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Seniors in the 2012 “Fiscal Cliff” Debate: What You Need To Know

Current Status of Seniors: 

  • Half of all seniors live in households with less than $22,000 in income.
  • 60% of older women and 41% of older men don’t have enough income to cover basic, daily expenses.
  • Social Security provides the majority of income for 2 in 3 seniors — 90% or more for 1 in 3 seniors.
  • Next year, the average retiree benefit will be$1,261 a month — $15,132 a year. The average single woman retiring at age 65 will get a benefit of about $13,200.
  • There is no cap on Medicare out-of-pocket spending. In 2010, the average senior on Medicare spent$4,500 on out-of-pocket medical costs — nearly 20% of their income.
  • Half of all seniors have less than $53,000 in savings.
  • 43% of Medicare recipients spend more than the total value of their assets — excluding their home — on out-of-pocket healthcare costs in the last 5 years of their lives.25% spend everything they have — including the value of their home. Surviving spouses (mostly older women) are often left with no or negative savings.

Medicare costs are already high under current law:

  • In 2013, seniors and people with disabilities with incomes will pay a base Part B premium of almost $1260 and an average Part D premium of $360. Premiums are deducted from seniors’ Social Security benefits each month.
  • Seniors will face a $1,184 deductible if they go into the hospital or get inpatient mental health services. If they go back to the hospital 60 days afterthey’ve completed treatment for the initial hospital stay, they pay the deductible again. (E.g., a senior who breaks a hip in January and has a heart attack in August would pay two deductibles — $2,368).
  • The 2013 Part B deductible is $147. Seniors and people with disabilities generally pay 20% cost-sharing. If they see a doctor who doesn’t take assignment – they face an additional 15%bill.
  • Private Part D prescription drug plans vary -some have deductibles up to $320.
  • Many services that seniors and people with disabilities require – including vision, hearing, and dental care – are not covered under Medicare.

The combined cuts on the table hurt poor and middle class seniors – and their families – for generations to come.

  • Chained CPI:It is not a more “accurate” reflection of seniors’ market basket. An “accurate” CPI would raise the COLA because health care, housing, and food make up a larger portion of seniors’ budgets. Those are fixed costs — there is no substitute for a senior’s heart medicine.The chained CPI is a benefit cut — one analysis shows the average senior would lose a combined $6,000 over the next 15 years.
  • Means-testing premiums: Part B and Part D premiums are already”means-tested” for those with incomes over $85,000 per individual/$170,000 per couple. In 2013, those additional costs would range from $504 to $2,270 per person for Part B and between $139 and $797per person for Part D. About 5% of seniors and people with disabilities pay those higher premiums. The President’s budget both increases the amount of additional payments and covers 25% of all Medicare beneficiaries. That would people with incomes of $47,000would be hit. Again, those additional costs would come of their Social Security checks.
  • Beginning in 2017, the President’s FY2013 budget would increase the Part B deductible for new beneficiaries — increasing it by$25 in 2017, 2019 and 2021. It would also apply a new $100 per home health episode co payment, and would impose a Part B premium surcharge (estimated at 30% of the Part B premium) for those with “low-cost sharing” Medigap policies.Many seniors buy Medigap policies (which average about $250 a month) to provide catastrophic coverage since there is no out-of-pocket limit on Medicares pending.
  • These additional costs could impact the sameindividual. For example, a senior with$50,000 in income who becomes eligible for Medicare in 2021 could be required to pay:

– the base Part B monthly premium (projected to be $161.20 a month, or $1,934.40 a year)
– plus a 30% surcharge if she has a “low-cost sharing” Medigap policy  (about $48 a month, or $576 a year)
– plus the base Part B deductible — projected to be $226
– plus the “new beneficiary” Part B deductible add-on of $75
– plus additional income-related additional premium payments for Part B and Part D.

  • Those higher costs would come out of a Social Security benefit reduced by use of the chained CPI.

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