The Medicare Part B crisis looming aggressively on the elderly!

December 15, 2015

The middle-class Americans have plenty to worry about, viz. the inflation, the rise in healthcare costs, growing old with too little savings, postponing their retirement and not having enough resources and options in case of a crisis after they retire. The rapid and total disappearance of defined-benefit pensions has left many Americans unprepared for retirement. As many as one-third of us have no savings at all, the median household retirement savings for 2013 was a meager $14,500.00. The reason it’s so called is – because an average 65-year old in the US can expect to live as many as 20 years post retirement and this amount is not even enough to replace one year’s worth of expenses for many older adults. Bankrate.com cited that nearly half of Americans place virtually no money aside for the future and only fewer than one in four save between 10-15% of their incomes.

The National Institute on Retirement Security also reiterates the dangerously low levels of savings where the deficit is between $6.8 to $14.0 trillion.  It uses the Federal Reserve’s Survey of Consumer Finances to analyze the retirement plan participation and has revealed that around 45 percent, or 38 million working-age households do not have the retirement savings.  Medicare Part-B spendingA new Government Accountability Office (GAO) analysis also finds that among households with members aged 55 or older, nearly 29 percent have neither retirement savings nor a traditional pension plan.  It has been announced that there will be no Social Security cost-of-living adjustment (COLA) increase next year, for only the third time in 40 years, that implies that millions of seniors who rely on their Social Security to get by will once again find their expenses outpacing their Social Security benefit. 

For seven in 10 Medicare beneficiaries 2016 will be much like 2015. They will pay $104.90 per month for their Medicare Part B premium just as they did in 2015.  But for the rest 30%, Part B premiums are now projected to increase in 2016 by 52%—up to $159.30 per month from $104.90. This increase will be also accompanied by an increase in the Part B deductible—up to $223 from $147.00 because the cost of living adjustments (COLA) for Social Security benefits is expected to be zero for 2016, enrollees who do not pay premiums from a Social Security benefit and those who pay an income-related higher premium.

One may be able to avoid paying the late enrollment penalty if she delays Medicare Part B because they have other health coverage, such as through an employer-sponsored group plan (either through their own or their spouse’s work). In this case, one can enroll through a Special Enrollment Period when she or their spouse would stop working or that other health coverage ends, whichever comes first.

If you have to pay a monthly premium for Medicare Part A, you may decide to delay enrollment in Part A as well and sign up during your Special Enrollment Period. If you enroll in Medicare with a Special Enrollment Period, you generally won’t have to pay a late enrollment penalty. Another factor that can increase your Medicare Part B premium is your income level. Premiums can be higher for beneficiaries with annual household incomes that exceed specific thresholds.

Roughly one-third of the 50 million elderly Americans depend on Medicare for their physician care and other healthcare services. Although the likely rate hike has not yet garnered enough public attention but it still has managed to illustrate the broader complicated interaction between the Medicare premiums that are typically automatically deducted from Social Security benefits and the rest of Social Security funds that are used for retirement and other non-health issues are the related expenditures.

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