Medicare plan hits the rich

Posted Friday, Apr. 12, 2013  comments  Print Reprints
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WASHINGTON -- President Barack Obama's plan to raise Medicare premiums for upper-income seniors would create five new income brackets to squeeze more revenue for the government from the top tiers of retirees, the administration revealed Friday.

The first details of the plan emerged after Health and Human Services Secretary Kathleen Sebelius testified to Congress on the president's budget. As released two days earlier, the budget included only a vague description.

Means testing has been part of Medicare since the George W. Bush administration, but ramping it up is bound to stir controversy. Republicans are intrigued, but most Democrats don't like the idea.

Obama's new budget calls for raising $50 billion over 10 years by increasing monthly "income-related" premiums for outpatient and prescription drug coverage. The comparable number last year was $28 billion over the decade.

Single beneficiaries making more than $85,000 a year and couples earning more than $170,000 pay higher premiums now.

Obama's plan would raise the premiums themselves and also freeze adjustments for inflation until 1 in 4 Medicare recipients were paying the higher charges. Right now, the higher monthly charges hit only about 1 in 20 recipients.

House Budget Committee Chairman Paul Ryan, R-Wis., asked Sebelius about the new proposal Friday, noting that it would raise significantly more revenue.

Part of the reason for the additional federal revenue is that Obama's 2014 budget projects an additional year of money from the proposals. The rest of the answer has to do with the administration's new brackets.

Starting in 2017, there would be nine income brackets on which the higher premiums would be charged. There are four now.

Under the proposal, a retiree making $85,000 would pay about $168 a month for outpatient coverage, compared with $146.90 now.

Under current law, the next bump up comes for individuals making more than $107,000. Under Obama's plan, it would come at $92,333. Under the proposal, the beneficiary would pay about $195 a month, rather than $146.90, for outpatient coverage under Medicare's Part B.

The top income step, now more than $214,000, would be $196,000. And individuals in the new top tier would pay 90 percent of the cost of their outpatient coverage compared with 80 percent now.

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