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| Benefits Highlights |
MEDICARE PREMIUMS AND DEDUCTIBLES FOR 2006The Medicare Part B monthly premium will be $88.50 in 2006, an increase of $10.30 from the current $78.20 premium. The 2006 premium is roughly the same as the CMS actuaries have been projecting since early this year.
Though premiums are rising, most Medicare beneficiaries will see significantly lower out-of-pocket health care costs in 2006 because of the savings in drug costs from the new Medicare prescription drug benefit. Also, about one-fourth of beneficiaries can receive assistance that pays for their entire Part B premium, and about one-third of beneficiaries can receive assistance for their Part D premium.
Continued rapid growth in the intensity and utilization of Part B services is the primary reason for the premium increase. This growth is seen in physician office visits, lab tests, minor procedures, and physician-administered drugs. It also includes rapid growth in hospital outpatient services. Additionally, increased fee-for-service expenditures contribute to higher payment rates to Medicare Advantage health plans. Also, enrollment in Medicare Advantage plans is increasing as those plans have become much more widely available. These factors are leading to higher Medicare costs related to the Medicare Advantage program. It should be noted that Medicare Advantage plans result in average beneficiary savings of $100 a month.
In addition, part of the premium increase is necessary to increase assets that, for accounting purposes, are held in the Part B trust fund. As the Medicare Board of Trustees noted in their March 23, 2005 report to Congress, a premium increase of 12 percent or more would be needed in 2006 to prevent a further decline in Part B trust fund assets and to help restore those assets to an adequate level. Premiums and Deductibles for 2006
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