Why Medicare Costs Have Risen for So Many

Many people with Medicare believed that their 2010 premium would be frozen at 2009 levels, but it’s jumped by 15%.

The reason?

It’s because of an unusual meeting of the rules governing Medicare and Social Security.

Each year, the Department of Health and Human Services sets the premium for Medicare Part B, which covers physician visits and outpatient treatment.

Usually there is an increase in that premium.

However, Medicare is legally prohibited from passing along to Social Security recipients a premium hike that’s higher than Social Security’s annual cost-of-living adjustment (COLA).

Since no COLA increase is expected for 2010, Medicare can’t charge members who are also Social Security recipients any extra premium.

And that’s the majority of Americans.

Of the 42.3 million Americans covered by Medicare Part B, around 73% also receive Social Security benefits.

If you’re one of those Americans, it’s great that your premiums didn’t rise this year.

But if you’re in the remaining 27% that receives Medicare benefits but not Social Security benefits, you’re going to make up Medicare’s loss by paying higher premiums.

In other words, according to a Kaiser Family Foundation report, “The Part B premium increase is higher than it would otherwise be because the costs are spread across a smaller share of beneficiaries.”

Who’s in that other 27%?

Those affected include Medicare Part B recipients who are celebrating their 65th birthday this year, as well as those who haven’t started collecting Social Security because they haven’t reached their full retirement age, which is 66 for people turning 65 in 2008 through 2019, or because they’re delaying benefits.

Now’s the Time to Protect Your Spouse with an Up-to-Date Will

The U.S. federal estate tax has been repealed.

This came about under a 10-year bill that steadily increased exclusions from the tax before fully repealing it in 2010.

That’s obviously good news for most Americans.

However, there is one issue that many people might not know about.

The negative consequence is that Americans who don’t update their wills could leave nothing to their spouses.

Wills typically use formulas designed to send the maximum amount of assets that are not subject to the estate tax into a trust.

The trust is usually for the decedent’s children.

Remaining assets are then left to the surviving spouse.

Under the new law, there is now no limit on the amount of assets people can pass on without being subject to federal estate tax.

Therefore, all the assets could go into a trust – leaving the surviving spouse with nothing.

However, there is a way around this.

Most states will let a surviving spouse claim part of the estate in such a situation. But the process can be costly, so it makes more sense for people to revise their wills.

The key to success is using dollar amounts instead of formulas to designate where assets should go.