, which will raise its average monthly premium to $37.15. This represents a 15.5% increase over its cost in 2008.

(9/21/08)- The premium that Medicare beneficiaries will pay for Part B in 2009 will be the same $96.40 in 2009, as it was in 2008, except for individuals earning more than $85,000 and couples earning more than $170,000. The amount of those premiums will range from $134.90 to $308.30 depending on the participant's income.

This is the first time since the year 2000 that the premium will not be increased. The reason for the non-increase was because the reserve in the Medicare Part B trust fund gained $8.3 billion earlier this year after officials discovered money was inadvertently being drawn for Medicare Part B to cover hospice benefits.

"In the future, we're going to have to go back to raising the premiums to match the increase in expenditures, " said Richard Foster, chief actuary at the Centers for Medicare and Medicaid Services.

The monthly premium for Medicare Part B covers a portion of the costs for physician services, home health and the purchase of certain medical equipment. The deductible for those services will stay steady next year at $135.

If admitted to a hospital, the deductible in 2009 will be $1,068, an increase of $44 from the $1,024 that it was in 2008.

Overall Medicare is expected to cost more than $500 billion next year. Compare that to the recently announced governmental plans to seize control of Freddie Mac and Fannie Mae which will cost at least $200 billion, the infusion by the government of $85 billion into the insurance giant AIG and the over $500 billion cost to buy the toxic mortgage assets of the banks.

(8/3/08)- Medicare officials announced on July 31, that Medicare would increase the base reimbursement rate to skilled nursing facilities by 3.4% for the 2009 fiscal year that will begin October 1, better than the 0.3% estimated cut proposed in the preliminary estimate made May 1. For 2008, the Medicare rate rose 3.3%.

Medicare officials also announced that Medicare would raise payment to hospice providers by 2.5% during fiscal year 2009, which begins on October 1. That is 60 basis points better than the preliminary rate of 1.9% announced in April.

(7/30/08)- The U.S. House voted to delay debate until its next session on President George W. Bush's proposed cuts to Medicare funding as required under the 2003 Medicare Modernization Act.

The Bush administration proposals were required under that act's "triggering" mechanism that apples if at least 45% of Medicare's funding came out of the general government fund for two consecutive years. The spending limitation was triggered for the first time last year.

The president's proposals included a series of cuts to Medicare that would have raised the cost of drugs for wealthy beneficiaries, capped damages in medical malpractice suits and forced doctors to begin using electronic records.

Theoretically, Medicare Part B premiums are supposed to stay at the same $96.40 level for beneficiaries in 2009, as they were in 2008, but since the required cut to physicians of over 10% turned into a 1.1% increase for them, it is likely that the premium will have to be increased to make up this deficit.

(7/18/08)- As we at therubins become aware of more of the provisions of the recently enacted Medicare law, passed by Congress this month, after it overrode the veto of President George W. Bush we will pass them on to you. Since the law also affected Medicare Advantage Plans and Private-fee-for-Service Plans, please also see our article on that topic.

Medicare beneficiaries getting mental-health treatment currently must pay 50% of the cost out-of-pocket. The new law cuts the co-payment to 20%, although the reduction phases in gradually until 2014.

Medicare now pays for new participants to get a "welcome to Medicare" physical within six months of joining the program. That period is being extended to 12 months, and the cost of the initial physical will no longer be counted against a beneficiary's annual deductible. Medicare's standard annual deductible is currently $135. Medicare does not cover routine physicals after the one you get when you first enroll.

The new law allows Medicare officials to add future preventive or screening services without getting prior approval from Congress, as is the case now.

Under the new law, starting in 2011, private-fee-for-service plans will have to bring doctors who accept the plans into a network, similar to the way the HMOs, and preferred provider organizations now do. Currently, the plans allow consumers to access any doctor, although individual doctors may choose not to accept a particular plan. The network requirement will apply only in geographic areas where consumers have at least two other Medicare Advantage plans.

The new law will give financial incentives to physicians to write electronic prescriptions, while slowly phasing in penalties to those medical professionals who do not do so. Although around 70% of all pharmacies can receive digital prescriptions, only 31% of independent drugstores now do it, according to SureScripts-RxHub LLC, which operates the main e-prescription network. Only about 40,000 U.S. doctors currently prescribe pharmaceuticals digitally.

(4/4/08)- The trustees of the Medicare and Social Security Trust Funds issued the required yearly report as to the financial health of these trusts. For the data on last year's report please see our item dated 5/6/07. The figures in this year's report were exactly the same as they were in the prior year's report, with the Medicare Trust being exhausted by 2019 and the Social Security Trust running out of funds in 2041.

The trustees said Medicare's hospital insurance trust fund would pay out more in benefits than it receives in taxes and other dedicated revenues this year. Social Security costs will exceed tax revenues starting in 2017. The government will then have to draw on assets of the Social Security trust funds to meet its obligations.

Social Security would still receive tax revenues and could pay 78% of promised benefits if the trust fund ran out of money in 2041 as predicted, the trustees said. Medicare has access to general revenue funds, and the premiums can be adjusted each year to cover about 25% of the expected costs for Medicare Part B.

Under the current formula, the premium for Medicare Part B will stay at the same present $96.40 2008 level in 2009 and 2010, but under this same law, and this is a big but, Medicare payments to doctors would be cut by more than 10% in July and an additional 5% in January 2009. Based on past history this surely will not happen.

Under a law passed in 2003, the solvency of Medicare requires the next president to issue a proposal to rein in Medicare costs. Congress is required to consider the proposal, but is not required to pass any legislation. The law requires that the president must offer his proposals if the Medicare trustees predict for two years in a row that more than 45% of Medicare spending will come from general revenue within a seven year window.

Henry M. Paulson, the Secretary of the Treasury is the managing trustee of Medicare and Social Security

(2/15/08)- Under President Bush's recent budget proposal, legislative changes would create $12.2 billion in savings in Medicare expenditures for the fiscal year 2009. This figure would rise to about $178 billion over five years. Much of the money would come from cutbacks in expected future payments for hospitals and skilled nursing facilities

The proposed legislative changes would reduce Medicaid expenditures by $1.77 billion for the fiscal year 2009, which ends on September 30, 2009,and about $17 billion over five years.

Federal spending on Medicare and Medicaid amount to 4% if gross domestic product and the Congressional Budget Office projected that that figure will rise to 9% by the fiscal year 2035.

(12/21/07)- The House by a vote of 411 to 3 cleared the legislation passed by the Senate unanimously on 12/18 that would replace a pending 2008 physicians pay cut of 10% through June 30th with a 0.5% pay increase and reauthorized the children's health program with funding to maintain current enrollment levels through March 2009.

The president is expected to sign the legislation into law before January 1. Medicare Advantage plans will suffer only some minor cuts, even though the Democrats had hoped to make more significant cuts to this type of plan.

