Raising Medicare Premiums for Higher-Income Beneficiaries: Assessing the Implications
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TABLE 1: Comparison of Income Thresholds and Premium Percentages for Medicare’s Income-Related Premiums Under Current Law and Proposals |
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| Income thresholds |
Premium percentage |
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| Single beneficiaries | Married couple | ||
| Current Law Income thresholds frozen through 2019; indexing thereafter | Not more than $85,000 | Not more than $170,000 |
25.0% |
| $85,000-$107,000 | $170,000-$214,000 |
35.0% |
|
| $107,000-$160,000 | $214,000-$320,000 |
50.0% |
|
| $160,000-$214,000 | $320,000-$428,000 |
65.0% |
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| More than $214,000 | More than $428,000 |
80.0% |
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| Proposals | |||
| Bipartisan Policy Center1Lowers income thresholds beginning in 2016 so that approximately 17% of beneficiaries would pay income-related premiums; thresholds frozen through 2018; indexing thereafter | Not more than $60,000 | Not more than $90,000 |
25.0% |
| $60,001-$82,000 | $90,001-$123,000 |
35.0% |
|
| $82,001-$135,000 | $123,001-$202,500 |
50.0% |
|
| $135,001-$189,000 | $202,501-$283,500 |
65.0% |
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| More than $189,000 | More than $283,500 |
80.0% |
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| Center for American Progress2Maintains current-law thresholds through 2019; beyond 2019 thresholds would be set so that 10% of beneficiaries would pay; increases the income-related premium percentages by 15% starting in 2014 | Thresholds not specified | Thresholds not specified |
Same as President’s FY 2013 Budget Proposal |
| Moment of Truth Project3Lowers income thresholds so that approximately 15% of beneficiaries would pay income-related premiums initially; thresholds frozen through 2030; increases current-law income-related premium percentages by 15% | Thresholds not specified | Thresholds not specified |
Same as President’s FY 2013 Budget Proposal |
| President’s FY 2013 Budget Proposal4Current-law Income thresholds frozen until 25% of beneficiaries pay income-related premiums; increases the current-law income-related premium percentages by 15% | Not more than $85,000 | Not more than $170,000 |
25.0% |
| $85,000-$107,000 | $170,000-$214,000 |
40.25% |
|
| $107,000-$160,000 | $214,000-$320,000 |
57.5% |
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| $160,000-$214,000 | $320,000-$428,000 |
74.5% |
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| More than $214,000 | More than $428,000 |
90.0% |
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| President’s FY 2014 Budget Proposal5Modifies and increases the number of current-law Income thresholds beginning in 2017; thresholds frozen until 25% of beneficiaries pay income-related premiums | Not more than $85,000 | Not more than $170,000 |
25.0% |
| $85,000-$92,333 | $170,000-$184,666 |
40.0% |
|
| $93,333-$99,667 | $184,666-$199,334 |
46.5% |
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| $99,667-$107,000 | $199,334-$214,000 |
53.0% |
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| $107,000-$124,667 | $214,000-$249,334 |
59.5% |
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| $124,667-$142,333 | $249,334-$284,666 |
66.0% |
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| $142,333-$160,000 | $284,666-$320,000 |
72.5% |
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| $160,000-$178,000 | $320,000-$356,000 |
79.0% |
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| $178,000-$196,000 | $356,000-$392,000 |
85.5% |
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| More than $196,000 | More than $392,000 |
90.0% |
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| TABLE 2: Estimates of Medicare Beneficiaries Paying Income-Related Part B Premiums Through 2040 Under Current Law and Changes Proposed in the President’s FY 2014 Budget |
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| CURRENT LAW: Income thresholds frozen through 2019; indexing thereafter |
PROPOSED CHANGES: Modified income thresholds beginning in 2017; income thresholds frozen beyond 2017 until 25% of beneficiaries pay income-related premiums |
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| Year | Part B enrollment (in millions) |
Number of Part B enrollees paying income-related premiums (in millions) |
Percent of total Part B enrollment |
Number of Part B enrollees paying income-related premiums (in millions) |
Percent of total Part B enrollment |
Difference between current law and proposed changes (in millions) |
| 2012 | 46.6 | 2.2 | 4.8% | 2.2 | 4.8% | 0.0 |
| 2013 | 48.1 | 2.4 | 5.0% | 2.4 | 5.0% | 0.0 |
| 2014 | 49.6 | 3.0 | 6.1% | 3.0 | 6.1% | 0.0 |
| 2015 | 50.8 | 3.3 | 6.5% | 3.3 | 6.5% | 0.0 |
| 2016 | 52.0 | 3.7 | 7.2% | 3.7 | 7.2% | 0.0 |
| 2017 | 53.4 | 4.3 | 8.1% | 4.3 | 8.1% | 0.0 |
| 2018 | 54.7 | 4.8 | 8.7% | 4.8 | 8.7% | 0.0 |
| 2019 | 56.2 | 5.4 | 9.6% | 5.4 | 9.6% | 0.0 |
| 2020 | 58.1 | 3.7 | 6.4% | 6.2 | 10.6% | 2.5 |
| 2021 | 59.8 | 3.8 | 6.4% | 6.7 | 11.2% | 2.9 |
| 2022 | 61.8 | 3.9 | 6.3% | 7.5 | 12.1% | 3.6 |
| 2023 | 63.6 | 4.2 | 6.6% | 8.3 | 13.1% | 4.2 |
| 2024 | 65.2 | 4.3 | 6.6% | 9.0 | 13.8% | 4.7 |
| 2025 | 67.0 | 4.6 | 6.8% | 9.8 | 14.6% | 5.2 |
| 2026 | 68.9 | 4.7 | 6.9% | 10.7 | 15.5% | 5.9 |
| 2027 | 70.2 | 4.7 | 6.7% | 11.2 | 15.9% | 6.4 |
| 2028 | 71.7 | 5.1 | 7.1% | 12.0 | 16.8% | 7.0 |
| 2029 | 73.1 | 5.2 | 7.2% | 13.1 | 17.9% | 7.9 |
