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Medicare Spike Will Not Spoil COLA

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The government announced today that the standard premium for Medicare Part B — which covers medically necessary services like doctors’ visits and outpatient and home health care — is $99.90 in 2012, significantly less than many experts had predicted.

Experts feared that the Medicare premiums would erase a larger chunk of the recent 3.6% cost-of-living adjustment that seniors will get in 2012.  But with Medicare premiums for most people only rising $3.50 per month, rather than the projected $10.20, the damage is less than expected, as the average senior will get a $39.50 net effective raise (since the average Social Security COLA uptick was $43 per month).

For most Medicare Part B recipients, this means your premiums will rise by about 3.6% from $96.40 to $99.90, or a total of $3.50 more per month.  Others will actually pay less this year than last: Consider that new enrollees in 2011 paid $115.40, and now will pay $15.50 less each month.  Additionally, the Medicare Part B deductible will be $140, a decrease of $22 from 2011.

Medicare Part A premiums — which cover inpatient stays in hospitals and nursing homes, as well as home health care — also rose. Medicare Part A monthly premiums will be $451 for 2012, an increase of $1 from 2011. The Part A deductible paid by beneficiaries when admitted as a hospital inpatient will be $1,156 in 2011, an increase of $24 from this year’s $1,132 deductible.

Click here for more information on Medicare premiums in 2012.

* The last sentence of the second paragraph was clarified to make the net effective raise clearer to readers.

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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.