The package would cut more than $1 billion from a "stabilization fund" created in a 2003 bill to help faltering Medicare Advantage insurers. The package would also cut an incentive fund passed by Congress last year to encourage physicians to report quality data to the government. Such cuts would be made to comply with Congress's pay-as-you-go budget rule that requires new spending to be offset.

(10/21/07)- November 15, 2007 is the first day that you can change your Medicare health or prescription drug coverage for 2008. December 31, 2007, with certain exceptions, is the last day that you can change our Medicare prescription drug coverage.

You can join, switch, or drop a Medicare Advantage Plan:

(10/20/07)- The Social Security Administration announced that monthly Social Security and Supplemental Security Income benefits for more than 54 million Americans would increase 2.3% in 2008.

Social Security and Supplemental Security Income benefits increase automatically each year based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year. This year's increase in the CPI-W was 2.3%.

For the nearly 50 million Social Security beneficiaries this increase will take place in their January 2008 checks. For the slightly more than 7 million who receive Supplemental Social Security Income, the increase will take place on December 31.

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $102,000 in 2008 from $97,500 in 2007.

(10/8/07)- The government announced that premiums for Part B of Medicare would increase by $2.90 a month beginning January 1, 2008 to $96.40, from $93.50 this year. Part B covers doctor's services, outpatient hospital care, x-rays, laboratory services and other diagnostic tests.

About 5% of beneficiaries with annual incomes exceeding $82,000 for individuals, and $164,000 for couples filing joint returns, will pay higher premiums on a sliding scale. The maximum will be $238.40 a month for individuals with incomes exceeding $205,00, and each member of a couple reporting combined income more than $410,000. For more on this matter see our item dated 12/27/06 below.

The premium increase for Part B beneficiaries comes to a 3.1% increase next year, which is the smallest percentage increase since 1999-200, when the premium was at the same level, $49.50 for two years in a row.

This premium increase is artificially low, because the formula for computing the increase assumes that Medicare payments to doctors will be cut about 10% next year, as required by law. Of course, as we all know, this has never happened before and it isn't going to happen in 2008 either.

The annual deductible for doctor's visits and other Part B services will be $135, up from $131 this year. This deductible was fixed at $100 a year from 1991 to 2004.

For a beneficiary admitted to a hospital, the deductible will be $1,024 next year, up from $992 this year. The deductible amount will increase by $44 to $1,068 starting in 2009. This pertains to the Medicare Part A plan.

(9/11/07)- As we pointed out in our item dated 12/27/06, this is the first year that Medicare Part B has a sliding scale for the monthly premium for Part B which covers doctors visits and outpatient care.

The Part B premium is now based on what’s called "modified adjusted gross income", which is a combination of your adjusted gross income plus tax-exempt interest, and tax filing status. The government uses information from your most recent tax return which is the 2005 return as reported by the income tax people (IRS) to the Social Security Administration (SSA).

If your income has fallen since 2005, you can ask the SSA to use income from a more recent tax year to determine your premium. Social Security Publication 10161 has details on the new rules, and Publication 1162 spells out Part B premium information in general for people who are newly eligible for Medicare.

The "initial enrollment period" for Medicare Part B starts three months before you turn 65 and lasts for seven months. If you miss this opportunity to enroll, you have to wait to sign up in what is called the "general enrollment period," which runs from January 1 through March 31 every year, and wait until the following July 1 for coverage to start.

(5/16/07)- The Centers for Medicare and Medicaid Services has changed the parameters for coverage by Medicare for the use of stents to be used in connection with propping open neck arteries to prevent strokes. It is estimated that Medicare will now cover only about 10% of the 150,000 to 200,000 Americans who annually undergo the procedure.

In stenting, doctors thread a thin catheter through blood vessels from the thigh to the constricted carotid artery, inflate a balloon inside the blockage to push the plaque aside, and then implant the stent within the artery to help keep the passageway open.

Carotid plaque accumulation has been linked to about 25% of the 700,0000 stroke cases reported annually in the United States.

The FDA had previously approved carotid stents and related gear in patients showing no symptoms of blockages if a diagnosis image shows a carotid restriction of 80% or more, and they have any of a number of conditions that might make an operation risky. It has also approved marketing the stents to high-surgical risk patients with symptoms of blockage, such as a previous stroke or other brain impairment, and diagnosed blockage of 50% or more.

Under the new rules Medicare will not pay for the device in any patient who has not yet shown symptoms of blockage. Even in symptomatic patients, it will require a diagnosis of at least a 70% blockage. Medicare patients who fall outside those standards, but within the FDA guidelines can receive coverage only if they are in a clinical trial.

Richard S. Foster, chief actuary for the Medicare program, said "the additional payments to Medicare Advantage plans, above and beyond the costs "of traditional Medicare, were causing higher premiums for all beneficiaries and speeding the depletion of the Hospital Insurance Trust Fund for Medicare

(5/08/07)- President George W. Bush will nominate Kerry N. Weems to succeed Dr. Mark B. McClellan, who resigned in October 2006 as administrator of the Centers for Medicare and Medicaid Services. Mr. Weems, who is 50 years of age, has worked at the Department of Health and Human Services as a federal budget analyst. He has been deputy chief of staff for Michael O. Leavitt, secretary of health and human services since 2005. Mr. Weems' nomination is subject to confirmation by the Senate.

Mr. Bush will also nominate an aide, Tevi D. Troy, as deputy secretary of health and human services. Mr. Troy, 40, was deputy director of policy for the Bush-Cheney campaign in 2004, and now coordinates the president's Domestic Policy Council.

(5/6/07)- The trustees of the Medicare and Social Security Trust Funds issued the required yearly report as to the financial health of these trusts. For the data on last year's report please see our item dated 4/27/06. The Medicare Trust will be exhausted by 2019 and the Social Security Trust will run out of funds in 2041.

Under last year's report the trustees estimated that Medicare would become insolvent in 2038, an increase of one year over 2005's assumption. The estimate for the solvency of Social Security was lengthened by 3 years to 2041. The Social Security program will begin to run into a cash deficit in 2017.

In their annual report, the trustees also said general revenue would be needed to cover more than 45% of Medicare funding within the next 6 years. Since the trustees issued a similar 45% warning last year, President Bush will be required next year to propose ways to reduce the general-revenues share of Medicare costs. Congress is not required to act but the debate on this matter will surely fill the media for months to come. Payroll taxes and premiums fund the Medicare program in addition to the general revenue contribution.

"Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues and threaten America's future prosperity, " said Henry M. Paulson Jr., secretary of the Treasury and a trustee of the Social Security and Medicare trust funds.

Spending from the Medicare Hospital Insurance Trust Fund was lower than expected last year because of "an abrupt decrease in the number of hospital admissions." The decrease was about 4% to 13.1 million and one possible explanation for the decrease is because of the new prescription drug law that went into effect to help beneficiaries with the cost of their drugs.

