Medicare premiums will take bigger bite out of Social Security checks

Medicare premiums and drug costs will likely take a bigger bite out of seniors’ Social Security checks, so it’s more important than ever to learn how to stretch your dollars.

To that end, the Social Security Administration will host Tuesday preretirement sessions on April 4 and April 11. Three sessions are planned per day, at 11:30 a.m., 1:30 p.m., and 3:30 p.m. at the Rose Tree Corporate Center, Building 2, first floor, 1400 N. Providence Rd., Media, Pa. 19063.

Topics will include how benefits are calculated; how to create your online account; when to take benefits; rules for collecting benefits while working; family benefits; and enrolling in Medicare.

Registration is required, either by email to edward.lafferty@ssa.gov or by calling 1-866-398-3469, Ext. 29305.

Why is your Social Security check lighter this year?

Here's an overview of Social Security today. With a $12 billion budget and almost 64,000 employees in more than 1,500 offices, plus 16,000 state employees making disability determinations, Social Security issues more than $960 billion in payments to nearly 66 million people each year.

More important, Social Security reduces the overall percentage of seniors living in poverty from 40.5 percent to 8.8 percent. That means it lifts 15 million American seniors above the poverty level.

As of year-end 2016, there were 2,780,095 people on Social Security in Pennsylvania and 1,602,542 in New Jersey. That included retirees and disabled beneficiaries and their entitled family members, plus surviving family members of deceased workers, the whole range of beneficiary categories.

In Pennsylvania, the average annual benefit for the year was $16,908, according to Social Security Administration public-affairs spokesman Richard Gaudiosi in Upper Darby. In New Jersey, it was $18,072.

As of 2015, 7 percent of Pennsylvania seniors are in poverty, but it would be 40.5 percent without Social Security. That's 724,000 seniors, Gaudiosi added. As of May 2015, the latest point for which data are available, there were 1,501,476 Pennsylvanians on Medicare A and/or Medicare B.

So to start to answer the question about those smaller checks, blame Medicare premiums. 

Boston College research found that most retirees didn’t notice the latest $5 cost-of-living increase in the average Social Security check. That’s because the Part B Medicare premium deducted from it is estimated to go up nearly as much (from $104.90 in 2016 to an average $109 in 2017).

“Beyond premium hikes, the bigger issue for retirees is the additional out-of-pocket costs they must pay as part of their Part B coverage for doctor visits and outpatient care. When rapidly rising copayments are added to the basic premium, they together consumed more than 15 percent of the average Social Security benefit last year. That is more than double the percentage in 1980, and it’s expected to exceed 17 percent by 2030, according to the Centers for Medicare and Medicaid,” Boston College’s Center for Retirement Research found. (The Centers for Medicare and Medicaid estimates were made prior to  announcements of 2017’s final cost-of-living adjustment and Part B increases.)

"Social Security is unfortunately offering less protection from their out-of-pocket medical costs than it used to — the dollars don’t stretch as far," said Juliette Cubanski, associate director of Medicare policy for the Henry J. Kaiser Family Foundation. 

In a year when there’s no COLA for Social Security, the majority of Medicare beneficiaries are protected by the “hold-harmless” provision so their Social Security payments don't go down.

But it doesn’t apply to Medicare Part D, the prescription-drug benefit. So if that is deducted from your Social Security check, that will result in an automatic decrease. Seniors also may pay higher deductibles for Part A for inpatient hospital stays.

What about life under Trumpcare?

Last week’s Congressional Budget Office report on President Trump’s proposed American Health Care Act said that by 2026, 24 million Americans who would have had coverage under the Affordable Care Act will be uninsured, including those between the ages of 50 and 64.

The bill proposes higher premiums for seniors. For example, a single 64-year-old with an income of $26,500 would have to pay a $14,600 a year in premiums. That, compared with $1,700 a year under the Affordable Care Act, is an increase of more than 750 percent. 

“In addition to raising premiums and cutting subsidy levels for lower-income people, the CBO report finds that the AHCA cuts Medicaid spending by $880 billion over 10 years. These draconian cuts will necessarily force states to cut enrollment, deny services that are critical to older adults in need of long-term care, and squeeze provider payments, making it harder for older adults to find providers and receive needed services,” said Kevin Prindiville, executive director of Justice in Aging.

Further, AHCA tax cuts for the wealthiest Americans will decrease Medicare revenues by $117 billion, according to CBO's report. “This will shorten the life of the Medicare Trust Fund and put health care for older adults in jeopardy,” he added.

The Social Security seminars in Media are free and open to the public (https://www.ssa.gov/phila/community.htm).