2024 Social Security Benefits to Rise 3.2%

Social Security announced today that its cost-of-living adjustment (COLA) for 2024 would be 3.2 percent, far less than this year’s 8.7 percent COLA. The ceiling on earnings subject to payroll taxes will rise to $168,600 from $160,200 this year.

The agency bases the COLA on consumer price inflation for the year ending September 30. The rate of inflation is sharply lower this year than last, explaining the reduced COLA.

The COLA also affects other Social Security benefit formulas. Here is the agency’s fact sheet. Apologies for the clunky appearance. Some of the terms are obscure. If a visit to your favorite search engine does not explain something clearly, let me know and I’ll respond.

2024 Part B Premium up 6% to $174.70

Medicare announced that Part B monthly premiums would rise to $174.70 in 2024 from $164.90 this year – an increase of $9.80, or 6 percent. The annual Part B deductible, which most people must pay before their Medicare coverage begins, will rise by $14, or 6.2 percent, to $240 from $226. Part B covers doctors, medical equipment, and outpatient expenses.

The Centers for Medicare & Medicaid Services (CMS) also released 2024 details for Part A of Medicare, which covers inpatient care in hospitals and skilled nursing facilities, hospice, inpatient rehabilitation, and some in-home care. The deductible for Part A will rise 2 percent to $1,632 in 2024 from $1,600 this year. Two-percent increases will also be applied to coinsurance programs for hospital and skilled nursing care.

Part A is funded by Social Security payroll taxes. People who pay payroll taxes for at least 40 quarters during their working lives do not pay premiums for Part A. For the small percentage of those who do not qualify, Part A premiums will decline by $1 to $505 a month for those with fewer than 30 quarters of covered earnings; they will remain at $278 a month for people with between 30 and 40 quarters of covered earnings.

The CMS announcement also covered next year’s high-income Medicare surcharges, which apply additional premiums for Part B and Part D drug plans for about 8 percent of the highest-earning Medicare enrollees. Those rates also will increase about 6 percent from 2023 levels:

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Alzheimer Drug Coverage Decision in April Could Trigger Part B Premium Cut2022 Medicare Premiums Post Big Increases

The government’s top health official once again signaled that 2022 Medicare Part B premiums could be cut once Medicare formally determines how it will cover Aduhelm. The agency announced in January that it had tentatively decided to sharply limit coverage of the expensive dementia drug. Its formal decision is due April 11.

“Once we have that determination, we’ll be able to fully assess what impact Aduhelm may have had on premiums for seniors in Medicare,” Becerra was quoted in a recent STAT story. “We’re gonna make sure that seniors don’t pay more than they have to.”

In November, when Medicare announced a large increase in 2022 Part B premiums, it attributed much of the rise to the possibility of large claims by users of Aduhelm, which is made by Biogen. Because this drug must be administered by licensed caregivers, it would be covered under Part B of Medicare as an outpatient service, not by Part D prescription drug plans.

The 2022 monthly Part B premium was increased then to  by $21.60, or nearly 15 percent, to $170.10 from $148.50 in 2021. This increase is more than double the projected $10 boost included in the annual report from Medicare program trustees that was released last  August. the possibility of large claims by users of Aduhelm, which is made by Biogen. Because this drug must be administered by licensed caregivers, it would be covered under Part B of Medicare as an outpatient service, not by Part D prescription drug plans.

The Centers for Medicare & Medicaid services (CMS) had explained its reasoning then as follows:

“Depending on utilization, the potential costs for this course of treatment range from negligible to very significant. To ensure that Part B is able to pay claims in full and on time, the Part B financing must be sufficient to provide for a realistic high-cost scenario of Aduhelm coverage. The contingency margin has been increased to accommodate this risk.”

The rational for basing a large part of its 2022 premium increases on the possibility of big Aduhelm spending has largely disappeared since then.

On Dec. 20, Biogen, said it would halve the drug’s annual price from $56,000 to $28,200. Many Medicare organizations urged CMS then to reduce Part B premiums.

