Medicare premiums, deductibles, and co-payments are updated each calendar year based on formulas set by Congress in statute. For 2013, the new Medicare deductible, coinsurance, and monthly premium rates for Part A and Part B are described below.
These apply to most but not all Medicare beneficiaries. Full-benefit dual eligibles – folks who are enrolled in both Medicare Part A and Part B and also their state’s Medicaid program – have no premiums or other cost sharing. Medicare beneficiaries who choose to receive their Part A and Part B benefits through a Medicare Advantage health plan often have lower premiums and cost sharing than enrollees in traditional fee-for-service Medicare. Medicare consumers who pay for private Medigap coverage or are covered under a employer or union retiree plan will also experience different and lower cost sharing. Finally, low-income Medicare beneficiaries who do not qualify for full Medicaid coverage may apply for assistance, with the state Medicaid program paying for most or all of the cost sharing on a sliding scale based on income.
Medicare Part A – Hospital Insurance:
Medicare Part A – also known as Hospital Insurance or HI – covers certain, mostly institutional care services, including inpatient hospital, skilled nursing facility, and hospice services. While the bulk of Medicare Part A costs are covered by taxpayers, Medicare beneficiaries are generally subject to certain deductible and coinsurance requirements.
Inpatient Deductible and Coinsurance: The Medicare Part A inpatient hospital deductible is $1,184.00 for CY 2013. In addition, when a beneficiary receives inpatient hospital services for more than 60 days during a spell of illness, he or she is responsible for a coinsurance amount equal to one-fourth of the inpatient hospital deductible per-day for the 61st through 90th day spent in the hospital. In 2013, this is $296.00 a day for the 61st through 90th day. Each beneficiary has 60 lifetime reserve days of coverage, which they may elect to use after the 90th day in a spell of illness. The coinsurance amount for these days is equal to one-half of the inpatient hospital deductible. In 2013, these lifetime reserve days is $592.00 a day for 91st-150th day. Costs for Medicare Advantage plan enrollees are often less.
SNF Coinsurance: There is also Medicare coinsurance for skilled nursing facility (SNF) services. Specifically, a beneficiary is responsible for a coinsurance amount equal to one-eighth of the inpatient hospital deductible per day for the 21st through the 100th day of Skilled Nursing Facility (SNF) services furnished during a spell of illness. For 2013, this works out to be $148.00 a day for 21st-100th day of SNF care. (Don’t confuse SNF care with long-term nursing home care. Medicare covers skilled level, largely post-acute care; has a limited home health benefit; and does not cover long-term care.)
Medicare Part A also has special co-payment amounts for certain other services.
Part A Premium: Most Medicare beneficiaries are covered by Part A without a monthly premium. For them, participation in Part A is automatic and not voluntary. However, some people are subject to a monthly premium because they didn’t qualify for Part A (they and their spouse have less than 40 quarters of covered employment under Social Security). They may voluntarily enroll in Part A and pay a premium – that is, they buy into Medicare Part A. In addition, since 1994, voluntary enrollees may qualify for a reduced premium if they have 30-39 quarters of covered employment. When voluntary enrollment takes place more than 12 months after a person’s initial enrollment period, a 10 percent penalty is assessed for 2 years for every year they could have enrolled and failed to enroll in Part A. In 2013, the base monthly premium for Part A is $441.00 for these voluntary Part A enrollees. The 2013 monthly premium for voluntary enrollees with 30-39 quarters of covered employment is $243.00, a 45 percent discount from the full premium. For those who delay voluntary enrollment and are therefore subject to the added penalty, the monthly premium with the 10 percent surcharge is $485.10. For those voluntary enrollees with 30-39 covered quarters but who enroll late, the monthly premium is $267.30. Higher income enrollees may pay more.
Medicare Part B – Supplementary Medical Insurance:
Medicare Part B – also known as Supplementary Medical Insurance or SMI – covers a variety of outpatient services, including physician services, outpatient hospital care, physician administered drugs and biologics, outpatient dialysis, and certain durable medical equipment and supplies (DMEPOS). Part B has a different cost sharing structure than Part A.
While Part B participation is voluntary, Part B costs are heavily subsidized by taxpayers and therefore generally a good financial deal for beneficiaries. About 95% of all Medicare beneficiaries elect to enroll in Part B. Like Part A, Medicare Part B has a late enrollment penalty.
In 2013, the premium, deductible, and copayment structure is:
- Monthly premium of $104.90 for most beneficiaries. Higher income beneficiaries are subject to somewhat higher premiums.
- Annual deductible of $147.00
- Co-payment (coinsurance) of 20%
Again, enrollees in Medicare Advantage plans often pay less (e.g., lower monthly premium, lower or no deductible, lower co-pays). So do enrollees in one of the four Medicare Savings Programs, where state Medicaid programs cover some or all of the patient costs of Part A or Part B. Also, as mentioned above, patients who are enrolled in both Medicare and Medicaid (full-benefit dual eligibles) are exempt from the Part B premiums, deductible, and 20% co-pay and from the Part A deductible and coinsurance.
The Part B deductible and 20% co-pay do not apply to a long list of preventive services, including an annual wellness exam and most cancer screening tests. These are paid by the general taxpayer and are no cost to the beneficiary.
Beneficiary out-of-pocket costs can also be different is the provider does not accept assignment. In those cases, the patient may have to pay upfront and seek reimbursement. The vast majority of providers participate in Medicare and accept assignment, but given Medicare reimbursement cuts, including those imposed to help pay for the Affordable Care Act (ACA), the number of non-participating providers may increase in future years.
Learn More About Medicare Costs:
Yes, it’s very complicated. And the above is only a summary description. There is much more to it. Medicare premiums and cost sharing policies are highly complex, subject to change, and affect beneficiaries differently based on a variety of factors. So it’s important to consult Medicare.gov and your local Social Security office. Beneficiaries covered by a Medicare Advantage plan, Medigap insurance policy, state Medicaid program, Medicare Savings Program, or employer retiree coverage should consult those sources as well and understand what they cover and cost.