| 2030 | 74.3 | 5.3 | 7.2% | 14.0 | 18.9% | 8.7 |
| 2031 | 75.5 | 5.5 | 7.2% | 15.5 | 20.5% | 10.1 |
| 2032 | 76.3 | 5.9 | 7.7% | 16.4 | 21.5% | 10.5 |
| 2033 | 77.6 | 5.9 | 7.6% | 17.2 | 22.1% | 11.3 |
| 2034 | 78.4 | 6.2 | 7.9% | 18.6 | 23.8% | 12.5 |
| 2035 | 79.6 | 6.3 | 8.0% | 19.8 | 24.8% | 13.4 |
| 2036 | 80.3 | 6.3 | 7.8% | 20.4 | 25.4% | 14.1 |
| 2037 | 80.8 | 6.7 | 8.2% | 21.5 | 26.6% | 14.8 |
| 2038 | 81.3 | 6.5 | 8.0% | 22.5 | 27.6% | 15.9 |
| 2039 | 81.6 | 6.8 | 8.4% | 23.7 | 29.0% | 16.8 |
| 2040 | 82.0 | 6.9 | 8.4% | 24.7 | 30.1% | 17.8 |
| SOURCE: Urban Institute tabulations from DYNASIM for the Kaiser Family Foundation; proposed changes based on the President’s FY2014 Budget. | ||||||
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TABLE 3: Estimates of Medicare Part B Premiums Through 2022 Under Current Law
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Income thresholds
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Ultimate percentage of program costs represented by premium
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Standard
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Income-related
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25.0%
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35.0%
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50.0%
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65.0%
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80.0%
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Singles
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$85,000 or less
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$85,001-107,000
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$107,001-160,000
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$160,001-214,000
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$214,001 or more
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Couples
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$170,000 or less
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$170,001-214,000
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$214,001-320,000
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$320,001-428,000
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$428,001 or more
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Historical and projected Part B premium amounts under current law
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Ultimate percentage of program costs represented by premium
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Standard
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Income-related
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Calendar year
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25.0%
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35.0%
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50.0%
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65.0%
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80.0%
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Total per capita Part B costs*
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Annual growth rate
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2007
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$93.50
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$105.80
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$124.40
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$142.90
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$161.40
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$374.00
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2008
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$96.40
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$122.20
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$160.90
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$199.70
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$238.40
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$385.60
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3.1%
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2009
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$96.40
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$134.90
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$192.70
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$250.50
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$308.30
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$385.60
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0.0%
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2010
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$110.50
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$154.70
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$221.00
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$287.30
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$353.60
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$442.00
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14.6%
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2011
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$115.40
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$161.50
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$230.70
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$299.90
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$369.10
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$461.60
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4.40%
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2012
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$99.90
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$139.90
