The Myth of the $247 Medicare Part B Premium

With all of the information available to people with Medicare, it can be difficult to separate fact from fiction. Recently, Medicare beneficiaries have contacted the Medicare Rights Center with concerns about an e-mail circulating to the general public. This e-mail falsely claims that the Medicare Part B premium will increase to $247 in 2014 as a result of the Affordable Care Act (ACA).

The amount of the Part B premium is calculated each year based on health care costs from the previous year. For most individuals, the government pays 75 percent of this calculated premium, while beneficiaries are responsible for 25 percent. The aforementioned email suggests that the ACA universally and dramatically increases premiums for all Medicare beneficiaries, an indisputably false claim. In fact, one of the potential effects of the ACA, which does not alter the long-established formula used to calculate Part B premiums, may be to slow the growth rate of these premiums over time. Health reform intends to decrease fraud, waste and abuse, and drive down health care costs through delivery system reforms, such as preventing unnecessary hospital readmissions. Because the Part B premium is calculated based on health care costs, a decrease in the growth rate of these overall expenses will result in a similar slower growth rate for Part B premium costs.

One change that the ACA has implemented affects the premium amounts paid by Medicare beneficiaries who have annual incomes over $85,000. A law passed well before the ACA requires that these individuals pay a greater share of the Part B premium. The higher a beneficiary’s income, the more that individual pays in monthly premium costs. Currently, only about five percent of those with Medicare are responsible for a higher premium. The ACA builds on this existing law by freezing the current income thresholds for higher-income Medicare beneficiaries through 2019. As a result, an estimated 14 percent of people with Medicare will be responsible for a premium surcharge by that date. However, the majority of Medicare beneficiaries are still unaffected by this provision.