By Bill Broich
Beginning in 2014, new rules were put in place governing the premiums paid for higher earners. If adjusted gross income (AGI) (which includes earned interest and tax exempt interest (municipal bonds) is over $85,000 for single taxpayers or $170,000 for married couples, they will be subject to the income related monthly adjustment amount paid for premiums for Part B and Part D Medicare supplements.
Congress has allowed everything that is calculated into the Adjusted Gross Income to affect the Medicare premiums. This includes capital gains; distributions from a qualified account, IRAs and any other form of ordinary income. In other words, the congress threw in the kitchen sink. The effect of this new rule will mean a simple thing; you will be paying more for your Medicare insurance.
Instead of using a simple, fair and common sense idea, increasing the wage limits for Medicare contributions, our congress has elected to use this back door approach. An approach that will not make as much noise, or be noticed, but allow the elected officials to remain elected, pure political nonsense.
Nothing about this seems fair, an increase I Medicare premiums, especially with nothing in place for the appeals process. Congress has allowed for an appeal for work stoppage such as a strike or layoffs, death of a spouse, divorce and other life changing events. Why not this?
Congress seems to have a fear of backlash when it comes to cutting any entitlements or any increase in taxes and yet this approach is not new, congress has made decisions from the shadows before. In the past 12 years, congress has dealt with this issue, one year at a time and only patching up the problem. Each patch has meant that the problem of funding just eased into the next year, now their approach is simplified; tax everything (increase premiums).
There is no hiding that the cost of medical care is increasing and just as congress was ready to increase premiums, they decided to increase reimbursement to physicians on some procedures, by.05%. The result of such short sightedness is obvious, doctors will flee the Medicare system and what will be left will be the dregs of the industry. Medical care will decrease and the cost of premiums will be pasted to the middle income earners.
How much of an increase could we be faced with in increasing Medicare premiums? A couple in the top tier could pay as much as an additional $600 a month. This is in addition to the premiums already being paid for Medicare Part B and D.
But wait, congress is not through. Beginning in 2018, Medicare premiums for income earners between $133,500 and $267,000 will once again increase. All told, congress will raise over $141 billion over the next 10 years to help cover the cost of Medicare expenses. When will it end? Believe it or not, there is an end to this deficit and the enormous cost for health care.
Once the Baby Boomers past away, the need for health care will begin to decline, managing the enormity of the baby Boomer generation is not easy but congress has certainly not done anything in the form of leadership. Instead their approach is to shy away from the issue and decrease spendable income by increasing premiums on those congress thinks can afford it.
The overall result is of course defining; the middle class cannot afford the increase in taxation, the increase in Medicare premiums and the increase in the idiocy of congress. Combine that with a shrinking of quality of medical care and boom, the problem that congress has refused to address is still there, now it is even bigger and more complex.