Raising the ages at which people can collect Medicare and Social Security would reduce federal spending and increase federal revenues by inducing some people to work longer. However, raising the eligibility ages for those programs also would reduce people’s lifetime Social Security benefits and cause many of the people who would otherwise have enrolled in Medicare to face higher premiums for health insurance, higher out-of-pocket costs for health care, or both. This issue brief reviews how ages of eligibility affect beneficiaries under current law and how delaying eligibility would affect beneficiaries, the federal budget, and the economy.
Raising the Age of Eligibility for Medicare to 67: An Updated Estimate of the Budgetary Effects
Outlays for Medicare would be lower under this option because fewer people would be eligible for the program than the number projected under current law. In addition, outlays for Social Security retirement benefits would decline slightly because raising the eligibility age for Medicare would induce some people to delay applying for retirement benefits. One reason is that some people apply for Social Security at the same time that they apply for Medicare; another reason is that this option would encourage some people to postpone retirement to maintain their employment-based health insurance coverage until they became eligible for Medicare. CBO expects that latter effect would be fairly small, however, because of two considerations: First, the proportion of people who currently leave the labor force at age 65 is only slightly larger than the proportion who leave at slightly younger or older ages, which suggests that maintaining employment-based coverage until the eligibility age for Medicare is not the determining factor in most people’s retirement decisions. Second, with the opening of the health insurance exchanges, workers who give up employment-based insurance by retiring will have access to an alternative source of coverage (and may qualify for subsidies if they are not eligible for Medicare). This option could also prompt more people to apply for Social Security disability benefits so they could qualify for Medicare before reaching the usual age of eligibility. However, in CBO’s view, that effect would be quite small, and it is not included in this estimate.
Changing the Age of Medicare Eligibility: Implications for Older Adults, Employers, and the Government
Extending Medicare benefits to nondisabled adults younger than 65, either by lowering the eligibility age outright or by allowing near elderly adults to buy into the Medicare program, could encourage some workers to retire early. By reducing or even eliminating the period during which early retirees without RHI benefits would need to purchase expensive private nongroup coverage to avoid becoming uninsured, extending Medicare coverage would lower the costs of retiring. Policies such as Medicare expansions that encourage retirement heighten concerns about the ability of the economy to support the growing retired population. But they would give some older workers who receive employer-sponsored health benefits on the current job the freedom to leave their job and pursue a second career in another line of work, or become self-employed, without worrying about the availability of health insurance coverage.
Medicare Proposal Pros and Cons
Proposed changes to the program include raising the eligibility age to 67, raising payroll taxes and requiring better-off beneficiaries to pay more. The most politically contentious plan, devised by Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, would limit federal spending on Medicare and alter the way the government pays for benefits. Republicans say this plan is a fiscally responsible way of extending Medicare’s viability as millions of boomers enter the program. Democrats call it "the end of Medicare as we know it" and a way to shift more costs to beneficiaries.
Medicare Eligibility Requirements
Part C: Medicare Part C is the Medical Advantage Plan whose services are performed by private companies also approved by Medicare. Part C combines Part A and B as well as any other necessary medical services a person may require (drug prescription, hearing, and vision services). If you are eligible for Medicare you are eligible for a Part C plan. Many people will opt for this plan because it offers the ability to add a wide range of service coverage to their medical insurance plan, but Plan C is not offered in every state. However, most Medicare Advantage Plans consist of particular doctors and hospitals in an area that a person must use in order to receive coverage for the medical treatment they receive. In addition to the premium paid for Part B Medicare coverage, a person receiving Part C coverage will have to pay a monthly premium. There are several Medicare Advantage Plans available to you. These plans include Medicare Health Maintenance Organizations (HMO), Medicare Preferred Provider Organization plans (PPO), Medicare Private Fee-for-Service plans (PPFS), Medicare Special Needs, and Medicare Medical Savings Account (MSA).