On January 10, Xavier Becerra, head of the U.S. Department of Health & Human Services, also asked CMS to reassess the amount of the Part B premium increase.

CMS has not yet indicated whether or when it might change Part B premiums but the agency’s limited approval of Adulhelm seems likely to trigger such action.

Under the 2022 premiums announced in November, higher health care expenses will also be reflected in higher patient charges for Part A and in the high-income surcharges paid on Part B and Part D premiums.

Part A Deductible and Coinsurance Amounts
2021 2022
Inpatient hospital deductible $1,484 $1,556
Daily coinsurance for 61st-90th Day $371 $389
Daily coinsurance for lifetime reserve days $742 $778
Skilled Nursing Facility coinsurance $185.50 $194.50

Some people with insufficient Social Security work earnings must pay Part A premiums. “Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate, which will be $274 in 2022, a $15 increase from 2021.” CMS said. “Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $499 a month in 2022, a $28 increase from 2021.”

Medicare Part B Income-Related Monthly Adjustment Amounts

Beneficiaries who file individual tax returns with modified adjusted gross income: Beneficiaries who file joint tax returns with modified adjusted gross income: Income-related monthly adjustment amount Total monthly premium amount
Less than or equal to $91,000 Less than or equal to $182,000 $0.00 $170.10
Greater than $91,000 and less than or equal to $114,000 Greater than $182,000 and less than or equal to $228,000 68.00 238.10
Greater than $114,000 and less than or equal to $142,000 Greater than $228,000 and less than or equal to $284,000 170.10 340.20
Greater than $142,000 and less than or equal to $170,000 Greater than $284,000 and less than or equal to $340,000 272.20 442.30
Greater than $170,000 and less than $500,000 Greater than $340,000 and less than $750,000 374.20 544.30
Greater than or equal to $500,000 Greater than or equal to $750,000 408.20 578.30

Premiums for high-income beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate return, are as follows:

Beneficiaries who are married and lived with their spouses at any time during the year, but who file separate tax returns from their spouses, with modified adjusted gross income: Income-related monthly adjustment amount Total monthly premium amount
Less than or equal to $91,000 $0.00 $170.10
Greater than $91,000 and less than $409,000 374.20 544.30
Greater than or equal to $409,000 408.20 578.30

Medicare Part D Income-Related Monthly Adjustment Amounts

Beneficiaries who file individual tax returns with modified adjusted gross income: Beneficiaries who file joint tax returns with modified adjusted gross income: Income-related monthly adjustment amount
Less than or equal to $91,000 Less than or equal to $182,000 $0.00
Greater than $91,000 and less than or equal to $114,000 Greater than $182,000 and less than or equal to $228,000 12.40
Greater than $114,000 and less than or equal to $142,000 Greater than $228,000 and less than or equal to $284,000 32.10
Greater than $142,000 and less than or equal to $170,000 Greater than $284,000 and less than or equal to $340,000 51.70
Greater than $170,000 and less than $500,000 Greater than $340,000 and less than $750,000 71.30
Greater than or equal to $500,000 Greater than or equal to $750,000 77.90

Premiums for high-income beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate return, are as follows:

Beneficiaries who are married and lived with their spouses at any time during the year, but file separate tax returns from their spouses, with modified adjusted gross income: Income-related monthly adjustment amount
Less than or equal to $91,000 $0.00
Greater than $91,000 and less than $409,000 71.30
Greater than or equal to $409,000 77.90

A Personal Note

Close readers (you know who you are!) will notice I have not posted in some time. You’ve heard of writer’s block, no doubt. In my case, it’s been physical, thanks to recent wrist surgery and the need to wear a wrist brace that has made typing impossible. Expect to see a resumption of my blog soon — perhaps a more welcome event for me than you!

How Much Money People Spend in Retirement

Social Security has just released a detailed look at consumer spending in 2020 by people aged 55 and older. As with much of Social Security, it’s all about the numbers, and there are lots of them here. But for anyone paying close attention to their income and spending records – aka retirees – it’s helpful to see how you compare with others of similar age and income levels.