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$199.80
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$259.70
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$319.70
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$399.60
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-13.4%
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2013
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$104.90
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$146.90
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$209.80
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$272.70
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$335.70
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$419.60
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5.0%
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2014
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$104.90
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$146.90
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$209.80
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$272.70
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$335.70
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$419.60
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0.0%
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Projected Part B premium amounts under current-law intermediate estimates
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2015
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$110.70
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$154.90
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$221.30
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$287.70
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$354.10
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$442.80
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5.5%
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2016
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$115.40
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$161.60
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$230.80
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$300.00
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$369.30
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$461.60
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4.2%
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2017
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$120.90
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$169.20
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$241.70
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$314.20
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$386.70
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$483.60
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4.8%
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2018
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$127.40
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$178.30
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$254.70
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$331.10
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$407.50
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$509.60
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5.4%
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2019
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$134.40
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$188.20
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$268.80
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$349.40
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$430.10
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$537.60
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5.5%
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2020
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$141.80
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$198.50
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$283.60
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$368.70
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$453.80
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$567.20
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5.5%
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2021
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$150.00
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$209.90
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$299.90
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$389.90
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$479.80
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$600.00
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5.8%
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2022
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$160.50
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$224.70
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$321.00
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$417.30
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$513.60
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$642.00
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7.0%
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NOTE: *Total per capita Part B costs consist of the 25 percent standard beneficiary premium payment and the 75 percent federal contribution. |
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| TABLE 4: Estimates of Medicare Part D Premiums Through 2022 Under Current Law | |||||||
| Income thresholds | |||||||
