Medicare Part B Premiums: A Hidden Income Tax

David T. Meeting, DBA, CPA, and Michael Cornick, PhD, and Charles Alvis

Many senior citizens express concern about potential reductions in Medicare benefits, yet while this question is important, seniors and their financial advisors should also look at the premium cost side of Medicare. A previous article by the authors demonstrated that Medicare is not a free good, but a cost that is rising faster than the Social Security cost-of-living adjustment (COLA) (Charles Alvis, David T. Meeting, and Michael Cornick, “Retirement Planning: Accountants Should Consider Medicare Costs,” The CPA Journal, March 2009). In 2010, Medicare premium costs again increased relative to Social Security, especially since there was no COLA increase.