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Seniors spared full Medicare premium hike now, but will pay later

Budget deal averts 52 percent of Medicare premium increase, but seniors will have to pay 'loan' back

A budget deal reached by Congress will keep a large number of seniors from getting hit in the wallet next year for a full 52 percent increase in their Medicare Part B premiums. However, the financial relief comes in the form of a "loan" that those seniors will need to pay back over the next nine years, according to the National Journal.

The two-year budget agreement passed by the Senate last Friday morning, will reduce the rate increase that will hit almost 30 percent of Medicare Part B beneficiaries in 2016, but over time, those seniors will have to eventually pay back the money that the government loses, the report said.

Without the deal, more than 8 million Part B enrollees would have seen a dramatic 52 percent increase in premiums. The reason is that seniors will not see a cost-of-living increase for Social Security next year. About 70 percent of Part B beneficiaries are protected from an increase in Medicare costs under the Social Security provision known as "hold harmless," which is a policy that is designed to protect seniors from cost increases beyond their Social Security benefit. That left the other 30 percent of beneficiaries who don't qualify for "hold harmless" to pay the entire increase in Medicare costs.

Under the budget agreement, seniors who were not "held harmless" will pay a more modest increase in 2016, but will then see an additional $3 increase to their monthly premiums until the loan from the treasury to the Supplementary Medical Insurance Trust Fund is paid off, the report said. In 2016, seniors who were not "held harmless" will pay $120 a month rather than the $159.30 rate that would have gone into effect. The majority of beneficiaries, protected by the held harmless policy, will continue the 2015 rate of $104.90, according to the report.

"It's ba­sic­ally spread­ing that in­crease over the next nine years," Loren Adler, a re­search dir­ect­or at the Com­mit­tee for a Responsible Fed­er­al Budget, told the National Journal.

There are some Medicare beneficiaries who will pay more than the additional $3 a month, namely wealthier seniors who pay higher premiums and those whose premiums are paid by Medicaid, the report said.

To learn more:
- read the National Journal report

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