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SAN FRANCISCO, CA

Legislation Report

January 2007

Medicare Part B premiums will be linked to income, or "means tested," for the first time starting in January 2007.  Currently beneficiaries pay 25 percent of the Part B premium, or $88.50 a month, in 2006.  In 2007, the Part B premium will increase 5.6 percent, to a base level of $93.50 per month.  However, in the New Year individuals with an annual income of more than $80,000 (or $160,000 for married couples) will pay more.  "Annual income" for purposes of calculating the Part B premium will be the Modified Adjusted Gross Income (MAGI ) on one's tax return from two years prior.  For instance, in order to calculate an individual's Part B premium for 2007 the MAGI from his/her 2005 tax return will be used.

Means testing of the Part B premium was adopted as a provision of the controversial 2003 Medicare Modernization Act.  NARFE opposed this provision, believing that it sets a dangerous precedent for linking other health insurance premiums to income and gives future Congresses an opportunity to alter income thresholds so that an increasing number of beneficiaries may be affected.  I believe means testing of Medicare premiums may be a slippery slope where the public comes to think of Medicare as a welfare program primarily for the poor rather than a government service for everyone.    Beatrice Bertwell

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