Medicare Costs 2016

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Updated 9/28/16

2017 Medicare Part B Premiums

At the outset of 2016, a proposed price hike in Medicare Part B premiums — to the tune of 52 percent — had Medicare beneficiaries on edge about their monthly bills. Fortunately, that higher rate increase failed to materialize. Had it happened, an estimated 52 million people would have taken a devastating hit. The 2016 premium increase turned out to be more moderate than expected. And for some Medicare beneficiaries, 2015 rates still apply.

Medicare Cost for 2016 Click Here To Get 2016 Pricing

It’s understandable why the rate increase jumped so high at first. The Centers for Medicare & Medicaid Services (CMS) cited several reasons for the price hike, including paying off mounting debt from past years and ensuring funding for future coverage. But another important factor was that 2016 saw no cost-of-living adjustment (COLA) for Social Security benefits. For 70 percent of Medicare beneficiaries, this meant that premium rates would stay the same in 2016. The remaining 30 percent — about 15.6 million enrollees — faced higher monthly premiums. And everyone who signs up for Medicare in 2016, regardless of enrollment status or income, will pay a higher annual deductible.

Fortunately, Congress passed a law in late November 2015 preventing this increase. As such, 2016 Medicare Part B premiums for those 30 percent of beneficiaries targeted were kept at more reasonable levels. It’s true that there will be still be some increases for premiums and deductibles, although at a much lower rate of 16 percent. For those who will pay the higher rate, the standard monthly Part B premium is now $121.80 a month. This includes new 2016 enrollees and people whose Medicare payments are rolled in with Social Security. And the good news continues, as the other 70 percent of Medicare consumers are again paying a $104.90 monthly premium for the third year in a row.

Taking Action to Reduce Premiums

Since Medicare was established in 1965, premium and deductible rates have played a large role in beneficiaries’ budgets. This is why premium rate increases can be so damaging and why the proposed 52 percent hike for 2016 Medicare Part B premiums could have been such a serious issue. In 2014, nearly 40 million enrollees relied on original Medicare (Parts A and B) for their healthcare needs, with 7.4 million Part A enrollees and 33.4 million Part B enrollees. Disruptions or changes to monthly premium and annual deductible rates have a significant impact on the nation’s healthcare system and people’s individual finances.

One chief responsibility of the CMS is to set insurance costs, including 2016 Medicare Part B premiums. The agency announced the proposed price increases on November 10, 2015. This was the decision of the Medicare Board of Trustees (the Board), a group of six government and public representatives who oversee the insurance program’s financial operations.

The Board saw this increase as necessary based on three factors:

  • Part B spending for 2014 had been higher than expected.
  • They needed to make sure that there were adequate reserves in the Supplementary Medical Insurance (SMI) Trust Fund. The SMI, which applies to both Medicare Part B and Part D (prescription drug coverage), is funded by beneficiary premiums, Congressional funding and general revenues. Aside from Parts B and D, the SMI pays for Medicare’s administrative costs.
  • There was no 2016 cost-of-living adjustment (COLA) for Social Security benefits. With the way Medicare is structured, 70 percent of all beneficiaries are saved from having to pay increased 2016 Medicare Part B premiums because of the hold harmless rule. The remaining 30 percent of enrollees are responsible for paying the higher 2016 Medicare Part B premiums.

Among the 15.6 million Medicare enrollees not covered by the “hold harmless” provision are those applying for Part B the first time. You may also have to pay the higher 2016 rates if:

  • You’re not currently collecting Social Security benefits
  • You’re paying a higher premium based on income
  • Your premiums are paid for by Medicaid (dual eligibility)
  • You’re billed directly for Part B premiums

To determine how much someone pays for Part B premiums, Medicare uses the following income ranges for single tax filers:

If you earn: You’ll pay:
Up to $85,000 per year $121.80 per month
Above $85,000 to $107,000 per year $170.50 per month
Above $107,000 to $160,000 per year $243.60 per month
Above $160,000 to $214,000 per year $316.70 per month
Above $214,000 per year $389.80 per month

Joint tax filers will double the amount of income of a single person to determine the monthly premium rate (starting with $170,000 per year as the initial threshold). For example, if you file joint taxes with your spouse and you earn $200,000 per year for both of you, then you would pay $170.50 per month for Part B coverage.

