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Income-Relating Medicare Part B and Part D Premiums: How Many Medicare Beneficiaries Will Be Affected?

Income-Relating Medicare Part B and Part D Premiums: How Many Medicare Beneficiaries Will Be Affected?

New in February 2012: Brief Examines Proposals to Further Expand Medicare’s Income-Related Premiums

This new analysis from the Kaiser Family Foundation examines the number of Medicare beneficiaries who will pay higher Part B or Part D premiums as a result of newly enacted provisions included the 2010 health reform law.

Part B Premiums. The health reform law modifies a requirement implemented in 2007 that upper-income Part B enrollees pay higher monthly Part B premiums. The change freezes the income thresholds that determine which Medicare Part B enrollees are required to pay the income-related Part B premium, at 2010 levels ($85,000 for individuals and $170,000 for couples). Until now, the income thresholds increased annually so that the higher premiums were paid by about 5 percent of the Medicare population.

Between 2011 and 2019, the share of Part B enrollees subject to the income-related Part B premium will rise from 5 percent to 14 percent (from 2.4 million enrollees in 2011 to 7.8 million enrollees in 2019), according to this analysis. Monthly Part B premiums will range from $161.50 to $369.10 per month in 2011 for those with incomes above the threshold, depending on income, while the standard Part B premium will be $115.40 per month in 2011.

Part D Premiums. The health reform law also imposes a new income-related premium for beneficiaries enrolled in Part D plans, applying the same fixed income thresholds that are applied to Part B premiums. The income-related Part D payments will be calculated based on the national average monthly Part D premium in a given year ($32.34 in 2011). The total amount that higher-income Part D enrollees pay will depend on the premium of the plan they select and their income.

Three percent of all Part D enrollees (1.2 million beneficiaries) will be subject to the new income-related Part D premium in 2011, rising to 9 percent (4.2 million beneficiaries) in 2019.

This analysis was conducted by researchers at the Kaiser Family Foundation and Actuarial Research Corporation.

Issue Brief (.pdf)