Recently I had a post related to the new premium sharing under Medicare Parts B and D. A reader took issue with the fairness of changing the rules after a person has paid into the system for decades. Of course, he has a valid point.
Most people don’t realize what has been paid in over the years. Please read the post and comments here.
There is a handy calculator that allows you to see what has been paid in taxes for Social Security and Medicare. Unfortunately, it only goes back to 2000.
Let’s look at a person earning $160,000. Total taxes paid for Medicare since 2000 are $69,600 (of course the actual total for a working life is much higher) that equals 2.9% on all wages. Today there is an additional tax of 0.9% on all wages in excess of $200,000.
Beginning in 2018 a person at this income level will pay 80% of the Medicare premium for Parts B and D. The standard premium is 25%.
I can hear some of you out there, “why shouldn’t “wealthy” people pay more?” 🍷🍷🍷🍷🍷🍷🍷
The fact is since the taxes are based on income, higher income people have paid more their entire working lives and in return receive the same Medicare benefits as everyone else. And keep in mind, we are not talking about the one-percent, we are talking about upper middle income Americans. Like you, these people retired under a certain deal. They were to pay a certain percentage of the premium. Of course the premium would increase each year so the dollar amount will increase as well. Now that deal has changed after the fact, the percentage has been changed.
😰😰😰😰😰😰 I know, who cares about these people? Don’t be so smug, the points at which cost-sharing is higher are not indexed for inflation, so you may be next. Also, many people with lower incomes will be bumped into the higher ranges simply by taking the required minimum distribution from their IRA or 401k at age 70-1/2.
In addition, these current increases have nothing to do with saving Medicare, but rather help pay for higher fees paid to physicians.
How would you feel if your employer changed the deal and took more from your pension after you retired? Public employee unions across the Country are fighting these same type of after the fact changes proposed by governors trying to salvage their budgets.
So, what do you say, does fairness stop at a certain income level?
QUINNSCOMMENTARY 
How would you feel if your employer changed the deal and took more from your pension after you retired? I will add, or soon to be retired? As in changing the 5 year rule to a 7 year rule? Whom did that benefit? IF you guessed me, you are wrong. Cost savings to my employer; it wasn’t pandering to voters, rather shareholders. Now that the stock price is quite high and shareholders should be rejoicing, what say we look to bringing that back to 5-year pension averaging? ROLF….
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You are correct; such a change is unfair and unwarranted and considers only short-term conditions.
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Dick, treating someone “fairly” means treating them the way they think they should be treated. What we should be striving for is “equity”, both horizontal and vertical equity. Treating similarly situated people the same and differently situated people differently.
The challenge here is that the relationships between those who have paid in all their lives and those who only paid the minimum for access (40 quarters with minimal wages) has been significantly changed. The other challenge here is that, because of “dual eligibles” (those who failed to prepare for retirement, who receive additional benefits due to their low income), the relationship in retirement has also been significantly changed.
I have no problem about the already significant (prior to 1983) redistribution from higher income to lower income working Americans. My problem is that politicians ignore those dramatic differences when they isolate another minority to pay for their past actions (and as recently as 2003, current actions) to buy votes. Anyone out there disagree that President Bush, looking at his prospects for reelection, decided to sock taxpayers (particularly wage earners) with $10+T in unfunded liability from adding Part D?
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But in the case of Part D nobody asks questions because the voting block just loves “more” and dare anyone ask questions they are vilified. We should not be surprised that concern over spending is only a concern when it’s not my benefits. I recall criticizing the “free” contraceptives on a blog and was torn apart by women who saw my concern as an attack on their rights. No matter they still paid hefty co pays on lifesaving necessary drugs. There is little concern beyond the next election.
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