Congress passed the Bipartisan Budget Act of 2015 (Public Law 114-74) on Nov. 10, 2015. The result was that those beneficiaries facing higher premiums would have a far smaller rate increase of only 16 percent. This means that they’ll pay only $121.80 in 2016, compared to $104.90 in 2015. But to help pay for this lower monthly premium, a $3 repayment surcharge was included, which will be added over time. The other 70 percent of original Medicare enrollees are again paying a $104.90 monthly premium, as with 2013, 2014 and 2015. According to the CMS press release on the 2016 rates:

Our goal is to keep Medicare Part B premiums affordable. Thanks to the leadership of Congress and President Obama, the premiums for 52 million Americans enrolled in Medicare Part B will be either flat or substantially less than they otherwise would have been,” stated Andy Slavitt, the CMS’s Acting Administrator. “Affordability for Medicare enrollees is a key goal of our work building a health care system that delivers better care and spends health care dollars more wisely.

Medicare Cost for 2016 Click Here To Get 2016 Pricing

According to the Department of Health and Human Services (HHS), the agency overseeing the CMS, Medicare currently provides 47.9 million Americans 65 years or older with access to high-quality, affordable and convenient health insurance. Another 9.1 million individuals with certain disabilities, including end-stage renal disease (ESRD) and Amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease), receive this coverage today.

Medicare Part B provides medical insurance, which includes any services and supplies considered medically necessary or preventive. “Medically necessary” refers to any services and supplies considered essential for the prevention, diagnosis or treatment of a wide array of conditions, illnesses, injuries or diseases, as well as their symptoms. These services and supplies must also meet the accepted standards of medicine.

Meanwhile, Part B preventive services and supplies are vital to preventing or detecting illness at an early stage, when treatments are most likely to work. To meet this requirement, Medicare Part B provides members with annual wellness visits along with a one-time “Welcome to Medicare” preventive visit. Part B enrollees are also eligible for many others services, including:

  • Ambulance services
  • Bloodwork
  • Chiropractic services (if medically necessary)
  • Clinical laboratory and diagnostic tests
  • Durable medical equipment (DME) as it relates to home use. It must be long-lasting, prescribed by doctors and considered medically necessary. DME includes at-home hospital beds; blood sugar (glucose) monitors and test strips; canes, crutches, walkers and wheelchairs; and oxygen equipment and accessories.
  • Doctor visits
  • General nursing
  • Home health care
  • Mental health care (inpatient, outpatient and partial hospitalization)
  • Nutrition therapy services
  • Occupational, physical and speech therapy (with limitations)
  • Prescription drugs
  • Screenings, including those for alcoholism, cardiovascular disease, cancer (e.g., cervical, colorectal, lung or prostate), depression, diabetes, glaucoma, HIV, obesity and sexually transmitted infections
  • Second opinions (before surgery)
  • Semi-private rooms
  • Shots, including flu, hepatitis B and pneumonia
  • Surgery

2016 Medicare Premiums Increases Lower Than Expected

Updated 2/25/2016 The Centers for Medicare & Medicaid Services (CMS) is tasked with the nation’s healthcare. Part of the U.S. Department of Health and Human Services (HHS), one major responsibility of this agency is setting insurance costs, including Medicare premiums, for 2016 and beyond. The CMS announced its planned costs for both premiums and deductibles back on November 10, 2015.

While much has changed year-to-year, the news is pretty good for beneficiaries, particularly for Medicare Part A and Part B (together known as Original Medicare). For Medicare Part A (hospital insurance), 99 percent of members typically pay no premiums. And those who do have to pay Part A premiums will only have to pay a few dollars more each month. Certain Part A-related costs (deductibles, coinsurance) saw only minor hikes, as well.

