Money & The Economy

2013 Medicare premium increase will cut into COLA for Seniors

The anticipated 2013 1.7% cost-of-living adjustment (COLA) for Social Security recipients will likely be wiped out by an expected 7-9% in Medicare part B premiums next year.

Private analysts expect the $99.90 part B premium for incomes up to $85,000 to rise by as much as $9 while the government’s projection anticipate a $7 per month increase. At around $100 per year, this could cut into the small COLA increase that is forecast.

An additional impact to seniors will be the expected rise in prescription drug plans (PDPs). According to a September report from Alvalere Health, “Seven of the top 10 prescription plans are raising their premiums by 11 to 23 percent.”

Between the PDP and Medicare part B increases, the entirety of the COLA increase could get almost completely eaten up by healthcare costs. Medicare officials are advising seniors to shop carefully for drug coverage to avoid the high increases.

The COLA increase will also raise the income ceiling for Medicare recipients. In 2012, the ceiling was $110,100 and will increase to $113,700 for 2013.

Medicare open enrollment started on October 15th and continues until December 7th, 2012. Any changes to Medicare selections will take effect on January 1st, 2013. During open enrollment, seniors can switch from   Medicare parts A and B (traditional Medicare) to a Medicare Advantage plan (part C) or go from Medicare Advantage back to a traditional plan. Medicare supplementary plans can be changed/elected at any time during the year.

The COLA increase is computed by the government using the CPI-W figures in the third quarter of the current year in comparison to the third quarter of the previous year. CPI-W measure price inflation of those working – known as CPI for Urban Wage Earners and Clerical Workers. Some Medicare analysts are pushing to have a new CPI measure, CPI-elder, be used to compute COLA as it takes senior costs more into account by weighting healthcare expenditures heavier.




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Rich Mitchell

Rich Mitchell is the editor-in-chief of Conservative Daily News and the president of Bald Eagle Media, LLC. His posts may contain opinions that are his own and are not necessarily shared by Bald Eagle Media, CDN, staff or .. much of anyone else. Find him on twitter, facebook and

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One Comment

  1. Why does Medicare have premiums at all? I can understand co-pays to reduce usage, but what the hell is the ~3% a year for almost 50 years for?

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