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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 LawIncome 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.

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