| Ultimate percentage of program costs represented by premium | |||||||
| Standard | Income-related | ||||||
| 25.5% | 35.0% | 50.0% | 65.0% | 80.0% | |||
| Singles | $85,000 or less |
$85,001-107,000 | $107,001-160,000 | $160,001-214,000 | $214,001 or more |
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| Couples | $170,000 or less | $170,001-214,000 | $214,001-320,000 | $320,001-428,000 | $428,001 or more |
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| Historical and projected Part D premium amounts under current law | |||||||
| Ultimate percentage of program costs represented by premium | |||||||
| Standard | Income-related | ||||||
| Calendar year | 25.5% | 35.0% | 50.0% | 65.0% | 80.0% | Total per capita Part D costs* |
Annual growth rate |
| 2007 | $27.35 | n/a | n/a | n/a | n/a | $107.25 | |
| 2008 | $27.93 | n/a | n/a | n/a | n/a | $109.53 | 2.1% |
| 2009 | $30.36 | n/a | n/a | n/a | n/a | $119.06 | 8.7% |
| 2010 | $31.94 | n/a | n/a | n/a | n/a | $125.25 | 5.2% |
| 2011 | $32.34 | $44.34 | $63.44 | $82.44 | $101.44 | $126.82 | 1.3% |
| 2012 | $31.08 | $42.66 | $60.94 | $79.22 | $97.51 | $121.88 | -3.9% |
| 2013 | $31.17 | $42.77 | $61.07 | $79.47 | $97.77 | $122.24 | 0.3% |
| 2014 | $32.42 | $44.52 | $63.52 | $82.62 | $101.72 | $127.14 | 4.0% |
| Projected Part D premium amounts under current-law intermediate estimates | |||||||
| 2015 | $36.68 | $50.38 | $71.88 | $93.48 | $115.08 | $143.84 | 13.1% |
| 2016 | $38.66 | $53.06 | $75.76 | $98.56 | $121.26 | $151.61 | 5.4% |
| 2017 | $41.28 | $56.68 | $80.98 | $105.18 | $129.48 | $161.88 | 6.8% |
| 2018 | $43.99 | $60.39 | $86.29 | $112.09 | $137.99 | $172.51 | 6.6% |
| 2019 | $46.99 | $64.49 | $92.19 | $119.79 | $147.39 | $184.27 | 6.8% |
| 2020 | $50.18 | $68.88 | $98.38 | $127.88 | $157.38 | $196.78 | 6.8% |
| 2021 | $53.28 | $73.08 | $104.48 | $135.78 | $167.18 | $208.94 | 6.2% |
| 2022 | $56.59 | $77.69 | $110.99 | $144.29 | $177.49 | $221.92 | 6.2% |
| NOTE: *Total per capita Part D costs consist of the 25.5 percent standard beneficiary premium payment and the 74.5 percent federal contribution. SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. |
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| TABLE 5: Estimates of Medicare Part B Premiums From 2017-2022 Under Changes Proposed in the President’s FY 2014 Budget | |||||||||||||
| Income thresholds | |||||||||||||
| Ultimate percentage of program costs represented by premium | |||||||||||||
| Standard | Income-related | ||||||||||||
| 25.0% | 40.0% | 46.5% | 53.0% | 59.% | 66.0% | 72.5% | 79.0% | 85.5% | 90% | ||||
| Singles | $85,000 or less | $85,001-92,333 | $92,334-99,667 | $99,668-107,000 | $107,001-124,667 | $124,668-142,334 | $142,334-160,000 | $160,001-178,000 | $178,001-196,000 | $196,001 or more | |||
| Couples | $170,000 or less | $170,001-184,666 | $184,666-199,334 | $199,334-214,000 | $214,001-249,334 | $249,334-284,666 | $284,666-320,000 | $320,001-356,000 | $356,001-392,000 | $392,001 or more | |||
| Part B premium amounts under intermediate estimates with proposed changes | |||||||||||||
| 2017 | $120.90 | $193.44 | $224.87 | $256.31 | $287.74 | $319.18 | $350.61 | $382.04 | $413.48 | $435.24 | |||
| 2018 | $127.40 | $203.84 | $236.96 | $270.09 | $303.21 | $336.34 | $369.46 | $402.58 | $435.71 | $458.64 | |||
| 2019 | $134.40 | $215.04 | $249.98 | $284.93 | $319.87 | $354.82 | $389.76 | $424.70 | $459.65 | $483.84 | |||
| 2020 | $141.80 | $226.88 | $263.75 | $300.62 | $337.48 | $374.35 | $411.22 | $448.09 | $484.96 | $510.48 | |||
| 2021 | $150.00 | $240.00 | $279.00 | $318.00 | $357.00 | $396.00 | $435.00 | $474.00 | $513.00 | $540.00 | |||
| 2022 | $160.50 | $256.80 | $298.53 | $340.26 | $381.99 | $423.72 | $465.45 | $507.18 | $548.91 | $577.80 | |||
| SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds and proposed changes based on the President’s FY 2014 Budget. | |||||||||||||
| TABLE 6: Estimates of Medicare Part D Premiums From 2017-2022 Under Changes Proposed in the President’s FY 2014 Budget | |||||||||||||
| Income thresholds | |||||||||||||
| Ultimate percentage of program costs represented by premium | |||||||||||||
| Standard | Income-related | ||||||||||||
| 25.5% | 40.0% | 46.5% | 53.0% | 59.% | 66.0% | 72.5% | 79.0% | 85.5% | 90% | ||||
| Singles | $85,000 or less | $85,001-92,333 | $92,334-99,667 | $99,668-107,000 | $107,001-124,667 | $124,668-142,334 | $142,334-160,000 | $160,001-178,000 | $178,001-196,000 | $196,001 or more | |||
| Couples | $170,000 or less | $170,001-184,666 | $184,666-199,334 | $199,334-214,000 | $214,001-249,334 | $249,334-284,666 | $284,666-320,000 | $320,001-356,000 | $356,001-392,000 | $392,001 or more | |||
| Part D premium amounts under intermediate estimates with proposed changes | |||||||||||||
| 2017 | $41.28 | $64.75 | $75.28 | $85.80 | $96.32 | $106.84 | $117.36 | $127.89 | $138.41 | $145.69 | |||
| 2018 | $43.99 | $69.00 | $80.22 | $91.43 | $102.64 | $113.86 | $125.07 | $136.28 | $147.50 | $155.26 | |||
| 2019 | $46.99 | $73.71 | $85.69 | $97.67 | $109.64 | $121.62 | $133.60 | $145.58 | $157.55 | $165.85 | |||
| 2020 | $50.18 | $78.71 | $91.50 | $104.30 | $117.09 | $129.88 | $142.67 | $155.46 | $168.25 | $177.11 | |||
| 2021 | $53.28 | $83.58 | $97.16 | $110.74 | $124.32 | $137.90 | $151.48 | $165.06 | $178.64 | $188.05 | |||
| 2022 | $56.59 | $88.77 | $103.19 | $117.62 | $132.04 | $146.47 | $160.89 | $175.32 | $189.74 | $199.73 | |||
| SOURCE: Kaiser Family Foundation analysis of current-law intermediate estimates from the 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds and proposed changes based on the President’s FY 2014 Budget. | |||||||||||||