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Raising Medicare Premiums for Higher-Income Beneficiaries: Assessing the Implications

TABLE 1: Comparison of Income Thresholds and Premium Percentages for Medicare’s Income-Related Premiums Under Current Law and Proposals

  Income thresholds  

Premium percentage

  Single beneficiaries Married couple
Current Law Income thresholds frozen through 2019; indexing thereafter Not more than $85,000 Not more than $170,000

25.0%

$85,000-$107,000 $170,000-$214,000

35.0%

$107,000-$160,000 $214,000-$320,000

50.0%

$160,000-$214,000 $320,000-$428,000

65.0%

More than $214,000 More than $428,000

80.0%

Proposals      
Bipartisan Policy Center1Lowers income thresholds beginning in 2016 so that approximately 17% of beneficiaries would pay income-related premiums; thresholds frozen through 2018; indexing thereafter Not more than $60,000 Not more than $90,000

25.0%

$60,001-$82,000 $90,001-$123,000

35.0%

$82,001-$135,000 $123,001-$202,500

50.0%

$135,001-$189,000 $202,501-$283,500

65.0%

More than $189,000 More than $283,500

80.0%

Center for American Progress2Maintains current-law thresholds through 2019; beyond 2019 thresholds would be set so that 10% of beneficiaries would pay; increases the income-related premium percentages by 15% starting in 2014 Thresholds not specified Thresholds not specified

Same as President’s FY 2013 Budget Proposal

Moment of Truth Project3Lowers income thresholds so that approximately 15% of beneficiaries would pay income-related premiums initially; thresholds frozen through 2030; increases current-law income-related premium percentages by 15% Thresholds not specified Thresholds not specified

Same as President’s FY 2013 Budget Proposal

President’s FY 2013 Budget Proposal4Current-law Income thresholds frozen until 25% of beneficiaries pay income-related premiums; increases the current-law income-related premium percentages by 15% Not more than $85,000 Not more than $170,000

25.0%

$85,000-$107,000 $170,000-$214,000

40.25%

$107,000-$160,000 $214,000-$320,000

57.5%

$160,000-$214,000 $320,000-$428,000

74.5%

More than $214,000 More than $428,000

90.0%

President’s FY 2014 Budget Proposal5Modifies and increases the number of current-law Income thresholds beginning in 2017; thresholds frozen until 25% of beneficiaries pay income-related premiums Not more than $85,000 Not more than $170,000

25.0%

$85,000-$92,333 $170,000-$184,666

40.0%

$93,333-$99,667 $184,666-$199,334

46.5%

$99,667-$107,000 $199,334-$214,000

53.0%

$107,000-$124,667 $214,000-$249,334

59.5%

$124,667-$142,333 $249,334-$284,666

66.0%

$142,333-$160,000 $284,666-$320,000

72.5%

$160,000-$178,000 $320,000-$356,000

79.0%

$178,000-$196,000 $356,000-$392,000

85.5%

More than $196,000 More than $392,000

90.0%

TABLE 2: Estimates of Medicare Beneficiaries Paying Income-Related Part B Premiums Through 2040
Under Current Law and Changes Proposed in the President’s FY 2014 Budget
    CURRENT LAW:
Income thresholds frozen
through 2019; indexing
thereafter
PROPOSED CHANGES:
Modified income thresholds beginning in 2017; income thresholds frozen beyond 2017 until 25% of beneficiaries pay
income-related premiums
 
Year Part B enrollment
(in millions)
Number of Part B enrollees paying income-related premiums
(in millions)
Percent of total
Part B enrollment
Number of Part B enrollees paying income-related premiums
(in millions)
Percent of total
Part B enrollment
Difference between current law and proposed changes
(in millions)
2012 46.6 2.2 4.8% 2.2 4.8% 0.0
2013 48.1 2.4 5.0% 2.4 5.0% 0.0
2014 49.6 3.0 6.1% 3.0 6.1% 0.0
2015 50.8 3.3 6.5% 3.3 6.5% 0.0
2016 52.0 3.7 7.2% 3.7 7.2% 0.0
2017 53.4 4.3 8.1% 4.3 8.1% 0.0
2018 54.7 4.8 8.7% 4.8 8.7% 0.0
2019 56.2 5.4 9.6% 5.4 9.6% 0.0
2020 58.1 3.7 6.4% 6.2 10.6% 2.5
2021 59.8 3.8 6.4% 6.7 11.2% 2.9
2022 61.8 3.9 6.3% 7.5 12.1% 3.6
2023 63.6 4.2 6.6% 8.3 13.1% 4.2
2024 65.2 4.3 6.6% 9.0 13.8% 4.7
2025 67.0 4.6 6.8% 9.8 14.6% 5.2
2026 68.9 4.7 6.9% 10.7 15.5% 5.9
2027 70.2 4.7 6.7% 11.2 15.9% 6.4
2028 71.7 5.1 7.1% 12.0 16.8% 7.0
2029 73.1 5.2 7.2% 13.1 17.9% 7.9
2030 74.3 5.3 7.2% 14.0 18.9% 8.7
2031 75.5 5.5 7.2% 15.5 20.5% 10.1
2032 76.3 5.9 7.7% 16.4 21.5% 10.5
2033 77.6 5.9 7.6% 17.2 22.1% 11.3
2034 78.4 6.2 7.9% 18.6 23.8% 12.5
2035 79.6 6.3 8.0% 19.8 24.8% 13.4
2036 80.3 6.3 7.8% 20.4 25.4% 14.1
2037 80.8 6.7 8.2% 21.5 26.6% 14.8
2038 81.3 6.5 8.0% 22.5 27.6% 15.9
2039 81.6 6.8 8.4% 23.7 29.0% 16.8
2040 82.0 6.9 8.4% 24.7 30.1% 17.8
SOURCE: Urban Institute tabulations from DYNASIM for the Kaiser Family Foundation; proposed changes based on the President’s FY2014 Budget.
TABLE 3: Estimates of Medicare Part B Premiums Through 2022 Under Current Law
Income thresholds
 
