Federal retirees won't know if they'll get a cost-of-living-adjustment (COLA) until October, but the possibility of a COLA-less 2016 has some worried about a Medicare price hike on the horizon.
Officials at the National Active and Retired Federal Employees Association (NARFE) sounded a warning bell on Aug. 27 that without legislation, premiums for Medicare Part B beneficiaries could jump 52 percent next year, leaving many with higher medical costs.
The association, which advocates for pay and benefits for both active and retired government employees, is asking both Congress and the Centers for Medicare & Medicaid Services to revisit a 2009 bill that would expand an established provision to help stem beneficiary premium hikes.
The provision, called the hold harmless provision, caps the increase in premium cost to the increase in the Social Security COLA, allowing beneficiaries to deduct premiums directly from their Social Security checks. When there is no COLA increase, the provision helps maintain the current premium cost.
That means those receiving Medicare Part B and Social Security benefits, an estimated 70 percent Medicare beneficiaries, would see their premiums stay at the current rate of $104.90 a month. The remaining 30 percent of beneficiaries could see as much as $159.30 in premium costs by October.
"It's just plainly an issue of fairness, of not having two people of the same income pay different premiums because one person has it taken out of the Social Security check and the other one doesn't," said John Hatton, NARFE deputy legislative director.
Hatton noted that the issue was not limited to federal retirees, but also new Medicare enrollees, dual eligibles for Medicare and Medicaid and any other beneficiaries not receiving Social Security benefits.
The issue was last visited in 2009 with the Medicare Premium Fairness Act, a House bill that sought to extend the hold harmless provision to all Medicare beneficiaries.
After cruising in the House with 406 votes, including 162 Republicans, the bill died in the Senate in 2010.
It's unclear if Congress will take up the issue again coming out of the August recess, especially since the GOP tried to increase benefit spending by federal employees in the spring. Hatton, however, points to the bipartisan support the previous bill received as evidence of its importance moving forward.
"I don't have a good idea on where Republicans stand on it," he said, "but I think it's important to note when this  bill came up before, it had 400 votes in the House. Democrats controlled the House, but they certainly didn't control 400 votes, so a significant majority of Republicans supported the same legislation."
NARFE is also calling on CMS and the Department of Health and Human Services to evaluate what they can do from a policy standpoint to expand the provision if a legislative option were not to emerge.
"They are looking at it, and it's our hope that they exercise at least some of the flexibility they think they have in terms of lowering those premiums and smoothing it out over a couple of years," Hatton said.
Part of that smoothing, Hatton said, could come from a change in the amount of contingency margin the Department of Health and Human Service calculates into its premium rate.
The cost premiums are decided by taking half of the HHS-determined actuarial rate, which includes a contingency margin. By lowering that margin, HHS can lower premiums across the board.
Officials at CMS, which operate within HHS, pointed to an earlier release saying that premium decisions still being made, but the possibility remains that 30 percent of Part B beneficiaries could see higher rates next year.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which helps determine the COLA rate, has fallen 0.3 percent for the year and stayed flat in July at 233.806.
COLA is in-part calculated by the average of the third quarter's CPI-W numbers. If the average falls below last year's mark of 234.242, the COLA rate will remain unchanged when it's set in October.
August's CPI-W numbers will be released by the BLS on Sept. 16.