In the report the trustees also stated that the costs associated with the new prescription drug law are proving to be much lower than had previously been estimated. The cost to the program would also sharply increase if the cut in yearly payment to medical professionals is not cut as required by the formula. In looking back at history, Congress has never cut the payment to physicians as set under the formula rules for Medicare and Medicaid.

(12/27/06)- The new means test that will affect the Medicare Part B premium for seniors starting January 1, 2007 will be phased in over a three-year period of time. Single beneficiaries with income of over $80,000 and couples with incomes greater than $160,000 will be affected. The new premium starting on January 1, 2007 for Part B will be $93.50 per month.

The adjusted gross income level will be based on your 2005 tax return. Supposing however you have a "life changing event", such as a divorce or spouse's death? How will the government deal with this situation?

By now, anyone subject to the extra charge should have received a notice from Social Security specifying your 2007 Part B premium. Social Security Publication 10161 details the rules for dealing with "life changing events". Publication 10162 is applicable to individuals newly eligible for Medicare.

(10/31/06)- The Social Security Administration announced that Social Security checks will increase by 3.3% starting January 1, 2007 for nearly 49 million retirees, and about 4 million people who are on Supplemental Security Income benefits for the poor.

The increase for 2006 was 4.1%, which had been the biggest increase in 15 years.

The monthly benefit for the typical retiree will rise to $1,044, from an average of $1,011 this year.

(9/18/06)- The Centers for Medicare and Medicaid Services said that most seniors will pay a $93.50 monthly premium for coverage under Medicare's Part B, which covers doctors' visits and outpatient care. This represents a $5 increase over the $88.50 monthly premium in 2006. This amount increased to $96.40 in 2008, which in turn will remain at $96.40 in 2009.

For more on the new premium rates please see our item dated 8/29/06.

The premium includes a calculation of a 5% cut in physician payments for 2007, but Congress has reversed such cuts for four years in a row. If the cut does not take place, it would mean that the premium would increase by an additional $1.50 per month.

Without the cut, Part B spending would increase by a total of $2.8 billion in 2007.

(8/29/06)- A little known part of the Medicare prescription drug act that was enacted in 2003 will become well known to about 1.5 million seniors next year when they will be required to pay a higher premium for their Medicare Part B coverage. Medicare Part B covers doctors' visits and outpatient care.

The new means test that will affect the cost of the premium for seniors starting January 1, 2007 will be phased in over a three-year period of time. Single beneficiaries with income of over $80,000 and couples with incomes greater than $160,000 will be affected.

The new premiums will be calculated on a sliding scale, based on adjusted gross income (AGI). As shown in our item dated 8/14/06 the premium for Part B coverage is expected to rise to $98.20 next year, from this year's cost of $88.50.

The premium that a senior will pay will be based on the AGI from the tax year that occurred two years earlier. Thus the premium for 2007 will be based on the senior's income for 2005.

Currently, the monthly premium is set, by law, at a level that is equal to 25% of the estimated spending by Part B in the prior year. The other 75% is subsidized by the government. Thus under the new means testing system, the government will be paying less of the subsidy for the higher income beneficiary's Part B coverage.

Starting next year Medicare single beneficiaries with income of $80,000 to $100,000 and joint income tax return beneficiaries with incomes of $160,000 to $200,000 will pay a premium of $105.80 for their Part B coverage;

singles with income of $100,001 to $150,000 and joint income tax return beneficiaries with income of $200,001 to $300,000 will pay $124.40;

singles with incomes of $150,001 to $200,000 and joint income tax return beneficiaries with income of $300,001 to $400,000 will pay $142.90; and singles with incomes above $200,000 and joint income tax return beneficiaries with income above $400,00will pay $161.40

By 2009, when means testing is fully phased in, those with incomes above $200,000 are expected to pay an estimated $314.60 per month. The income thresholds will be adjusted for inflation.

The Internal Revenue Service will release tax-return information to the Social Security Administration to identify which beneficiaries will have to pay higher premiums.

Congress had previously passed and President Reagan signed a "supplemental premium" provision in 1988 under a law that called for expanded coverage for high-cost illnesses and prescription drugs. A substantial outcry by the public resulted in the provision being repealed in 1989

(8/14/06)- Dr.Mark B. McClellan, administrator of the Centers of Medicare and Medicaid Services, said that the premium would probably rise to $98.20 next year, up $9.00 or 11% over this year's premium. Keep in mind that Medicare prescription drug coverage plan premiums are an additional cost that elderly beneficiaries will be faced with.

Bush administration officials announced a cut of 5.1% across the board in Medicare payments for services provided by doctors to elderly and disabled patients in 2007. This is an annual farce that takes place every year, because doctors threaten that they will withdraw from being in the Medicare plan. After they do this, Congress eventually agrees to allow them a small increase instead of the decrease that is called for under the law.

Under the law Part B premiums, which pays for doctor's services and other outpatient care must cover 25% of the projected spending under Part B. Thus any increase that the doctors receive must be added to the premiums that beneficiaries will pay in 2008.

Administration officials also announced that it would require hospitals to provide the government with information on their "investment and compensation relationships with physicians." Hospitals that specialize in cardiac, orthopedic or surgical care will have to inform patients if any staff doctors have "an investment interest" in the hospital.

Hospitals that do not comply with the new disclosure requirements will face civil fines up to $10,000 a day.

Officials estimate that the Medicare Part B program will pay $61.5 billion to 875,000 doctors and other medical professionals over the next year.

(5/17/06)- J&J announced that CMS officials had agreed to cover the company's artificial spinal disk Charite implanted in patients under the age of 60, if the agency's local medical directors approve the coverage. This decision thus reversed an earlier ruling from the agency in February.

The Charite disk is surgically inserted to replace a damaged disk between the vertebrae in the spine. The Swiss medical device maker Synthes has conditional FDA approval to sell a competing artificial disk, and Medtronic and Stryker Corporation are also working on their versions of the disk implants.

(5/13/06)- According to the preliminary figures, Medicare beneficiaries will see an 11% increase, to $98.20 from $88.50 for their Part B premiums next year. Part B deals with the physician and outpatient-costs for medical care. A good portion of this increase is due to the fact that Congress overrode a reduction in physician payment that was scheduled to occur this year.

The report from the Medicare Trust Fund shows that it will be depleted in 2018, two years earlier than the forecast called for last year. Social Security will begin running a deficit in 2017, the same as projected last year, and its accounting trust fund will be exhausted 2040, one year earlier than projected last year.

(5/2/06)- If an individual is 65 years or older, and has been admitted to this country as a permanent resident, he or she is eligible for Medicare once the individual has lived in the U.S. for five consecutive years. At the end of that five-year period the individual can sign up for one or more parts of the Medicare program.