The news may be even better for Medicare Part B (medical insurance) premiums. As with 2013, 2014 and 2015, the majority of enrollees will not see their Medicare premiums for 2016 increase; they’ll again pay $104.90 per month. But those members who do pay a monthly premium can also take a breath of relief, as a previously announced — and huge — increase in premiums and deductibles never materialized. This increase was seen as necessary, due to multiple factors, including lack of a 2016 cost-of-living adjustment (COLA) for Social Security benefits.

While no COLA means that 70 percent of Part B enrollees are spared from paying higher Part B premiums in 2016, the remaining 30 percent would have to pay more. Fortunately, a law passed in late-2015 meant that these enrollees’ premiums and deductibles only increased by 16 percent. For this 30 percent of Part B enrollees, monthly premiums only increased from 2015’s $104.90 to $121.80 in 2016. Meanwhile, the protected 70 percent again pay a $104.90 monthly premium.

As for Part C (Medicare Advantage, private insurance plans) and Part D (Prescription Drug Plans; PDPs) your Medicare premiums for 2016 are based on your specific plan, which have varying prices. But for Part D, typically, the higher your income from 2014, the most recent tax year reported to Social Security, the more you can expect to pay.

2016 Medicare Part A Premium Update

Medicare Part A coverage refers to hospital insurance, including inpatient hospital, skilled nursing facilities (SNFs) and some home healthcare services. With Part A, 99 percent of enrollees typically pay no premiums. However, you must have earned at least 40 employment credits (based on the period of time in quarters that you’ve worked and paid the Medicare tax) throughout your working life in order to receive premium-free Part A coverage.

Upon retirement (at age 65), these benefits and taxes are calculated to determine your contribution toward Medicare. Specifically, each working year is broken down into four quarters. According to the Social Security Administration (SSA), in 2016, for one quarter of coverage (QC), $1,260 in earnings is required to qualify for a Medicare work credit; in 2015, this amount was $1,220. The SSA may raise this amount yearly, depending on average earnings.

Monthly Part A Medicare premiums for 2016 for beneficiaries who do have to pay have only gone up a few dollars a month, compared to 2015’s rates. These rates apply to individuals 65 and older, as well as those with certain disabilities: end-stage renal disease (ESRD) and Amyotrophic Lateral Sclerosis (AML, or Lou Gehrig’s disease). Specifically, the Medicare premiums for 2016, depending on earned QCs, are as follows:

  • 40 quarters ore more get premium-free Part A coverage
  • 30-39 quarters pay $226 in 2016, compared to 2015’s $224
  • 30 quarters or below pay the full premium, $411 a month, compared to 2015’s $407

2016 Medicare Part A Premium Update

Medicare Part B coverage refers to that for medical insurance, including those services and supplies considered medically necessary. Generally, enrollees use their coverage for doctors’ visits (such as annual “Wellness” visits), although it also encompasses an array of additional services. Among these are: vaccinations (flu, HIV), assorted screenings (cancer, alcoholism, diabetes), ambulance use, clinical research, durable medical equipment, second opinions and mental health visits.

In regard to Medicare premiums for 2016, once again, most beneficiaries will pay $104.90 per month. However, an estimated 52 million Americans (about 30 percent of all part B members) must pay higher monthly premiums. And according to the Medicare Board of Trustees (the Board), the six members who oversee the program’s financial health, these premiums and deductibles were forecast to go up by 52 percent, compared to 2015.

The Trustees saw this huge increase as necessary, due to such factors as: previous years’ financial debts; setting aside funding for Medicare’s future; and the lack of a 2016 cost-of-living adjustment (COLA) for Social Security benefits. Under Medicare’s hold harmless rule, the lack of a COLA means that 70 percent of Part B enrollees are spared from paying higher Part B premiums in 2016. But the remaining 30 percent of enrollees would have faced the massive increases.