Spending patterns change a lot as people and households get older, but the common direction is that people spend less as they age – except on health care. This likely is due to income reductions but also to reductions in activities that use discretionary income – travel, restaurant meals, entertainment, and the like.

Seeing these trends and, especially, their implications for changed spending behavior, can be helpful. Having time to make needed adjustments is nice, too.

The report looks at spending by age, income level, household, and individuals. Here’s a snapshot of household size by age grouping:

Size/Age                                  55-64               65-74               75+

1 person                                   31.4                 37.2                 54.2

2 people                                   40.4                 49.0                 37.7

3 or more people                     28.2                 13.9                   8.2

Pick the unit size closest to your situation. If you live with one or more other people, either a partner or friends, spending figures by household size may be more meaningful than individual spending levels.

Likewise, annual household incomes are broken into quartiles — $19,871 or less, $19,872 to $35,794,  $35,795 to $65,000, and more than $65,000. The report calls these groups lowest, low-middle, high-middle, and highest. It provides percentile figures and also the average and median spending totals. These last two categories are needed because the lopsided growth of high-income households in recent years has rendered some averages of little meaning, and made midpoint averages more relevant.

Here were the spending averages of these households:

Quartile                     Lowest            Low-Middle                High-Middle               Highest

Average (“mean”)       $26,160           $36,658                       $47,631                       $78,473

Midpoint (“median)    $19,116           $28,660                       $37,515                       $59,500

25th Percentile             $13,712           $21,028                       $28,692                       $43,456

75th Percentile             $28,788           $39,100                       $ 50,906                      $85,053

Again, pick the group most like you, and compare your spending to it.

Here’s the same breakdown by individuals as opposed to households. If you live alone, this is the measure you should track.

Quartile                     Lowest            Low-Middle                High-Middle               Highest

Average (“mean”)       $22,105           $27,152                       $28,092                       $41,941

Midpoint (“median)    $16,380           $20,656                       $21,374                       $30,942

25th Percentile             $11,796           $14,436                       $14,666                       $19,784

75th Percentile             $23,540           $30,565                       $31,696                       $47,712

Once your eyes are no longer glazed over by all these numbers, here is a look are household spending sliced into age groups:

 Age                                           55-64               65-74               75+                  65+

Average (“mean”)                   $64,048           $52,245           $40,716           $47,457

Midpoint (“median)                $46,636           $37,384           $30,124           $34,088

25th Percentile                         $29,071           $24,684           $19,396           $22,032

75th Percentile                         $74,345           $57,732           $46,636           $53,172

 

 

 

 

 

 

 

 

 

 

Useful Nursing Home Staffing Details

The Centers for Medicare & Medicaid Services (CMS) has improved its online nursing home tools to provide details on staffing levels – a variable that often is linked to a home’s quality of care.

Adequate nursing home staffing was a problem before the pandemic but has become even more challenging since. The jobs have never paid very well and the work can be arduous in the best of times. Today, residents continue to be vulnerable to serious COVID illnesses, and staffers face heightened challenges in caring for vulnerable residents and also concerns about their health and that of their family.

The new CMS measures track staffing turnover and weekend staffing. It described these terms in a news release:

Staff turnover is the percent of nursing staff and number of administrators that stopped working at a nursing home over a 12-month period. The nursing staff included in this measure includes licensed nurse staff (i.e. registered nurses (RNs), licensed practical and vocational nurses as well as nurse aides who work under the direction of licensed nurse staff and provide much of the day-to-day care for nursing home residents, such as eating, bathing, grooming and toileting.

Weekend staffing is the level of total nurse and RN staffing on weekends provided by each nursing home over a quarter.

“Facilities with lower nurse turnover may have more staff that are familiar with each resident’s condition and may be more able to identify a resident’s change in condition sooner,” the agency said. “Lower administrator turnover may have a positive impact on leadership stability, direction and operations, which may help staff provide more care consistently and effectively to residents.”

The new tools are part of Medicare’s “Care Compare” website. Click on the Nursing Home icon and then enter the name of a nursing home or a ZIP code for a list of homes near that area. You can then refine the search by distance, quality rating, number of licensed beds, and other variables, including whether a home accepts Medicare or Medicaid.

