Social Security Payments Increase While Medicare Payments to Healthcare Providers Decrease

In 2008, many Medicare recipients noticed a slight increase in social security payments. With the passage of an increase, the average senior adult began receiving a 2.3 percent increase in payments each month. For seniors, the increase was barely noticeable and well below the rate of inflation. To the contrast, physicians experience a decrease in Medicare payments.

The balance of social security benefits and Medicare payments is a tricky one. With a declining economy and a rise in living expenses, many seniors are in desperate need of an increase in monthly social security benefits. However, even with the nominal increase of 2.3 percent in 2008, most seniors, on average, only realize a $24 increase each month. While social security is increased at the onset of most calendar years, this increase in 2008 was smaller than the increase in 2007. For many seniors, there is concern the increases in future years will continue to decline until, ultimately, social security benefits become a support of the past.

Not only are seniors suffering in the 2008 changes, physicians also experienced a change. With the passing of the New Year, many physicians began to experience a decline in payments, most as high as 10 percent. While many advances in healthcare have encouraged longer life spans and more advanced technology for seniors, this growing use of healthcare services has ultimately impacted physicians in an adverse way by exceeding financial projections. When Medicare financial projections are exceeded, the "formula" used by the Medicare system begins lowering reimbursement rates for those same services.

As the aging population continues to increase in numbers, we can expect there will be significant changes to Medicare reimbursement rates as well as social security payments in years to come. With more adults reaching the age of retirement, and many more living longer, we can expect there will be even lower increases in social security payments. In addition, many physicians will continue to experience lower and lower reimbursement rates as the use of healthcare continues to rise, often exceeding financial projections.

While the American Medical Association and the AARP continue to lobby for changes to the reimbursement and payment programs under Medicare and social security, many senior adults continue to struggle financially. While the use of medical services is often limited by only that which is medically necessary, even these services may be further limited in the years to come. If you are a senior adult who relies heavily upon your social security payment and your Medicare benefits, it is important to watch for additional changes and to prepare financially by consulting with a financial advisor on a regular basis.