Not long ago, I had dinner with a group of friends from college. One of the big topics of conversation was Medicare, for which we will all be eligible in the next several years. (Farewell, callow youth!) One of the most-asked questions about Medicare was, “How much is it going to cost me?”
Like private health insurance, Medicare has premiums, deductibles and co-pays. These costs can — and often do — change from year to year. What you actually pay depends on your work history, income and inflation.
Only about 1 percent of people with Medicare pay a monthly premium for Medicare Part A, which covers inpatient hospitalization, skilled nursing care and some home health services. That’s because they paid Medicare paycheck deductions for 40 quarters or longer during their working lives.
However, most people pay a monthly premium for Medicare Part B, which covers doctor fees, outpatient treatment, durable medical equipment and other items. Part B premiums are rising this year, but for most people, the increase won’t be very much.
The law protects most seniors from Part B premium hikes if the cost-of-living adjustment in their Social Security benefit doesn’t go up in a given year. Since the Social Security COLA for 2017 will be 0.3 percent, about 70 percent of Medicare beneficiaries will pay an average Part B premium of $109 per month in 2017. That’s up from $104.90 for the past four years.
The remaining 30 percent of Medicare’s 58 million beneficiaries will pay the standard Part B premium of $134 for 2017, a 10 percent increase over the 2016 premium of $121.80.
This smaller group is not protected under the statutory “hold harmless” provision linked to the Social Security COLA. It includes people who do not receive Social Security benefits; enroll in Part B for the first time in 2017; are directly billed for their Part B premium; are eligible for both Medicare and Medicaid and have their premiums paid for by a state agency; and pay higher premiums based on their higher incomes.
This year, as in years past, the government has worked to reduce projected premium increases for these beneficiaries, while also maintaining a prudent level of reserves to protect against unexpected costs. The U.S. Department of Health and Human Services will work with Congress as it explores budget-neutral solutions to challenges created by the “hold harmless” provision.
Part B also has an annual deductible, which will rise to $183 in 2017 (compared with $166 in 2016). After your deductible is met, you typically pay 20 percent of the Medicare-approved amount for most doctor services (including most doctor services while you are a hospital in-patient), outpatient therapy and durable medical equipment.
The Part A deductible, which you pay when admitted to the hospital, will be $1,316 per benefit period in 2017, up from $1,288 in 2016. This deductible covers your share of costs for the first 60 days of Medicare-covered in-patient hospital care in a benefit period.
People with Medicare pay co-insurance of $329 per day for the 61st through 90th days of hospitalization ($322 in 2016) in a benefit period and $658 per day for lifetime reserve days ($644 in in 2016).
For beneficiaries in skilled nursing facilities, the co-insurance for days 21 through 100 in a benefit period will be $164.50 in 2017 (versus $161 in 2016).
Since 2007, higher-income people with Medicare have paid higher Part B premiums. These income-indexed rates affect about 5 percent of people with Medicare. So, for example, a person with Medicare who files an individual tax return showing an income of between $85,000 and $107,000 will pay a Part B premium of $187.50 per month next year.
Some people choose to get their benefits through privately operated Medicare Advantage health plans, or purchase a Medicare Part D plan to help cover their prescription drug costs. Many of these plans carry their own monthly premiums.
For more information about 2017 premiums and deductibles, go to www.medicare.gov, or call Medicare any time of the day or night at 1-800-MEDICARE (1-800-633-4227).
Cate Kortzeborn is Medicare’s acting regional administrator for Hawai‘i, California, Nevada, Arizona and the Pacific Territories.