Ultimate percentage of program costs represented by premium
Standard
Income-related
25.0%
35.0%
50.0%
65.0%
80.0%
Singles
$85,000 or less
$85,001-107,000
$107,001-160,000
$160,001-214,000
$214,001 or more
Couples
$170,000 or less
$170,001-214,000
$214,001-320,000
$320,001-428,000
$428,001 or more
Historical and projected Part B premium amounts under current law
 
Ultimate percentage of program costs represented by premium 
Standard
Income-related
Calendar year
25.0%
35.0%
50.0%
65.0%
80.0%
Total per capita Part B costs*
Annual growth rate
2007
$93.50
$105.80
$124.40
$142.90
$161.40
$374.00
2008
$96.40
$122.20
$160.90
$199.70
$238.40
$385.60
3.1%
2009
$96.40
$134.90
$192.70
$250.50
$308.30
$385.60
0.0%
2010
$110.50
$154.70
$221.00
$287.30
$353.60
$442.00
14.6%
2011
$115.40
$161.50
$230.70
$299.90
$369.10
$461.60
4.40%
2012
$99.90
$139.90
$199.80
$259.70
$319.70
$399.60
-13.4%
2013
$104.90
$146.90
$209.80
$272.70
$335.70
$419.60
5.0%
2014
$104.90
$146.90
$209.80
$272.70
$335.70
$419.60
0.0%
Projected Part B premium amounts under current-law intermediate estimates 
2015
$110.70
$154.90
$221.30
$287.70
$354.10
$442.80
5.5%
2016
$115.40
$161.60
$230.80
$300.00
$369.30
$461.60
4.2%
2017
$120.90
$169.20
$241.70
$314.20
$386.70
$483.60
4.8%
2018
$127.40
$178.30
$254.70
$331.10
$407.50
$509.60
5.4%
2019
$134.40
$188.20
$268.80
$349.40
$430.10
$537.60
5.5%
2020
$141.80
$198.50
$283.60
$368.70
$453.80
$567.20
5.5%
2021
$150.00
$209.90
$299.90
$389.90
$479.80
$600.00
5.8%
2022
$160.50
$224.70
$321.00
$417.30
$513.60
$642.00
7.0%

NOTE: *Total per capita Part B costs consist of the 25 percent standard beneficiary premium payment and the 75 percent federal contribution.
SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