Most retirees do not have to pay for Part A, which covers hospital expense if the individual worked 40 quarters, or 10 years. For people who have worked less than 40 quarters the option is available to them to pay for Part A coverage. If the individual worked for at least 30 quarters the premium is $216 per month. For individuals with less than 30 quarters, the premium is $393.

Individuals can buy Part A coverage only if they buy Part B coverage also. Part B coverage covers the doctor's bills and is presently $88.50 per month. Enrollment in Part A and Part B coverage is done at the local Social Security office.

(4/27/06)- The president granted "recess reappointments" to the public trustees for the Social Security and Medicare trusts.The two public trustees who were appointed in 2000 are John L. Palmer, former dean of the Maxwell School at Syracuse University who is the Democratic member, and Thomas R. Saving, and economist at Texas A&M, who is the Republican member of the panel. Their terms have expired and President Bush has re-nominated them, but the Senate has not taken any action on the nominations.

The Senate has not acted on the nominations because Senate leaders of both parties say they want to follow the precedent of having the public trustees serve no more than one term. Under the Constitution, the president can "fill up all vacancies that may happen during the recess of the Senate." They now can serve until the end of the next session of the Senate, in late 2007

It is the job of the trustees to ensure that the assets of the Social Security and Medicare trusts are properly managed. It is also their responsibility to oversee the accurateness of the administrations annual report to Congress. In a joint statement issued with last year's reports, Mr. Palmer and Mr. Saving broke with the Bush administration and said that Medicare's financial problems were more severe than those that the Social Security system were facing.

Mr. Bush, who is pursing his program for private personal accounts for individuals under the Social Security system, has emphasized that program's shortfalls more than the shortfalls of Medicare.

Mr. Palmer and Mr. Saving were appointed by President Bill Clinton in October 2000 to four-year terms. Under the Social Security Act, they were allowed to complete work on a fifth report, which was the one issued on March 23, 2005.

Since the first public trustees were confirmed in 1984, none have served more than one term. Under federal law, the two public trustees "may not be from the same political party". The Senate Democratic leader, Harry Reid of Nevada, has recommended a Democratic candidate to the president, but the White House feels that this candidate is too partisan.

The trustees of Social Security and Medicare typically meet and approve the annual reports just hours before they are issued. The reports were issued in 1990 without there being any public trustees appointed to their posts. The reports estimate spending and revenue for Social Security and Medicare over 75 years.

The reports are prepared by civil servants, including actuaries and economists, who see the presence of public trustees as a way to guarantee that the figures are not slanted to suit any political point of view.

The reports were supposed to have been issued by April 1. In their next reports, the trustees will provide information on the long term outlook for Medicare and Social Security, and also a new look at the cost of the new Medicare prescription drug plan.

The report from the Social Security and Medicare trustees last year showed an improved outlook for both funds because of an increase in the productivity of American workers in the coming decade. Overall productivity growth for the 75-year period measured will be 1.6% annually, compared with the 1.5% figure that was used last year.

The Medicare trustees are the Treasury Secretary and Managing Trustee, Secretary of Health and Human Services, Labor Secretary and the Social Security Commissioner. The two other members are the public trustees, who are appointed by the President with Senate confirmation. The public trustees are John Palmer and Thomas Saving. They serve four-year terms and represent the general public. The administrator of the Centers for Medicare & Medicaid Services, serves as secretary to the board of trustees.

The panel estimated that Medicare would become insolvent in 2038, an increase of one year over last year's assumption. The estimate for the solvency of Social Security was lengthened by 3 years to 2041. The Social Security program will begin to run into a cash deficit in 2017.

The report on Medicare said the hospital insurance trust spent $143.4 billion last year, while it took in $174.6 billion, so it had a net surplus of $31 billion last year. The hospital trust is expected to run into a deficit starting in 2016. Spending for the separate trust fund that pays doctors and labs rose last year by 12 % to $101.4 billion.  

(4/9/06)- According to Columbia University researchers, about 170,000 people had defibrillators implanted in them last year. About one half of them were of Medicare age. Officials with the Centers for Medicare and Medicaid Services announced that they would allow Medicare to reimburse beneficiaries for the Cambridge Heart Inc. test to determine who is a candidate that would be helped by the implantation of the company's defibrillator.

The test is needed to evaluate patients at risk of sudden cardiac death, which kills about 350,000 Americans a year. The test using the Cambridge screener costs about $400 to administer, and it screens out patients who are not likely to benefit from an implanted defibrillator. A defibrillator costs about $30,000, uses electric shocks to correct an abnormal rhythm or restart a heart that has stopped.

Cambridge has sold about 500 of the machines, and the test is very similar to taking a stress test. This decision affects only Medicare beneficiaries and does not apply to Medicaid beneficiaries. If the test shows a negative reading, there is a low chance-only about3%- that the patient will die of a life-threatening heart rhythm episode within two years.

Worldwide sales of defibrillators totaled $5.5 billion last year, up about 19% from 2004. It is estimated that there are about 1.3 million Americans who would be helped by having a defibrillator. According to the firm of Bernstein Research there are only about 450,000 people who would benefit from having a defibrillator implanted in their body.

The decision by the CMS does not require that the test be performed before a defibrillator is implanted. Only about 10% of the private insurers require the test before they will pay for the implantation of a defibrillator.

(3/5/06)- Medicare officials announced new regulations that would expand coverage for severely obese beneficiaries. To be eligible, a beneficiary must have tried other treatments without success, have at least one health condition related to obesity and a body mass index of 35 or more.

The medical facility where the procedure is performed must be one in which a high number of the procedures have been performed. The sites must meet the standards set by one of two professional groups, the American Society for Bariatric Surgery or the American College of Surgeons.

About 34 % of Americans are considered over weight, and 27% are considered obese. In 2004 Medicare covered about 8,000 weight-loss surgeries, mostly for disable people under the age of 65. The procedure can cost between $15,000 to $20,000.

(2/16/06)- The budget bill that was recently signed by President Bush allocated funds, starting in 2007, for the free screening test of new enrollees to Medicare who are considered to be at high risk for abdominal aortic aneurysms. Abdominal aneurysms are responsible for at least 15,000 U.S. deaths each year.

One of the groups considered to be at high risk is men who have smoked more than 100 cigarettes in their lifetime. Another high-risk group is men and women whose family history includes aortic aneurysms. The free test for aortic abdominal aneurysms does not include those who are already covered by Medicare, only the new enrollees starting in 2007.

The backers of the bill for the free coverage estimate that about 58,000 people would be covered by its provision for the free screening test. For more information on this topic please go to our article" "Aortic Abdominal Aneurysm"

(2/06/06)- Administration officials are estimating that President Bush's budget proposals will contain some measures that are intended to cut Medicare spending by $30 billion to $35 billion in the next five years. That represents less than 1.5 percent of total Medicare spending in those years. Many of his proposals follow the recommendations contained in a report from the Medicare Payments Advisory Commission (MedPAC).

