The Medicare program provides health insurance to persons ages 65 and older, as well as persons under age 65 who have been entitled to monthly benefits based on total disability for at least 24 months. In the case of some disability diagnoses, the waiting period is waived.
Medicare has several parts to its program. Basic hospital insurance, or Medicare Part A, is financed through payroll taxes. There is also an elective supplementary medical insurance, or Medicare Part B, plan for which monthly premiums are charged. Medicare also offers Medicare Part C (Medicare Advantage) plans that include both Parts A and B coverage and additional benefits, sometimes at an additional cost. Finally, Medicare Part D provides optional prescription drug coverage for an additional premium. Both Medicare Parts C and D are offered through private insurance companies approved by Medicare.
Eligible railroad retirement annuitants and social security beneficiaries whose benefits are payable by the RRB are automatically enrolled under Part A and Part B; however, Part B may be declined by the annuitant or beneficiary. Eligible nonretired persons must apply in order to obtain Medicare coverage. The RRB automatically enrolled almost 27,200 beneficiaries for Medicare during fiscal year 2015. As of the end of the fiscal year, about 465,600 persons were enrolled in the Part A plan, and nearly 446,300 (96 percent) of them were also enrolled in Part B.
Except for benefits for services in Canada, which are paid from the Railroad Retirement Account, Part A benefits for railroad enrollees are paid from the Federal Hospital Insurance Trust Fund, the same as for persons covered under the social security system. Part B benefits are paid from the Federal Supplementary Medical Insurance (SMI) Trust Funds. The carrier for Part B claims of railroad Medicare enrollees made payments totaling $829 million in the 2015 fiscal year.
The regular monthly premium for Part B was $104.90 throughout fiscal year 2015. Beneficiaries with modified adjusted gross incomes above certain thresholds pay higher Part B and Part D premiums under the Income Related Monthly Adjustment Amount (IRMAA) provisions of law. At the end of fiscal year 2015, approximately 11,000 Part B premiums and about 8,500 Part D premiums were increased by an IRMAA amount.
The RRB generally withholds Part B premiums from the annuitant's benefit payments, and at the end of fiscal year 2015 some 426,100 annuitants were having their premiums withheld. Of the remaining Part B enrollees, over 2,600 were paying premiums to the RRB, either directly or through an intermediary, and 17,500 had their premiums paid by State agencies. The RRB periodically transfers premiums to the SMI Trust Funds.
Recently, the RRB began offering to collect Part C and Part D premiums from monthly benefits through an exchange process. While this option has grown in popularity, many annuitants pay their Part C and Part D premiums directly to their plan. At the end of fiscal year 2015, more than 9,000 Part C premiums and almost 35,800 Part D premiums were deducted from benefits paid by the RRB.