Will You Pay Income-Related Premiums?

Will You Pay Income-Related Premiums?

Understanding The Coming Shift In Medicare

As the healthcare landscape continues to change in the United States, there has been ongoing discussion about the best way to replace Medicare’s Sustainable Growth Rate formula for physician payments without increasing government spending.

One of the most popular solutions is to take the existing structure of income-related premiums for Americans who are earning a higher income and expand it. Currently, the majority of Medicare beneficiaries pay a set monthly premium that is designed to cover 25 percent of Medicare Part B and Part D costs. For individuals earning more than $85,000 and couples earning more than $170,000, however, that structure changes. Depending on how much they are earning, these Medicare beneficiaries will pay premiums that cover anywhere between 35 and 80 percent of Medicare Part B and Part D program costs. The more they earn, the more their premiums increase.

Right now, only about 6 percent of Medicare beneficiaries are earning over $85,000, so the income-related premiums affect few Americans. There is a proposal to expand this structure, however, to include the top 25 percent of earners. The Obama Administration’s proposed Fiscal Year 2016 budget includes a plan to gradually increase the percentage of beneficiaries who pay income-related premiums until the 25 percent mark is reached. Ultimately, this would help Medicare move forward while spreading out the cost among American individuals who can (theoretically) best assume it. If you are a high earner, be aware that your Medicare costs will likely change.

Do you have questions about how these changes could affect you? Would you like to have an expert help you understand the changing face of Medicare? To get a knowledgeable, experienced team of Medicare experts on your side, contact Employee Benefit Plans Inc. in Greenwood. We have the insider insight you need to understand your Colorado healthcare costs and how they will likely change.