The item that follows was taken from our article: Helpful Web Sites

"Medicare Payment Advisory Commission (MedPAC)- The Medicare Payment Advisory Commission (MedPAC) is an independent federal body established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission's statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. The Commission's 17 members bring diverse expertise in the financing and delivery of health care services. Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time. Appointments are staggered; the terms of five or six Commissioners expire each year. For more information on the commissioner appointment process, please click here. The Commission is supported by an executive director and a staff of analysts, who typically have backgrounds in economics, health policy, public health, or medicine. MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress.
Our thanks to Margo Harrison, a research analyst at the commission for emailing us with this info."

On January 1, 2006 premiums for coverage under Medicare Part B were increased to $88.50 a month. This monthly premium will increase in 2007, with those who have more than $80,000 in annual income paying a higher premium than those with annual income of less than $80,000. For those earning more than $100,000 the premium will more than double.

Under the 2003 Medicare law that enacted these changes, the income level is increased each following year to reflect inflation. Mr. Bush's proposal would eliminate these adjustments, so that more people would have to pay the higher premiums each year.

Medicare spending totaled $333 billion last year. According to estimates from the Congressional Budget Office (CBO) this spending will increase to $445 billion in 2007, since the cost of the new prescription drug plan coverage will have to be included in the computation.

Medicare payments to nursing homes would be frozen at its present level, which according to MedPAC is "more than adequate" at its current level. Medicare payments to home care agencies would also be frozen at its current level, which according to Sharon Bee Cheng, an analyst at the commission would have "no adverse impacts" on patients or providers of home care.

(10/21/05)- Social Security officials announced that the annual Cost of Living Adjustment (COLA) increase for the 48 million Americans who are on Social Security will be 4.1% beginning with their January 2006 checks. This increase is the largest percentage increase since the 5.4% increase that was granted in 1991.

Please keep in mind that Medicare Part B premiums will be increased by $10.30, and that the premium for the drug coverage that begins next year will average $32.20 monthly. According to statistics from the Social Security Administration the sole source of income for 22% of Americans is their Social Security check.

The average benefit for a single retired worker will rise by $39, to $1,002 a month. For a couple who are both receiving Social Security checks, the average monthly check will increase to $1,648 a month, up from $1,583 this year.

The Social Security payroll tax will be assessed on income up to $94,200 next year, from $90,000 this year.

The Center for Medicare & Medicaid Services has issued an interum final rule that describes the additional new documentation needed to approve claims for wheelchairs or scooters to Medicare beneficiaries. the regulations are available online at

(9/21/05)- Bush administration officials announced that the premium for Medicare would increase to $88.50 per month from this year's premium of $78.20. This represents a 13% increase from last year. The premium was $66.60 in 2004 and $58.70 in 2003. Please keep in mind that Medicare beneficiaries who join a prescription drug plan under the new law will have another monthly premium to belong for this coverage starting in January 2006 which will be approximately $30 a month.

The chief Medicare actuary, Richard S. Foster, said that the premiums paid by the beneficiaries covered one-fourth of the cost of benefits under Part B of Medicare.

Keep in mind also that the deductible for Medicare beneficiaries will also increase starting in 2006 when it becomes $124, which is up $14 from this year's deductible of $110. The amount of the deductible had stayed constant at $100 from 1991 to 2004.

Under the Medicare payments law physicians are faced with a 4.4% cut in Medicare payments starting in January 2006. The same was true for this year, but in reality the medical profession was able to receive an increase in their fees this year, and will in all likelihood receive another increase in 2006. This increase in doctor's fees will of course have the effect of further escalating Medicare premiums in future years also, so the cycle will continue until something is done to bring these increases into check.

(4/4/05)-Medicare Premiums for Part B, which covers physicians visits and other outpatient services are expected to rise to $89.20 per month starting January 1, 2006 from this year's premium cost of $78.20 (please note the actual increase took the premium up to $88.50, slightly less than had bee anticipated). That amounts to a 34 percent increase in two years, from $66.60 in 2004. Add to this monthly bill the expected cost of about $37 per month for the new prescription drug coverage, which also starts on January 1, 2006 you see why the financial squeeze is occurring to our senior citizens.

Federal officials said that Medicare would cut payments for each physician's service by 4.3% starting in January 2006 unless Congress intervenes as they did last year. If the cuts are made many physicians have threatened to leave Medicare as has also occurred in prior years. Richard S. Foster, the chief Medicare actuary, said that payments to doctors and other health care professionals under the Medicare fee schedule totaled $88.3 billion last year, up from $76.7 billion in 2003. Federal officials have announced that the "allowed expenditures" this year were $79.9 billion, which is $13 billion less than the "estimated actual expenditures" of $92.9 billion.

(11/28/04)- To see an excellent site, that we at therubins highly recommend, on Medicare including some very informative articles on the whole prescription drug issue please go to:

(11/23/04)-The CMS announced that payments to physicians will increase an average of 4% starting in January 2005, and that they will be able to bill more for preventive care. Overall, payments for outpatient hospital services will rise by 3.3% next year to account for inflation. Physicians will be able to bill and be paid separately for an electrocardiogram, which is used to screen for heart problems, as well as be paid for the physical exam.

Reimbursement for the flu vaccine will rise to $18 from $8. Psychologists will be able to receive payments for administering diagnostic psychological tests. Terminally ill Medicare patients will also be able to receive a one-time evaluation and counseling from a physician employed by a hospice to determine appropriate end-of-life services. Payments for screening services such as mammograms would increase by an average of 40% to 60%. Payments for colon cancer screening tests performed by hospital outpatient departments will rise by about 8% and glaucoma screening payments will be increased by 9.9% Bone density test payments will rise by 4.5%

Dr.Mark B. McClellan, administrator for Medicare announced that the agency would finance a project along with the National Cancer Institute to determine the effectiveness of the usage of certain cancer drugs for non-approved uses. The trials will be subject to public comment before proceeding with the trials will involve only between 2,000 to 3,000 patients.

The drugs involved in the trial are Erbitux, from ImClone Systems; Avistin, from Genentech; Campostar, from Pfizer; and Eloxatin, from Sanofi-Synthelabo. In addition Medicare will pay for positron emission tomography, of PET scans, for cervical cancer and for studies of the scans' use in other cancers. The money ($300 million) for the test program arises from funding provided in the prescription drug bill that was enacted in December 2003. In return for $130 per patient day, oncologists will collect information about three conditions from their patients: pain; nausea and vomiting; and fatigue.

The test period will last for one year. The payments will be used for any of nine clinical trials that will test their effectiveness against other cancers. Data must be collected and submitted to the CMS to see how well the off-label drugs are working. Dr. McClellan said that Medicare would be willing to pay for unproven treatments only if they prove to be effective in the long run. Patients must be willing to enroll in these studies, which will be paid for by someone other than Medicare.

