Medicare tax gets you mandatory program for health insurance that costs fortune in co-pays, deductibles

Medicare is a tough pill to swallow as it devours family incomes of the elderly

The usual self-centered politicians and their masters at Fix the Debt, Libertarian Caucus, Tea Party and Fox News, along with a pack of pitiful former government officials like Ed Rendell, this week bemoaned the so-called “doc fix”, which brings Medicare payments to providers up to miserable levels, instead of a 21%  cut.

That reduction in doctor payments would increase the number of physicians who refuse to treat Medicare patients. The Wall Street Journal explains in 2012:

…the proportion of family doctors who accepted new Medicare patients last year, 81%, was down from 83% in 2010, according to a survey by the American Academy of Family Physicians of 800 members. The same study found that 4% of family physicians are now in cash-only or concierge practices, where patients pay a monthly or yearly fee for special access to doctors, up from 3% in 2010.

Using the example of a September 2014 visit to a cardiologist (without the 21% reduction) in Philadelphia suburban Montgomery County, the doctor charged $168 for a 20-minute exam (time he was present with patient), and was allowed only the Medicare approved amount of $114.07, and Medicare paid only $89.43, while the patient paid $22.81. An EKG was performed by a physician assistant and the provider charge was $90, including analysis by the doctor. Medicare allowed only a payment of $18 – $14.11 by Medicare and $3.60 by the patient.

Is it any wonder that doctors are refusing to treat Medicare patients, even without more cuts in payments?

If you have completed your income tax (deadline tomorrow), and are a senior forced to be only on Medicare – versus far cheaper Obamacare – the costs you pay would astound the self-centered public masters and financial pundits in both political parties.

Here is a real life examination of Medicare expenses paid in 2014 by one average couple, Harry and Sylvia Schmendrich, both retired and on Social Security. Their adjusted gross income (AGI) was $30,309. Sylvia is 67. Harry is 73 and was required to withdraw a Required Minimum Distribution (RMD) from his IRA of some $8,400, subject to regular income tax rates. The IRS determines how much you must take out of such retirement funds each year, which increases your AGI.

No matter how you toss it, $30,309 AGI isn’t outstanding, so you would expect that Medicare benefits would offset low income with a great healthcare benefit. Wrong!

The Schmendrich’s medical expenses are typical of a couple, where one has had some sort of heart incident and is on the usual blend of cholesterol and blood thinner drugs, the wife is not on any major meds, and Harry spent one night in the hospital in 2014 after a fainting spell for observation.

Medicare Part A is included in Medicare at no premium charge, but it only covers hospital visits. Medicare B, to cover doctor visits, for average folks like the Schmendrichs, cost the couple $2,516 a year in premiums to the government. They also have an additional AARP plan which reduces co-payments for Part B by about 50%. That costs $2,487 for the couple annually. In addition they have premiums for Medicare D (drugs) which total $164  a year, and only cover some drugs, some of the time.

Harry ended up in the hospital overnight and his Medicare A paid everything except his deductible of $608. If he went twice last year, he would have paid $1,216, and so on. The only other big expense was an eye exam and glasses for Sylvia, which cost the Schmendrichs $903 after Medicare reimbursement of $50. Other doctor office visits during the year added up to $1,066. There was also about $300 for over the counter vitamins and other items

The biggest out of pocket expense was prescription drug co-pays, which totaled $3,341 for the Schmendrichs.

Grand total was $10,490.05 paid by the couple, fully covered by Medicare. If they had any dental expenses, none would be covered by Medicare. Hearing aids are also not covered by Medicare. About one-third of their AGI (before taxes) went to medical expenses.

At least, they had a “nice” deduction for their income taxes, but the politicians knew how to reduce that.

Some 7.5% of their AGI ($2,273) was deducted from medical expenses, leaving them with $8,229.

Medicare is a great deal – if you don’t have the facts and ignore lousy benefits and high prices.  The fiscal hawks, who want to raise premiums and cut the current miserly benefits, don’t really care much for Medicare folks with walkers and bad hearts, I suppose because they are usually not physically able to successfully riot for their causes.

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