The “supplement” for seniors will cost roughly $14 billion, which will be gleaned from Social Security payroll taxes on earnings between $250,000 and $359,000 a year. Right now, they only pay Social Security taxes on the first $106,800 of their incomes.
The tax will likely not go over well with those who have to pay it, but it’s obvious that something needs to be done to assist seniors in the absence of the cost of living adjustment.
The theory is seniors will spend it on health care needs that include medications and topping off their Medicare supplements for better health coverage. This economic boost for seniors will be a welcome relief as Medicare Part B costs will increase as much as 9% in 2010, with Part D costs increasing about 11.1% for 2010.