TABLE 4: Estimates of Medicare Part D Premiums Through 2022 Under Current Law
Income thresholds
  Ultimate percentage of program costs represented by premium     
  Standard Income-related    
25.5% 35.0% 50.0% 65.0% 80.0%
Singles $85,000
or less
$85,001-107,000 $107,001-160,000 $160,001-214,000 $214,001
or more
Couples $170,000 or less $170,001-214,000 $214,001-320,000 $320,001-428,000 $428,001
or more
Historical and projected Part D premium amounts under current law
  Ultimate percentage of program costs represented by premium     
  Standard Income-related    
Calendar year 25.5% 35.0% 50.0% 65.0% 80.0% Total per capita
Part D costs*
Annual growth rate
2007 $27.35 n/a n/a n/a n/a $107.25
2008 $27.93 n/a n/a n/a n/a $109.53 2.1%
2009 $30.36 n/a n/a n/a n/a $119.06 8.7%
2010 $31.94 n/a n/a n/a n/a $125.25 5.2%
2011 $32.34 $44.34 $63.44 $82.44 $101.44 $126.82 1.3%
2012 $31.08 $42.66 $60.94 $79.22 $97.51 $121.88 -3.9%
2013 $31.17 $42.77 $61.07 $79.47 $97.77 $122.24 0.3%
2014 $32.42 $44.52 $63.52 $82.62 $101.72 $127.14 4.0%
Projected Part D premium amounts under current-law intermediate estimates
2015 $36.68 $50.38 $71.88 $93.48 $115.08 $143.84 13.1%
2016 $38.66 $53.06 $75.76 $98.56 $121.26 $151.61 5.4%
2017 $41.28 $56.68 $80.98 $105.18 $129.48 $161.88 6.8%
2018 $43.99 $60.39 $86.29 $112.09 $137.99 $172.51 6.6%
2019 $46.99 $64.49 $92.19 $119.79 $147.39 $184.27 6.8%
2020 $50.18 $68.88 $98.38 $127.88 $157.38 $196.78 6.8%
2021 $53.28 $73.08 $104.48 $135.78 $167.18 $208.94 6.2%
2022 $56.59 $77.69 $110.99 $144.29 $177.49 $221.92 6.2%
NOTE: *Total per capita Part D costs consist of the 25.5 percent standard beneficiary premium payment and the 74.5 percent federal contribution.
SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
TABLE 5: Estimates of Medicare Part B Premiums From 2017-2022 Under Changes Proposed in the President’s FY 2014 Budget
Income thresholds      
  Ultimate percentage of program costs represented by premium 
  Standard Income-related
25.0% 40.0% 46.5% 53.0% 59.% 66.0% 72.5% 79.0% 85.5% 90%
Singles $85,000 or less $85,001-92,333 $92,334-99,667 $99,668-107,000 $107,001-124,667 $124,668-142,334 $142,334-160,000 $160,001-178,000 $178,001-196,000 $196,001 or more
Couples $170,000 or less $170,001-184,666 $184,666-199,334 $199,334-214,000 $214,001-249,334 $249,334-284,666 $284,666-320,000 $320,001-356,000 $356,001-392,000 $392,001 or more
Part B premium amounts under intermediate estimates with proposed changes
2017 $120.90 $193.44 $224.87 $256.31 $287.74 $319.18 $350.61 $382.04 $413.48 $435.24
2018 $127.40 $203.84 $236.96 $270.09 $303.21 $336.34 $369.46 $402.58 $435.71 $458.64
2019 $134.40 $215.04 $249.98 $284.93 $319.87 $354.82 $389.76 $424.70 $459.65 $483.84
2020 $141.80 $226.88 $263.75 $300.62 $337.48 $374.35 $411.22 $448.09 $484.96 $510.48
2021 $150.00 $240.00 $279.00 $318.00 $357.00 $396.00 $435.00 $474.00 $513.00 $540.00
2022 $160.50 $256.80 $298.53 $340.26 $381.99 $423.72 $465.45 $507.18 $548.91 $577.80
SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds and proposed changes based on the President’s FY 2014 Budget.
TABLE 6: Estimates of Medicare Part D Premiums From 2017-2022 Under Changes Proposed in the President’s FY 2014 Budget
Income thresholds      
  Ultimate percentage of program costs represented by premium 
  Standard Income-related
  25.5% 40.0% 46.5% 53.0% 59.% 66.0% 72.5% 79.0% 85.5% 90%
Singles $85,000 or less $85,001-92,333 $92,334-99,667 $99,668-107,000 $107,001-124,667 $124,668-142,334 $142,334-160,000 $160,001-178,000 $178,001-196,000 $196,001 or more
Couples $170,000 or less $170,001-184,666 $184,666-199,334 $199,334-214,000 $214,001-249,334 $249,334-284,666 $284,666-320,000 $320,001-356,000 $356,001-392,000 $392,001 or more
Part D premium amounts under intermediate estimates with proposed changes
2017 $41.28 $64.75 $75.28 $85.80 $96.32 $106.84 $117.36 $127.89 $138.41 $145.69
2018 $43.99 $69.00 $80.22 $91.43 $102.64 $113.86 $125.07 $136.28 $147.50 $155.26
2019 $46.99 $73.71 $85.69 $97.67 $109.64 $121.62 $133.60 $145.58 $157.55 $165.85
2020 $50.18 $78.71 $91.50 $104.30 $117.09 $129.88 $142.67 $155.46 $168.25 $177.11
2021 $53.28 $83.58 $97.16 $110.74 $124.32 $137.90 $151.48 $165.06 $178.64 $188.05
2022 $56.59 $88.77 $103.19 $117.62 $132.04 $146.47 $160.89 $175.32 $189.74 $199.73
SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds and proposed changes based on the President’s FY 2014 Budget.
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