Clicking on a link for a specific home generates a summary page for that home. It includes subsections for health inspections, staffing, and quality of resident care. Clicking on the box labelled “View Staffing Information” will generate a page with several details, including the newly added measures. The data are compared with U.S. and statewide averages to provide an indication of relative performance.

Introducing Ask Phil – A Curated Guide to Your Benefit Questions

Since co-authoring the first “Get What’s Yours” book in 2015, I have spent nearly seven years fielding reader questions. That first book was about Social Security. It sold lots of copies and led me to become a contributor to a PBS web site overseen by one of my co-authors, Paul Solman, who has been an esteemed economics correspondent there for a long time – at least since the early days of movable type.

I introduced Ask Phil to PBS readers and, being PBS readers, they responded in force. For the next five years, I received thousands of questions from them and others who had read or learned about the that first book and a second about Medicare that followed in 2016.

I was not paid for these pieces but saw them as a way of repaying people for all the Get What’s Yours books they bought and, to knock my white hat askew if not off my balding head, to get exposure and sell even more books. In exchange for this largess, PBS approved my request to own the copyright to Ask Phil and its content.

I have continued to answer reader queries. Nothing reveals what you know and don’t know better than having to answer questions. It also reveals subjects that readers most often find important to them, or confusing, or both. And it helps keep me on my toes about changes to the rules and workings of the Social Security Administration and the Centers for Medicare & Medicaid Services, the division of the U.S. Department of Health & Human Services that oversees Medicare.

Fast forward to today.

I love books and collections of them in wonderful spaces we call libraries. Sadly, the Internet has made lots of non-fiction books obsolete, particularly non-historical books. I’m sensitve to this phenomenon because those are the kinds of books I have written. The aging of such books adversely affects me in two ways.

My most recent book was an explanation of U.S. health care. It was published a year ago but the manuscript was submitted more than half a year earlier, guaranteeing that the book was out of date before the ink on its pages had dried. Publishers hustle where they can to shorten print schedules but, as we’ve seen with today’s supply chain gridlocks, it can take a lot of time to get printed copies of books into thousands of bookstores and the warehouses of Amazon, Barnes & Noble, and other mass booksellers.

The second factor involves my Social Security and Medicare books. Now approaching their seventh and sixth birthdays, respectively, they are increasingly seen by even loyal fans of the books as being very long in the tooth. I know this because I get those emails, too!

In reality, both books remain largely accurate and (cue my bias) useful subject guides. To justify a new edition of a book, my agent and publisher tell me, at least 30 percent of its content must be new. There haven’t been enough changes in either Social Security or Medicare to come close to this threshold.

Sales of older current-affairs books dwindle, and that’s the case here, even though they remain relevant. To close the time gap, I use the Get What’s Yours website to publish significant rule changes for both programs, most notably each year’s new levels of Social Security benefit levels and various income qualification metrics, and Medicare premiums and user co-pays.

What to do?

Well, I have saved all those reader questions and answers. I reviewed them and came up with a master list of the important things that people asked me over and over again. I wound up with about 135 questions and issues. I combined earlier answers, rewrote them to make sense, and then updated them so that they reflect current Social Security and Medicare rules. Lastly, I inserted lots and lots of links to official program rules and explanations.

I’m making all of this material available today through the Ask Phil link that appears at the top of this page. Just scroll through the topics to find what you’re looking for.

Collectively, these items work like an ebook. With the Internet, however, I think I can do better. The ebook you see here is not a fixed object but will be updated as rules change so that what you read is always accurate when you read it. I call Ask Phil a curated archive. Thinking of it as a living ebook works, too.

I am making this content freely available to anyone who wants it. I’ve always been better at creating content than figuring out how to make money at it. I suppose some copycat gremlin could repurpose this archive and monetize it. But if you want to make sure this content is accurate, Ask Phil is the only place that can provide that assurance.

If you like what you see, tell your friends and colleagues. And, to my journalistic colleagues, I’d extend the offer to quote these materials and email me for any additions and clarifications.

