Medicare’s monthly premium will be unchanged at $96.40 next year for most of the 44 million beneficiaries in the U.S. health program for the elderly and disabled. This is the first time in eight years the rate won’t rise.  Medicare fees will stay the same partly because the program’s reserves have increased, according to a statement from the Centers for Medicare and Medicaid Services.  This is only the sixth time since Medicare was created in 1965 that rates held steady for two consecutive years, said Rick Foster, Medicare chief actuary, on a press conference call. However, “[n]ow that the “catch-up increases in premiums from the past few years have been absorbed, monthly rates are likely to go up in 2010 as health costs continue to rise,” Foster said. Medicare is financed through payroll taxes, monthly premiums paid by enrollees and general government revenue.

Medicare premiums were linked to beneficiary income for the first time two years ago, part of a 2003 law that sought to slow rising benefit costs. The standard rate applies to individuals with income less than $85,000 a year. For 2009, monthly premiums will range from $134.90 for individuals with income of $85,000 to $107,000 to $308.30 for those whose income is more than $213,000.

Source: Bloomberg (September 19, 2008)