Medicare Premium Increase Modest and Less than Predicted

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While Medicare premiums are increasing next year, the cost will not be as bad as was previously predicted, hopefully helping seniors keep their health insurance costs affordable.

Originally expected to rise $10.20, the new Medicare Part B premium will cost only $3.50 more per month in 2012. For most beneficiaries, the total cost of the premium will be just $99.90. Medicare Part B pays for physician visits, hospital outpatient costs, and other services such as home health care.

Some Medicare beneficiaries will actually see lower payments. The standard premium cost for new enrollees since 2008 have been $115.40. These seniors will see their premiums drop by $15.50 per month.

More on EmaxHealth.com: Most Medicare Beneficiaries Happy with Part D Prescription Drug Coverage

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Medicare premium increases are based partly on Social Security payouts. A special provision links Part B payments with the checks from which they usually get deducted. Because the Social Security Administration announced that recipients will receive a 3.6% cost-of-living increase in their checks next year, Medicare costs will not rise significantly.

"More people are sharing in the smaller-than-expected increases in costs," said Dr. Don Berwick, the Centers for Medicare and Medicaid Services administrator. "Thanks to the Affordable Care Act, Medicare is providing better benefits at lower cost," said Health and Human Services Secretary Kathleen Sebelius.

More on EmaxHealth.com: Improved Benefits and Lower Costs for New Medicare Plans

Other Medicare changes for the new year also show a positive trend in cost-savings. The annual Part B deductible will decrease by $22 to $140 and premiums for Part D (the prescription drug program) will also drop slightly in 2012. Unfortunately, however, the hospital inpatient deductible cost will increase by $24 to $1156.

"Millions of America's seniors are struggling with higher expenses ... and this small increase is welcome news," AARP legislative policy director David Certner said in a statement.

About 44 million Americans were enrolled in Medicare Part B in 2010, according to the 2011 Medicare Trustees’ report.

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