The Sound Bite:

During the “fiscal cliff” discussions and, more recently, the deficit reduction talks in Congress, policymakers proposed that wealthier Medicare beneficiaries pay a little more for premiums— otherwise known as “means-testing.”

“I think that is reasonable and certainly consistent with the Democratic message that those who are better off in our country should be willing to pay a little more,” Senate Majority Whip Dick Durbin (D-Ill.) told The Hill when lawmakers suggested raising premiums for wealthy Medicare recipients.

In 2011, in response to a question from ABC News, President Obama said he was open to means-testing Medicare.

“I’ve said that means-testing on Medicare, meaning people like myself…. You can envision a situation where, for somebody in my position, me having to pay little bit more on premiums or co-pays or things like that would be appropriate,” Obama said.

The GOP presidential candidate Mitt Romney also supported means-testing. According to The Boston Globe, part of Romney’s plan for Medicare included cutting benefits for higher-income people, while “lower income seniors in the future will receive the most generous benefits.”

These sound bites suggest means-testing is not currently being done in Medicare, but that’s not the case.

Fact or Fiction?

Fiction. Premiums for Medicare Medical Insurance (Part B) and Medicare Prescription Drug Plans (Part D) are already tied to beneficiaries’ income levels. In a more indirect form, Medicare Hospital Insurance (Part A) is also tied to income.

Medicare Part B Premiums By Income in 2013

If your yearly income in 2011 was

File individual tax return

File joint tax return

2013 premiums

$85,000 or less

$170,000 or less

$104.90

above $85,000 up to $107,000

above $170,000 up to $214,000

$146.90

above $107,000 up to $160,000

above $214,000 up to $320,000

$209.80

above $160,000 up to $214,000

above $320,000 up to $428,000

$272.70

above $214,000

above $428,000

$335.70

Source: www.medicare.gov

The costs of a Part D plan vary and include monthly premiums, yearly deductibles, co-payments and costs in the coverage gap (also known as “donut hole”). In addition, those who meet certain income requirements (both high and low) will have different plan costs.

Although more indirectly, Part A is also means-tested because it is financed by a 2.9 percent payroll tax imposed on all working Americans. In other words, those who earn higher wages pay more into Medicare than those who earn less. In addition, starting in 2013, individuals who earn an annual income of $200,000 and married couples with an annual income above $250,000 will pay an additional 0.9 percent Medicare tax.

Within the context of Medicare reform, some policymakers explain that what they are proposing as parts of proposals to either save the program money or as a deficit-reduction strategy is an expansion on means-testing for the program. Currently, approximately only 5 percent of Medicare beneficiaries pay the higher premiums for Part B. Some lawmakers propose freezing the income thresholds until 25 percent of beneficiaries pay the higher premiums.

There may be more discussions now on how much beneficiary contributions should be linked to wealth, but to suggest that means-testing in Medicare is a new strategy is simply false.

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