Summary

Beginning January 1, 2007, the premiums for the Medicare Part B Supplementary Medical Insurance program will be based on income, which will raise the premiums for approximately 1.65 million higher-income beneficiaries to as much as 80 percent of the full cost over the 3-year phase-in period. This change, which may be unknown to some beneficiaries, will affect single individuals with incomes over $80,000 and married couples who file jointly with incomes over $160,000. Medicare Part B is a voluntary program administered by the Centers for Medicare & Medicaid Services (CMS) that covers doctors' services, certain outpatient services, and other care. Currently, Medicare Part B beneficiaries generally pay a flat premium of 25 percent (the standard monthly premium) of the cost of the program, with the remaining 75 percent subsidized by the federal government. While CMS administers the program, the Social Security Administration (SSA) is responsible for determining and assessing Medicare Part B income-based premiums once CMS has set the standard premium amount for the year. To better understand how SSA is implementing such premiums, the Senate Committee on Finance requested that we review the process that SSA has established to determine and assess the new premiums.

GAO updated the briefing that we provided to Congressional staff on November 7, 2006 describing the status of SSA's implementation efforts as of November 6, 2006. At this writing, SSA is still in the process of calculating premiums and expects to finish this task by mid-November. Once the calculations are completed, SSA will include the new premium in its cost of living adjustment notices, which will be mailed to affected beneficiaries in late November. Beneficiaries will have 60 days after receiving the notice of the premium increase to file an appeal. However, they may also request a new determination without filing an appeal if they have experienced a life changing event that results in a significant reduction in their income, or they have more recent, amended or corrected tax return information. Time frames for requesting new determinations vary depending on the reason that beneficiaries cite for making such a request. SSA is conducting a number of training efforts to assist staff in dealing with inquiries from affected beneficiaries. For field offices with a high volume of affected beneficiaries, SSA plans to move the resulting work as needed to offices with fewer affected beneficiaries. Despite SSA's planning efforts, there are various issues that could affect its implementation of income-based premiums. For example, SSA has about a month to determine and assess the premiums, and faces an anticipated field office workload increase when beneficiaries contact them for help in understanding the higher premiums or challenging the premium assessment.