Dr. McClellan said that the purpose of the program was to get better and more cost-effective medicines to patients. "Instead of having 10 to 20 percent success rates over a broad population, we want to get to 80 to 90 percent who will benefit, and with fewer side effects, " he said. Medicare's budget for this year is about $320 billion and rising.

In general when drugs are used for off-label purposes it is up to the discretion of local contractors to the agency to pay or not to pay. Starting immediately Medicare will require all contractors to pay for off-label uses of the drugs for patients in any of nine clinical trials being started by the National Cancer Institute. For PET scans for people who are suspected to have Alzheimer's disease, Medicare will pay only if patients are in a clinical trial in which they will be randomly assigned to have a PET scan of the brain, or not.

Medicare has also proposed to pay for implantable defibrillators for thousands of patients with severe heart disease, but who have not had a heart attack, but only if they are in a national registry to follow the outcomes. Follow-up results must be made available on the effectiveness of the product.

(10/30/04)-The Social Security Administration announced that Social Security benefits will increase 2.7% starting January 2005. Last year the increase was 2.1%. The annual cost-of-living adjustment for Social Security is based on the rise in the Consumer Price Index. Medicare premiums are set by law at the level needed to finance about one-fourth of the cost of Part B of Medicare.

Social Security officials said the average monthly cash benefit for retired workers would rise to $955 in January, from $930 this year. This is an increase of $25 per month versus the $11.80 increase in the monthly premium for Medicare Part B to $78.20. The maximum amount of earnings subject to the Social Security tax will increase to $90,000 from $87,900 this year.

(10/15/04) Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services announced that Medicare would expand its coverage to pay for implanting cardiovascular defibrillators in patients with mild to moderate heart failure. There will be a period of time for public comments before the ruling goes into effect. These defibrillators have been prescribed for patients who have survived sudden cardiac arrest. The device sells for between $20,000 to $35,000 apiece.

Mild to moderate heart failure is defined in the ruling as an "ejection faction of 30% or worse in the amount of blood the heart pumps with each contraction. A score of 30 is less than half that of a typical healthy person. The CMS estimates that the new payment policy would raise the total of potentially eligible patients by one-third, to about 500.000 of the total of 41 million Medicare beneficiaries. The agency further estimates that it expects to cover about 25,000 patients in the first year that the new rule is in effect.

An estimated 5 million Americans suffer heart failure annually, and an estimated 450,000 deaths ensue from it each year. Sudden cardiac arrest is not related to a blockage of blood flow to the heart. It is the nation's leading cause of death. The FDA had previously approved Phillips Medical Systems to sell its $2,000 external defibrillator to consumers for home use without a prescription.

About 100,000 Americans received an implanted defibrillator for the first time in 2003, and another 30,000 had replacements put in. Batteries for internal defibrillators last for between 7 to 10 years before they have to be replaced. A study sponsored by the National Institute of Health and financed by Medtronic Inc., tracked 2,521 patients from 1997 to 2001. It found that 22% of those implanted with a Medtronic defibrillator died within two and a half years, compared to 28% of those receiving Cordarone, a drug treatment from Wyeth for heart rhythm problems, and a death rate of 29% for those receiving the placebo.

Medicare will start to cover the positron emission tomography scans (PET) for those patients who show signs of both Alzheimer's and dementia but whose final diagnosis remains uncertain, as well as other patients who enroll in certain clinical trials.

Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services announced that Medicare would increase the cost for Part B premiums by $11.80 to $78.20 starting in January 2005. This represents a 17% increase over the level for the premium monthly payment in 2004, which in turn was a 14% increase over the level paid in 2003. This is the largest increase in terms of dollars and percentage in the history of Medicare. Out-of-pocket expenses will also increase for long term stays in hospitals. The charge will go up beginning in January 2005 to $228 per day after a Medicare beneficiary spends 30 days in a hospital, and $456 a day after 90 days in a hospital. The present charges are $219 and $438 per day.

Dr. McClellan acknowledged that about $1.75 of this year's increase resulted from the billion of dollars Medicare is paying insurers to encourage them to offer private plans. The number of Medicare beneficiaries enrolled in private plans has dropped to 4.6 million in 2003 from 6.3 million in 1999. When Congress passed the Prescription Drug Plan in December of 2003 the law included provisions for the government to provide subsidies to private plans that enrolled Medicare beneficiaries as members in their plans.

The deductible that Medicare beneficiaries under Part A will have to pay as their hopitalization expense will increase to $912, an increase of $36, in 2005.

The Health and Human Services Administration has both an Internet Web site and a call in number for people who have questions about Medicare. The Web site is and the phone number to call if you have any questions about Medicare is 800 633 4227. There is however another source that is available when you have a more complicated question, or if you have differing answers to your question between the answer your medical professional gives you, and the answer that you get from your Medicare contractor.

The Medicare Rights Center, a New York advocacy group has phone lines manned by volunteers and new graduates in law or medicine that are planning careers in public policy. There is no cost to the caller for the answers to your questions. Beneficiaries with traditional Medicare coverage can call 800 333 4114 x 1. Those who have questions about their coverage from a Medicare HMO can call 888 466 9050.

Under a formula adopted by Congress in 1997 Medicare payments to doctors were supposed to have been cut by 3.6 % beginning January 1 2005. Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services announced that Medicare would increase payments to doctors, for services covered under the program by 1.5% beginning on January 1, 2005

Incidentally all legislation in the Senate dealing with Medicare must arise in the Senate Finance Committee. In the House the Ways and Means Committee originates all legislation dealing with Part A of Medicare and the Energy and Commerce Committee controls the legislative process for all bills dealing with Part B of Medicare.

One of the little known benefits contained in the Prescription Drug Law passed on December 12, 2003 is a provision that Medicare would cover, beginning January 1, 2005 an initial comprehensive physical exam for all new Medicare beneficiaries. In addition free coverage would become available for all people already in the program who take tests for cholesterol and diabetes. Medicare will also start to cover the positron emission tomography scans (PET) for those patients who show signs of both Alzheimer's and dementia but whose final diagnosis remains uncertain, as well as other patients who enroll in certain clinical trials.

The new "welcome to Medicare physical" for new beneficiaries includes influenza and hepatitis B vaccines, mammograms, Pap smears and pelvic examinations and screening tests for prostate cancer, colon cancer, glaucoma and osteoporosis, among other conditions. Medicare will cover such services as part of 'an initial preventive physical exam" within 6 months of enrollment.

As part of the exam Medicare will also pay for an electrocardiogram; an assessment of a person's risk of depression; hearing and vision tests; and a review of a person's agility to perform activities like bathing, dressing, eating and getting in and out of bed. The government will also pay for education and counseling for any problems discovered in the exams.

Medicare will also pay for diabetes screening tests twice a year for people who are at high risk of contracting the disease. It will also pay for blood tests every five years to detect cardiovascular disease in people with no apparent symptoms, including analysis of total cholesterol, high density lipoprotein and triglycerides.

