Medicare Program Takes on More Income-Related Features

Retirement Accounts and Wealth, 2001

May 2004, Vol. 25, No. 5
Paperback, 16 pp.
PDF, 670 kb
Employee Benefit Research Institute, 2004

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Executive Summary

Medicare Program Takes on More Income-Related Features—The Medicare Prescription Drug, Improvement and Modernization Act of 2003, which added a prescription drug benefit to Medicare, also eliminated the flat Part B premium for all beneficiaries. In the future, although the benefits package will be the same for all beneficiaries regardless of income, the highest paid workers will pay higher payroll taxes and the highest income beneficiaries will pay a higher Part B premium. This change has attracted very little attention, but it may be indicative of measures that will become necessary to keep Medicare solvent in the years ahead, and that will require retirees to spend more of their income on health insurance and health care services.

Retirement Accounts and Wealth, 2001—In order to assess the adequacy of Americans' preparations for retirement, this article examines the ownership of individual retirement accounts and 401(k)-type plans by Americans age 21 and older as well and the plans' balances. It also investigates the number of years that plan owners have contributed to these plans, compares the wealth of those who do and do not own the plans, and discusses the effect of plan ownership on overall wealth.