Lastly, please hold me accountable. If you spot incomplete or inaccurate answers, I absolutely want to hear about it. Readers remain my best guide to relevancy and accuracy.

Thank you!

Aduhelm Preliminary Approval Only for Limited Use in Clinical Trials

The Centers for Medicare & Medicaid Services (CMS) said today (January 11) that it provisionally supports the limited use of Aduhelm, the controversial Alzheimer’s medicine, in clinical trials. The agency’s final decision is expected in April. The drug was approved last June by the U.S. Food & Drug Administration despite widespread concerns about its effectiveness.

Limiting the drug’s use will intensify pressure on CMS to reduce the large increases in the Part B premium for Medicare that it announced last fall. Aduhelm will be charged as a Part B medication because it must be infused in an office setting, unlike Part D drugs, which are self-administered by patients.

On November 12, Medicare cited potential Aduhelm spending as a major factor in its decision to raise the basic monthly Part B premium by $21.60, or nearly 15 percent, to $170.10 from $148.50 in 2021. The other causes were continued health-care price inflation and to make up for the government’s decision to minimize the 2021 premium increase to help people being battered by economic losses related to the pandemic.

As I wrote at the time, “(T)the sting of higher premiums will be reduced by next year’s Social Security cost of living adjustment (COLA) of 5.9 percent — the largest in 40 years. From where I sit, the COLA provided Medicare with the cover it needed to boost what amounts to a rainy-day reserve, not only for Aduhelm expenses but also broadly higher health care costs.”

On December 20, however, Biogen, the maker of Aduhelm, said it would cut its price in half to $28,000, triggering calls for a reduction in the Part B premium. Pressure increased earlier this week when Xavier Becerra, head of the U.S. Department of Health & Human Services, asked CMS to reassess amount of the Part B premium increase.

Why Can’t We Make Things Better in Health Care?

I have spent a lot of time around all sorts of insurance companies during the past 25 years, as an executive, entrepreneur, and contributing writer. In the health space, it is easy to hate insurance people. They receive our premium dollars, cover some of our health needs – often putting their commercial interests before those needs — and make lots and lots of money off of us.

A good case can be made that health care should be a public and not a private good. I respect that view but have never seen a well-conceived plan for how the U.S. can move from our private health insurance system to a European model where taxpayers fund a government-run health system.

Today, the odds of expecting such a plan from the bitterly divided Congress are zero. Huge compromises would be required. Further, it would take decades to effect any far-reaching transformation of health care. Such long-term planning is just not possible in Washington, and hasn’t been feasible for a long time.

Advocates of a true public health system seldom offer up approaches that explain how we’ll pay for such a system. As we’re learning, government deficits and inflation do matter. Steep cuts to defense spending are hardly a valid strategy. Big tax hikes on rich people and companies would amount to at best a down payment for a true public health system.

Plans also may include steep cuts in health prices, which admittedly are outrageous – roughly double per person here what they are in other so-called first world nations. But such plans don’t account for how private health companies would respond to price cuts, not to mention how nurses, doctors, and other front-line health professionals would react. They’re already part of the Great Resignation.

Medicare and Medicaid are certainly financed largely by the federal and state governments. But they also are largely run by private insurance companies. Why? There is no one-size fits all answer, but a major reason is that private companies manage health plans more efficiently and with better health results than do public plans.

The Veterans Administration is the closest thing the U.S. has to public health care. I think highly of the VA but its marks for customer service and health quality often fall far short of what we should expect from a public health system.

Meanwhile, health care businesses continue to feel the effects of the seemingly ingrained need in America to blame someone else whenever things go wrong.

When I see people bash health insurers, I’d like to ask them why they believe these private companies should operate with different goals than companies in other industries? Good luck trying to sell Wall Street on the need to accept lower health-care profit margins because they are in the public interest. By the way, the profit margins in Big Tech would be unthinkable in health care. But we love us our iPhones and there is no movement to shame Apple into lowering its profit margins.

So, we muddle on, unhappy and often unhealthy.