A new policy handed down by the Department of Health and Human Services removes the phrase "Obesity itself cannot be considered an illness," from the Medicare Coverage Issues Manuel. This will allow scientists, clinicians and companies to submit proposals recommending that Medicare cover certain treatments.

These treatments could include surgical procedures, dietary counseling or cognitive-behavior therapies. Drug treatments for obesity were ruled out in the Medicare prescription drug law that was passed in December 2003. Eighteen percent of the Medicare population is obese, according to the American Obesity Association, a nonprofit advocacy group.

Medicare Part B premiums increased to $66.60 a month in 2004 for the approximately 41.7 million elderly and disabled covered by Medicare. That represents a $7.90 per month increase over the premium that it was in 2003. This 13.5% increase is one of the largest percentage increases in the history of the program.

Contrast that with the 2.1% increase that Social Security beneficiaries received starting January 2004. For the average Social Security recipient this meant an about $19 per month more in their check. For 2003, the monthly premium rose 8.7% to $58.70 from the rate it was in 2002. The highest percentage increase in the premium rate occurred in 1993 when it jumped 15% from the 1992 level.

Earlier in 2003 Richard S. Foster, chief actuary for the Medicare plan, had estimated that the Medicare premium would rise to $66 a month, an increase of $7.30 from the $58.70 premium in 2002 or 12.4% next year, which at that time was the largest increase in 11 years. Mr. Foster itemized some of the increases in Medicare spending last year:

Under the Medicare payment formula, the premiums from Medicare are supposed to cover about one-fourth of the costs of the Medicare trust fund that pays doctors and outpatient care. General tax revenues cover the other 75% of Part B costs. The monthly Medicare premium started at $3 in 1966 and was still under $25 in 1988. The premium reached $50 in 2001 and was increased 13.5% to $66.60 a month in 2004. It was $58.70 in 2003. This is one of the largest increases in the history of the program. It will be increased to $78.20 beginning in 2005, which represents a 17% increase over the premium paid for Part B by Medicare beneficiaries in 2004

Medicare spent $45 billion on doctors' services in 2002, an increase of $3 billion, or 7% from 2001. This increase took place even though the average fees paid to the medical professionals were cut in 2002. Thomas L. Grissom, director of the federal Center for Medicare Management said, "we now estimate physicians fee schedule updates will be negative for 2004 to 2007," because spending for doctor's services grew more and the economy grew less than expected in 2002.

The Centers for Medicare and Medicaid Services (CMS) announced legally mandated increases in the Medicare premium, deductible and coinsurance amounts to be paid by beneficiaries starting in January 2004. For Medicare Part A, which pays for hospital, the beneficiary deductible was increased to $876 in 2004 from $840 per benefit period in 2003 which is up from $812 in 2002 and $792 in 2001.  The premium for Medicare Part B, which helps pay for physician services, ambulatory care and other services, rose to $66.60 in 2004 from $58.70 per month in 2003 and was $54 per month in 2002 and $50 per month in 2001. It is being increased to $88.50 in 2006.

All Medicare beneficiaries received in the mail the booklet entitled "Medicare & You 2004". We will attempt herein to simplify that booklet so that you will better understand your rights and obligations under Medicare. We would also like to point out that the new premium rates and deductible amounts for Medicare have been announced. They are as follows:

Part A (Hospital)-

Deductible rises $44 to $1,068 per benefit period beginning in January 2009. Thus you are now responsible for the first $1,068 part of the bill when you are in a hospital. For co-insurance amounts for hospital and nursing home stays see article below. The deductible will increase by $44 to $1,068 starting in 2009.

Part B (Medical including doctors)-

Premiums are $96.40 per month beginning in January 2010. This amount increases for individuals earning more than $85,000 and couples earning more than $170,000. The amount of those premiums will range from $134.90 to $308.30 depending on the participant's income.

The basis for today’s Medicare Program resulted from legislation passed by Congress in 1965. The Centers for Medicare and Medicaid Services (CMS) which was formerly called the Health Care Financing Administration (HCFA) was established in 1977 under the Department of Health and Human Services which administers the Medicare Programs.

To enroll in Medicare, all eligible individuals should file an application with their local Social Security Office. Enrollment is automatic for people eligible for Social Security or Railroad Retirement Benefits. Seniors may enroll in Medicare as early as three months prior to their 65th birthday, and up to three months after the month of their 65th birthday.

Working seniors and their spouses covered under the employer group health plan of a company with 20 or more employees, may enroll within 7 months following their de-enrollment from the employer group health plan. Individuals who don’t enroll when initially eligible may enroll between January 1 and March 31, of each following year. There is however a 10% per year late enrollment penalty. 

The amount of the deductible for Medicare Part B will remain at $135, which was the same amount that it was in 2008



PART A is generally provided automatically to people age 65 and over, who are entitled to Social Security or Railroad Retirement benefits as long as you or your spouse have paid into Medicare via a payroll deduction for 10 or more years.  

WHAT DOES PART A COVER- Part A covers mainly inpatient hospitalization

INPATIENT HOSPITAL CARE-covers the cost of semi-private room, meals, regular nursing services, operating and recovery room, intensive care, inpatient prescription drugs, laboratory tests, x-rays, and all other medically necessary services and supplies provided in the hospital. All costs for the first three pints of blood you get as part of inpatient hospital stay (unless you or someone else donates blood to replace what you use).

CLINICAL SERVICES- $0 for Medicare approved clinical laboratory services.


Starting January 2008 it is $1,024 per benefit period for a hospital stay and $135 for a doctor's visit. This amount increases by $44 in 2009 to $1,068 in 2009, but the amount of the deductible will remain the same in.2009 as it was in 2008, namely $135.


You must pay $267 a day for days 61 -90 of a hospital stay each benefit period. For days 91-150 you must pay $534 per day if you have lifetime reserve days available. These 60 reserve days can be used only once during your lifetime. You pay all costs for each day over 150 days stay in a hospital.

All costs for each day beyond 150 days- no coverage.

SKILLED NURSING FACILITY- [SNF] Is covered by Part A only if it follows within 30 days of a hospitalization of 3 or more days, and is certified as medically necessary by a doctor. Covered services are similar to those for inpatient hospital care, but also include rehabilitative services and appliances. The number of SNF days provided under Medicare is limited to 100 per benefit period.


Complete coverage until day 21.

$133.50 each day for days 21 - 100 each benefit period.

You pay all costs beyond the 100th day in the benefit period.

