November 17,2006

Senators Call for Smooth Transition to New Medicare Part B Premiums

Senators express concern that SSA will not meet deadline for transition to income-related premiums mandated by the MMA

Washington, DC - U.S. Senators Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.),today commented on new information from the Government Accountability Office(GAO) regarding the Social Security Administration’s (SSA) ability to successfullyimplement income-related Medicare Part B premiums. In a review requested by theSenators, who are Chairman and Ranking Democrat on the Senate Committee onFinance, the GAO found that the short timeframe before the change is scheduled to takeeffect and heavy workload challenges could affect SSA’s ability to successfully calculatethe new premiums. As part of the Medicare Prescription Drug, Improvement, andModernization Act of 2003 (MMA), the premiums are set to change from one flatpremium to income-related premiums, beginning January 1, 2007.

“Three years ago Congress acted to help ensure the long-term sustainability of theMedicare program by asking those who can afford it to help out and pay anincreased premium for Medicare Part B,” Grassley said. “In two months this newadjusted premium takes effect. As this report shows, SSA, IRS, and CMS need toget together in these next critical weeks to make sure the system works and beneficiaries are charged the correct premium. We had similar problems with thewithholding of Part D premiums earlier this year. SSA and CMS need to reflectupon those problems and prevent any similar problems from occurring with thePart-B premium. Senator Baucus and I will be watching this transition to help protect these beneficiaries.”

“The GAO report indicates that the Social Security Administration has beenworking hard under severe time constraints to make sure that this process runswithout problems, but I am still concerned that time is too short. I urge the SSA –in conjunction with CMS and IRS—to continue its serious efforts to ensure that the process runs smoothly,” said Baucus. “Part B premiums need to be calculatedcorrectly and on time. It is only fair that we let the beneficiaries who are affected bythis change know what their premiums will cost well in advance. This process oughtto be seamless given that we passed the law three years ago.”

The Senators have asked the GAO to determine the SSA’s ability to carry out its newresponsibility to determine which beneficiaries will have to pay an increased premiumand to calculate these new premiums. Under the MMA, Medicare Part B premiums willbe calculated based on tax information that the SSA receives from the Internal RevenueService. If a beneficiary’s income is above the threshold – $80,000 (single filers) or$160,000 (married filers) – SSA will then calculate the amount a beneficiary has to pay inaddition to the standard monthly Medicare Part B premium, which is $93.50 for 2007.The full text of the GAO correspondence is attached and will also be available The GAO expects to provide additional information in response to the Senators’ request soon.