This year, there is a huge hike in the cost of Medicare premiums. Centers for Medicare and Medicaid Services (CMS) disclosed that in 2020, Medicare Part B premiums will rise 6.7 percent to $144.60.
The Medicare Part B program pays for outpatient healthcare and physician services.
The premium hike follows the news that the yearly Cost-Of-Living Adjustment (COLA) for Social Security will only be 1.6 percent for the year 2020. However, Medicare Part B premiums are taken from Social Security benefits. With that, the COLA will actually become much smaller for the majority of the recipients.
CMS said that the rate increase is due to the rise in spending on physician-administered medicines. According to the Medicare Payment Advisory Commission, the spending increased to a rapid 9.6 percent yearly clip between 2009 and 2017.
A demonstration project was proposed, tying Medicare outpatient and physician-administered medicines to international prices to lower the spending.
The algorithm of Medicare and the Social Security Cost-of-Living Adjustment (COLA) shows how challenging it is for retirees to secure themselves from inflation. Still, social Security is very important as it is solely the retirement assistance providing several kinds of inflation security.
In addition, the growing cost of healthcare services is also another threat to retirees. Social Security expansion advocates are trying to address the gap between general inflation and healthcare by following a more accurate COLA formula called CPI-E for the elderly, an experimental index supported by the U.S. Bureau of Labor Statistics.
THE 2020 PART B PREMIUM INCREASE
The Senior Citizens League (SCL) said that the increase in 2020 Medicare Part B premium will impact all excluding the Social Security enrollees receiving the lowest benefit of no more than $570 this year. The group will be protected by the hold-harmless rule of federal law. This provision aims to protect the enrollees of Social Security from any reduction in benefits.
Medicare enrollees who will carry the full freight on the hike include those who have Medicare but do not contribute to Social Security. State or federal government workers who use Medicare but do not have Social Security and first-time enrollees of Medicare will also bear the weight of the hike. Furthermore, affluent senior citizens paying high-salary Medicare premium surcharges will see a rise in their premiums.
QUESTION ON INFLATION
The Senior Citizens League conducts an annual study, and they have consistently discovered that even with inflation, the CPI-W is still not doing a good job in keeping seniors. The league reported that since 2000, the seniors have lost 33 percent of their buying power.
The league’s Social Security and Medicare policy analyst Mary Johnson said that the older Americans do not live on a fixed income. Johnson added that the seniors are trying to live off with a shrinking income. The quality of living of these people is decreasing as their Social Security benefits now have a lower buying power and thus purchasing less.