Debt Deal: What Changes Are in Store for Medicare?

Last Updated Aug 26, 2011 2:30 PM EDT

Medicare will be scrutinized by the bi-partisan committee that will be appointed to make recommendations to Congress for reducing entitlements, as a result of the recent debt compromise. Medicare will be protected, however, from the automatic reductions in entitlements that will go into effect if the bi-partisan committee doesn't come to any agreement, or if Congress doesn't adopt their recommendations.

What could this mean for your retirement planning? To see what this bi-partisan committee might recommend, let's take a look at the following recent proposals to change Medicare:
  • Proposals by Rep. Paul Ryan (R-Wisconsin)
  • The report of the National Commission on Fiscal Responsibility and Reform, the bi-partisan panel headed by former Senator Alan Simpson (R-Wyoming) and Erskine Bowles, known as the Simpson-Bowles recommendations.
  • Public remarks by President Obama
It's important to keep in mind that the Patient Protection and Affordable Care Act -- a.k.a. Health Care Reform and Obamacare, passed in 2010 -- contains provisions to contain the costs of Medicare, as well as expand benefits in some areas. Many of these provisions haven't yet become effective, so let's review those provisions first.

Next: A review of Obamacare
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    For more than 35 years, consulting actuary Steve Vernon helped large employers design and manage their retirement programs. Now he's a Research Scholar for the Stanford Center on Longevity, where he helps collect, direct, and disseminate research that will improve the financial security of seniors. He also delivers retirement planning workshops and has authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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