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Posted: September 23, 2008

No Rise for 2009 Medicare Premiums; First Time in 8 Years

For the first time in nearly a decade, most of America’s elderly population will not be receiving an increase next year in the monthly Medicare insurance premium they pay.

The Centers for Medicare and Medicaid Services (CMS) announced that most of the 44 million Medicare beneficiaries will continue to pay a monthly premium of $96.40 in 2009, marking the first time in eight years that rates haven’t risen. In addition, the 2009 Medicare Part B deductible will be the same in 2009 as it is this year -- $135.

CMS said it was able to hold the line in 2009 premiums because the Medicare financial reserve has increased, helping protect against an increase.

This is only the sixth time since Medicare was created in 1965 that rates held steady for two consecutive years, CMS said. The last time was in 2000. Medicare is financed through payroll taxes, monthly premiums paid by program enrollees and general federal government revenue.

AARP, the senior advocacy group, greeted the CMS announcement with caution and an urging for Congress. “Lawmakers should not use today's announcement as an excuse to rest,' AARP said in a statement. “The average 73-year-old in Medicare has seen his or her premium double since joining the program. Americans old and young continue to struggle with skyrocketing health care costs.'

Medicare premiums were linked to beneficiary income for the first time two years ago as part of a 2003 law aimed at curbing increased benefit costs. The standard rate of $96.40 per month applies to individuals with income less than $85,000 a year. For 2009, monthly premiums in higher income brackets 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.

The deductible that Medicare beneficiaries must pay for hospital stays of up to 60 days will rise next year to $1,068, from $1,024 this year.

The basic monthly premium is for Medicare Part B, which helps pay for doctor and outpatient care, some home health services, medical equipment, independent lab work and managed-care programs.

CMS projects that in 2009, Medicare will spend $245.5 billion on hospital, skilled nursing, hospice and some home health services and $194.3 billion on Part B services.

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