For the period 1/89 through 12/89, the Medicare program was changed by the Medicare Catastrophic Coverage Act of 1988 from an acute care program into a catastrophic care program.

The additional long-term hospital benefits (effective 1989), drug benefits (in full effect 1991),and yearly cap on Part B expenses (effective 1990) were to be funded by an income tax-based premium for:

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  all who were eligible for Part A of Medicare on a non-premium basis,

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  had at least $150 income tax liability for 1989,

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  did not meet the exclusion relating to long-term residents of foreign countries.

Along with this funding, a specific add-on to the Part B premium was enacted.

The add-on to the announced Part B premium of $27.90 was $4 for most enrollees, but varied depending on whether you were a “Part B only” beneficiary (including Premium-HI enrollees) who paid no add-on at all, a resident of Puerto Rico ($1.30),or a resident of the Commonwealth and Territories of the Northern Mariana Islands, Guam, the U.S. Virgin Islands, and American Samoa ($2.10).

This legislation was repealed effective with 1/1/90. The income tax-based premium was never collected; however, the catastrophic add-on was collected from 1/89 through 12/89 for those who were enrolled in Part B during some or all of those months to help finance the Part A catastrophic benefits that had been in effect for 1989.