Setting the Record Straight: Medicare is not free.

In this political silly season I am amazed how often I read or hear some politician, or FOP (Friend of Politicians), or DOP (Disciples of Politicians) talk about how we seniors are getting away with free medical care paid for by those of you who are still working.

It just ain’t so.

Let’s just concentrate on Part B Medicare Premiums…Medicare Part B covers physicians’ services, outpatient hospital services, some home health services, durable medical equipment, and other items.

As required in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (don’t you love the titles of these “Acts”?) beginning in 2007 the Part B premium a beneficiary pays each month is based on his or her annual income.

Specifically, if a beneficiary’s “modified adjusted gross income” is greater than the legislated threshold amounts ($85,000 in 2012 for a beneficiary filing an individual income tax return or married and filing a separate return, and $170,000 for a beneficiary filing a joint tax return) the beneficiary is responsible for a larger portion of the estimated total cost of Part B benefit coverage.

The 2012 Part B monthly premium rates to be paid by beneficiaries who file an individual tax return (including those who are single, head of household, qualifying widow(er) with dependent child, or married filing separately who lived apart from their spouse for the entire taxable year), or who file a joint tax return are shown in the following table. There may be a late-enrollment penalty.

Table 1: Part B Monthly Premium
 Beneficiaries who file an individual tax return with income   Beneficiaries who file a joint tax return with income
Your 2012 Part B Monthly Premium Is If Your Yearly Income Is
$99.90  $85,000 or less $170,000 or less
$139.90  $85,001-$107,000 $170,001-$214,000
$199.80  $107,001-$160,000 $214,001-$320,000
$259.70  $160,001-$214,000 $320,001-$428,000
$319.70  Above $214,000 Above $428,000

See those numbers!  Medicare looks back two years to your gross income (on your IRS form) and can then assess you up to $319.70 PER PERSON for Medicare.  Oh, and don’t forget that you will probably be looking at a Supplemental Plan ($150+/month/each), too.

(Note:  this scenario does not impact those who retired before 2009…so if you or your parents retired before that time, you/they are not subject to this means-tested premium).

So right now, a typical retiree is paying about $100/month ($200 per couple).  And the law requires that this premium be automatically deducted from your monthly Social Security check.

My husband and I currently are paying $900/month for Medicare and a supplement plan (and there is a $140/each deductible each year, too).  When we were younger and had two kids, the most it ever cost us was $700/month.  And the year before we retired…$300/month – for both of us.

Listen to the deficit-reduction rhetoric and you will hear them talk about starting to “means-test” Medicare recipients with incomes higher than what you get with Social Security.  Then tell whomever is blowing that baloney that they already do.  Pretty soon it will be cheaper to self-insure in retirement (Whoops!  Not allowed….you MUST take Medicare when you turn 65.)

Who’da  thunk it?

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