Bipartisan Budget Bill Changes ACA, Medicare Premiums and Social Security

The President has signed the new Bipartisan Budget Bill. As has been widely reported, this bill funds the government for two years and extends the debt ceiling. Less widely reported is that this bill repeals an automatic enrollment provision under the Affordable Care Act (ACA) and makes changes to Medicare and Social Security (SS). The changes made to Social Security Disability Insurance (SSDI) eligibility extend beyond that program and will be important for State Medicaid Agencies and for low-income people with disabilities.

The automatic enrollment provision under the ACA would have applied to employers with 200 or more employees. The provision was never enforced because regulations were never issued.

Under the budget deal, about 17 million Medicare beneficiaries will see their Part B premiums rise 14 percent instead of 52 percent. Without the deal, some 30 percent of 54 million Medicare beneficiaries would have seen Part B premiums increase 52 percent in 2016, from a base rate $104.90 per month to $159.30. With the budget deal, about 17 million beneficiaries will see their Part B premiums rise 14 percent instead, to a new base rate of $120 per month in 2016, plus a $3-per-month surcharge. Higher-income beneficiaries will pay more; those amounts have not yet been announced.

The cost of the Medicare Part B part of the legislation will be covered by a loan from the Treasury and paid back over time by a gradual increase in Medicare Part B premiums.

When the government announced there would be no SS cost-of-living-adjustment (COLA) for 2016 it meant no increase in Part B premiums for the 70 percent of Medicare beneficiaries who are receiving SS benefits. This is because of a hold-harmless provision that prevent SS benefits from being reduced because of Part B premium increases. Without the budget deal, the other Part B beneficiaries would have had a big increase to make up for the fact that most would have no increase.

The 30 percent not held harmless include new enrollees who start benefits in 2016; enrollees who don’t receive a Social Security benefit check; enrollees subject to the income-related premium adjustment; and dual Medicare-Medicaid beneficiaries, whose premiums are paid by State Medicaid programs.

In addition to smoothing out the Medicare premium increase, the budget deal also addresses a big cut in SSDI benefits that was on the horizon. It re-allocates payroll taxes among SS program trust funds to ensure solvency of the SSDI program. The SSDI trust fund was on pace to run dry in 2016, and millions of Americans were going to get an automatic 19 percent reduction in their SSDI benefits. The bill extends the life of the SSDI trust fund through 2022 by moving funds from the SS retirement trust fund to the SSDI fund.

This bill also strengthens a medical requirement so that all States’ eligibility determinations make a reasonable effort to have a physician, psychiatrist or physiologist perform the medical review. This could mean that fewer individuals would qualify for the SSDI benefit, which would mean fewer would qualify for benefits provided by state Medicaid programs. These people may be able to receive health insurance through the low-income categories in Medicaid or through the exchanges, but these benefits don’t typically cover the long-term care and home and community benefits that these individuals often require.

The new budget bill also contains a provision that will cut off benefits to millions of households now receiving them. Benefits now being received by spouses, divorced spouses or children on the work record of a spouse, ex-spouse or parent who has suspended his or her benefits will be eliminated until the worker restarts his or her retirement benefit.

About John Garner

John Garner has over thirty five years of experience in employee benefits. He specializes in compliance, health care reform, the Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Employee Retirement Income Security Act (ERISA). He helps clients with life, health, and disability benefits, cost containment, flexible benefits, and claim consulting.

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