HOME HEALTH AGENCY CARE [HHA] $0 for Medicare approved home health services, including a home health aide may be furnished by a home health agency in the residence of a homebound beneficiary if intermittent or part-time skilled nursing, physical therapy or rehabilitative care is necessary. There must be a plan of treatment and periodical reviews by a physician. Home Health Care under Part A has no time limitations, no co-payment and no deductible. Food and drugs are not provided as HHA services. Medicare generally covers up to 28 hours per week of home health aide services. The individual who is homebound must require intermittent skilled nursing care. The services must be certified by a certified home health agency participating in Medicare. You pay nothing for home health care, but you are responsible for 20% of the cost for any Durable Medical Equipment you may purchase.

HOSPICE CARE is a service provided to terminally ill people with a life expectancy of 6 months or less, who elect to forgo traditional medical treatment for the terminal illness, and to receive only limited hospice care. The Medicare beneficiary pays no deductible, but does pay a small co-insurance amount for drugs and the cost of respite care. There is about a $5 co-payment for each prescription medication and inpatient respite care if needed.

BLOOD- You are responsible for payment for the first 3 pints of blood received during either a hospital or skilled nursing facility stay. All costs for the first three pints of blood you get as an outpatient, then 20% of the Medicare approved amount for each additional pint of blood (unless you or someone else donates blood to replace what you use).

Benefit Period

A " benefit period" starts when the beneficiary first enters a hospital and ends when there has been a break of at least 60 consecutive days since inpatient hospital or skilled nursing care was provided. There is no limit to the number of benefit periods covered by Part A during a beneficiary’s lifetime; however, inpatient hospital care is normally limited to 90 days during a benefit period and co-payment requirements ($267 each day)apply for days 61 through 90. If a beneficiary exhausts the 90 days of inpatient hospital care available, he or she can elect to use days of Medicare coverage from a non renewable "lifetime reserve" of up to 60 total additional days. Once used up the 60 days is gone forever. You are responsible for the co-insurance amount of $438 per day while using up this 60 day "lifetime reserve".



$135 per year beginning in 2008 up from the $131 mark in 2007, which will remain the same in 2009


$96.40 per month in 2008, which will stay the same in 2009.

If you enroll late in Medicare a surcharge of 10% is assessed for each 12 months in which a beneficiary could have been enrolled but was not. You are responsible for 20 % of the approved amount after the deductible has been paid. Medicare Part B will then generally pay the remaining 80% of the Medicare allowed amount.

PART B (SMI) benefits are available to those who have paid their monthly premiums. Part B is optional. Primarily, it covers physician services in non-hospital settings. It also includes: clinical laboratory tests, durable medical equipment (80%), most supplies, diagnostic tests, ambulance services, flu vaccinations, prescription drugs which can not be self administered, certain self administered anti-cancer drugs. It also covers outpatient physical and occupational therapy and mental health services.

Hospital out-patient department expenditures for institutional services, ambulatory surgical centers, and certain other centers are also covered. Home Health Agency services are covered under Part B if there is no Part A entitlement. All services must be medically necessary to be covered.

Outpatient Psychiatric Services - You pay 45% of the Medicare-approved amont for most outpatient mental health care.

Non covered services under Medicare include long term nursing care or custodial care. Dentures, dental care, eyeglasses, hearing aids and most prescription drugs are not part of either Part A or Part B unless they are part of a special " managed care plan".

Pre-paid health care plans known as managed care plans, such as Competitive Medical Plans [CMP] and Health Maintenance Organizations [HMOs] are options available to Medicare beneficiaries. Congress recently created the Medicare + Choice program to let more private insurance companies offer coverage to people in Medicare.

Once the patient meets the $135 deductible, Medicare pays for 80 percent of the Medicare approved charge for almost all of Part B services. Medicare providers who accept "assignment " may not charge patients more than the Medicare’s approved charge for their services. Medicare pays 80 percent and the patient or Medigap pays the remaining 20 percent. It is always a good idea to ask providers whether or not they will take assignments. Assignment means that Medicare will pay the doctor. If the doctor is a "non-participating" doctor he can only charge 15% more than the Medicare approved amount. In some states like New York the doctor, by NY State law, can only charge 5% more than the Medicare approved amount.


If a claim is denied that you feel is justified you may avail yourself of the Medicare Appeal Process. To ask for a review, send a copy of the Medicare denial back to Medicare with assigned note asking for a review. Medicare patients who appeal their denial, have been successful over 50 percent of the time.

Social Security recipients will receive a 1.4-% cost-of-living increase in their monthly checks next year, the smallest increase in four years. The increase will mean an extra $13 a month for a typical retiree, beginning in January. It will affect about 46 million people who receive Social Security benefits and about 7 million recipients of Supplemental Security Income, the program for the needy. The increase last year was 2.6-%.


Under the Qualified Medicare Beneficiary Program the state’s Medicaid program pays Medicare premiums, deductibles, and co-payments for Medicare beneficiaries with low incomes and very limited assets. The program limits enrollees' assets, excluding a home, a car, some life insurance and a burial plot, to less than $4,000 for an individual and $6,000 for a couple. It is open to individuals with incomes of less than $8,292 a year, and couples with less than $11,100 in income. If you qualify you are exempted from paying Medicare's monthly premium, the 20 percent share of the charges for doctors' office visits and the initial $768 in charges for hospitalization that Medicare requires of other recipients. If an individual earns up to $9,900 annually, or a couple earns up to $13,260 annually, you may enroll in the Specified Low-Income Beneficiaries program. This program picks up Medicare's $45.50 monthly premium.

There are certain other Medicare Preventive Services that you may be entitled to. To see what they are we refer you to our article on Preventive Services. Also please remember that PSA testing is a free preventative health benefit. Medicare now covers special shoes for Medicare patients who require same because of a diabetic condition.

For informative information on this topic we refer you also to the following 3 sites:


1-800-MEDICARE Helpline
Call about

  • TTY/TDD and local phone numbers
  • General Medicare information
  • Order Medicare Publications
  • Information about health plans

All States




Inspector General
Call about: Reporting Fraud

All States

TTY: 1-800-377-4950

Social Security Admin.
Call about:
Changing your address
Medicare Part A or B
Lost Medicare Card

All States

TTY: 1-800-325 0778

Durable Medical Equipment

Call about:
Bills for DME

List of Approved Suppliers

New York


Fiscal Intermediaries
Call about:
Part A bills and services
Hospital care services
Skilled Nursing Care services
Fraud and abuse

New York


Centers for Medicare and Medicaid (CMS)
Call about:
Local Health Care fairs and seminars

New York


Long Term Care Ombudsman
Call about:

Information about Nursing Homes
Resolving Problems with nursing homes

New York

1-800-342-9871-(in state only)

Medicare Carriers
Call about:
Part B Bills
Part B Services
Fraud and Abuse

Blue Cross

NY Empire Medic.

NY Group Health


1-800-442-8430 (downstate exc.Queens)

1-800-632-5572 (Queens County)

Office for Civil Rights
Call about:

New York



To see Part II of this article Medicare-Who Pays and How Much-Part II

 By Allan Rubin
updated October 19, 2009

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