The House of Representatives passed the Medicare Premium Fairness Act, legislation which will protect seniors and people with disabilities from unfair increases in their 2010 Medicare Part B premiums.  The legislation passed by a bipartisan vote of 406 to 18.

“In these unusually difficult economic times, this legislation protects millions of retirees who would otherwise have to pay increased Medicare Part B premiums,” said Rep. Levin.  “It also avoids placing added costs on state budgets, already under serious financial pressure, which would otherwise have to cover the increased premiums for seniors eligible for both Medicaid and Medicare.”

Current law protects most Medicare beneficiaries from premium increases in years when their Social Security benefits aren’t set to rise, a likely outcome for next year.  However, 27% of beneficiaries are not covered under this “hold harmless” policy. 

These include low-income individuals who are eligible for Medicare and Medicaid (18%, or 7.3 million beneficiaries), higher-income Medicare beneficiaries (5%, or 2.1 million beneficiaries), new Medicare enrollees (3% or 1.3 million beneficiaries) and enrollees whose Medicare premiums are not deducted from their Social Security checks (2%, or 850,000 beneficiaries).  Because of the way the law is written, premiums for the enrollees who are not currently held harmless would be disproportionately increased unless Congress acts.

Currently, 42 million seniors and people with disabilities are enrolled in Medicare Part B.  The standard Part B premium for 2009 is $96.40 per month (higher for individuals with incomes over $85,000 or $170,000 for couples).  By law, the premium is calculated each year to cover approximately 25 percent of the cost of the Medicare program.

The House-passed bill would extend the “hold harmless” policy to protect all Medicare enrollees from an increase larger than the Social Security COLA, so that the 2010 Part B premiums will remain at $96.40 and no seniors will see a cut in their social security checks.

The nonpartisan Congressional Budget Office estimates the cost of the bill at $2.8 billion for 2010 and the bill is fully paid for by reducing the Medicare Improvement Fund, a set-aside fund in Medicare.