Medicare Premiums and Deductibles For 2012: Medicare Part B

As 2011 is drawing to an end, it is necessary to be prepared for the changes to come in Medicare in the next year. This is the second post in our “Medicare Premiums and Deductibles For 2012” series, which can also be found at

 The Centers for Medicare & Medicaid Services (CMS) Office of Public Affairs reported that the standard Medicare Part B monthly premium will be $99.90 in 2012, a $15.50 decrease over the 2011 premium of $115.40.  According to a recent CMS news release, “Most Medicare beneficiaries were held harmless in 2011 and paid $96.40 per month. The 2012 premium represents a $3.50 increase for them.”

 What does Medicare Part B cover? This portion of Medicare covers a portion of the cost of physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. By law, the standard premium is set to cover one-fourth of the average cost of Part B services incurred by beneficiaries aged 65 and over, plus a contingency margin. The contingency margin is an amount to ensure that Part B has sufficient assets and income to cover Part B expenditures during the year, cover incurred-but-unpaid claims costs at the end of the year, provide for possible variation between actual and projected costs, and amortize any surplus assets. Most of the remaining Part B costs are financed by Federal general revenues.  (In 2012, about $2.9 billion in Part B expenditures will be financed by the fees on manufacturers and importers of brand-name prescription drugs under the Affordable Care Act.)

 Physician Fees

The largest factor affecting the contingency margin for 2012 is the current law formula for physician fees, which will result in a payment reduction of about 29 percent in 2012.  For each year from 2003 through 2011, Congress has acted to prevent smaller physician fee reductions from occurring. The 2012 reduction is almost certain to be overridden by legislation enacted after Part B financing has been set for 2012. In recognition of the strong possibility of increases in Part B expenditures that would result from similar legislation to override the decrease in physician fees in 2012, it is appropriate to maintain a significantly larger Part B contingency reserve than would otherwise be necessary.  The asset level projected for the end of 2012 is adequate to accommodate this contingency. 

 Social Securtiy in 2012

“In 2012, Social Security monthly payments to enrollees will increase by 3.6 percent,” reported the CMS. “The dollar increase in benefit checks is expected to be large enough on average to cover the increase in the Part B premium of $3.50 that most beneficiaries will experience. For those who were paying the standard premium of $115.40, their benefits checks will only increase.”

If you have any questions about how these changes will affect you or your loved one, consult a professional or patient advocate.

The information provided in this post is from a recent press release from the Centers for Medicare & Medicaid Services (CMS) Office of Public Affairs.

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