VIII. MEDICARE PREMIUMS AND DEDUCTIBLES FOR 2007

The standard Medicare Part B monthly premium will be $93.50 in 2007, an increase of $5.00 or 5.6 percent from the current $88.50 Part B premium, considerably lower than was earlier projected. This premium is the smallest percent increase in the Part B premium since 2001 and less than half of the dollar increase in the premium for 2006.

Together with an increase of 0.1 percent in the average Part D enrollee premium - and less if beneficiaries choose lower-cost drug plan options, as they did for 2006 - Medicare beneficiaries are experiencing cost increases that are modest in comparison to recent health care cost trends. This is also less than the projected 6 percent increase in per capita national health spending for 2007 and the projected 7 percent increase for 2007 retail prescription drug spending. In addition, more than one-fourth of beneficiaries can receive assistance that pays for their entire Part B premium.

In 2007, approximately 4 percent of Medicare Part B enrollees with higher incomes will pay a higher Part B premium based on their income. The income-related Part B premiums for 2007 will be $106.00, $124.70, $143.40, or $162.10, depending on the extent to which an individual beneficiary’s income exceeds $80,000 (or a married couple’s income exceeds $160,000), with the highest premium rates only paid by less than 1 percent of beneficiaries whose incomes are over $200,000 (or $400,000 for a married couple). A beneficiary who pays the highest income-related premium in 2007 would pay $1,945 per year in Part B premiums, but is estimated to receive an average of $4,363 in Medicare Part B benefits.

These limits will reduce Medicare costs by an estimated $7.7 billion over the next five years and $20.8 billion over the next 10 years, improving Medicare’s sustainability to provide effective coverage for all eligible persons in the future.

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