The estimated 30 percent of people who will see an increase in their monthly Part B premiums and deductibles cover a wide range of people. For example, people applying for Medicare Part B for the first time may pay higher premium amounts. In addition, higher premiums must be paid by: those not currently collecting Social Security benefits; “dual eligible” beneficiaries (those with premiums paid by Medicaid); and those paying additional income-related premiums. Medicare Part B enrollees, whether single or joint filers, may also have to pay even more for their premiums, depending on their earned incomes:

Single filers earning:

  • Less than or equal to $85,000 will pay $121.80 in monthly premiums
  • $85,000–$107,000 = $170.50
  • $107,000–$160,000 = $243.60
  • $160,000–$214,000 = $316.70
  • $214,00 and up = $389.80

Joint filers earning:

  • Less than or equal to $170,000 will pay $121.80 in monthly premiums
  • $170,000–$214,000 = $170.50
  • $214,000–$320,000 = $243.60
  • $320,000–$428,000 = $316.70
  • $428,00 and up = $389.80

However, with Congress passing the Bipartisan Budget Act of 2015 (Public Law 114-74) on Nov. 10, 2015, those estimated enrollees forced to pay for premiums and deductibles saw their costs increase by only 16 percent; $121.80 in 2016, compared to $104.90 in 2015. This includes a $3 repayment surcharge, which will be added to monthly premiums over time to cover 2016’s reduced premiums. Meanwhile, the protected 70 percent again pay a $104.90 monthly premium.

And while these lower-than-expected increases are welcome, enrollees may face higher premiums, in smaller amounts over the next nine years. There will also be an additional $3 cost to Part B monthly premiums. These smaller annual increases are thought to be easier for the majority of members.

There’s no getting around it. When people turn 65, they get Medicare. Some seniors are well off enough to not worry about monthly premiums, deductibles, out-of-pocket maximums and the price of their prescription drugs. These seniors have investments perhaps, as well as a retirement from a big company or the military to fall back on.

Other seniors aren’t exactly poor, but they could use a little help paying for their Medicare benefits. They too, get a retirement check each month from Social Security. But it’s not enough to cover expenses and medical care, too. Then there are those seniors who don’t have a retirement plan. These are the people who need help the most.

So the question is, what are the costs for Medicare in 2015?

2016 Medicare Part A Costs

Most people don’t have to pay for Part A, or the hospitalization portion of Medicare. They paid for it with payroll deductions all their working lives. That’s the good news. These people will need to pay the deductible before Medicare pays their part. That doesn’t mean people need to scrape and scrounge to pay it before they go to the hospital. Instead, they will be billed for the amount incurred by the hospitalization, and when the deductible is paid, Medicare will kick in and begin paying its share.

The bad news is that people who did not personally work or did not have a spouse that worked and paid payroll taxes towards Medicare will need to pay for Medicare Part A. There will be a monthly premium, in addition to the deductible, out-of-pocket maximum, coinsurance and prescription drugs. Folks will get a bill every three months (quarterly). The bill can be paid by check, credit card or checking account deduction.

Seniors who have to pay for Part A will pay a $407 monthly premium in 2015. A benefit period is usually a year. Per benefit period, the deductible is $1,260. Folks pay nothing for the first 60 days of hospitalization. From day 61 to day 90, they will pay $315. Days 91 to the lifetime reserve days will cost $630, with a 60-day cap over the period of the senior’s lifetime.

In skilled nursing facilities, seniors will pay nothing for the first 20 days. For days 21 to 100, folks will pay $157 per day. From day 101 until they leave, the senior will pay for everything.

2016 rates will be pretty close to the 2015 rates for Part A benefits.

2016 Medicare Part B costs

Part B is the medical insurance portion of Medicare. It covers doctor visits, medical equipment and perhaps some prescription drugs. As with Part A, the deductible will need to be paid before Medicare pays its share. The good news is that the premium can be taken out of the Social Security check each month. Folks just need to plan their budget around the payment. The bad news is that Part B doesn’t cover many services seniors need. So, they will either pay out-of-pocket for those services. Or, they will need a supplementary plan that does cover services, drugs and other medical needs.

Payment for Part B depends on people’s income on their tax returns from two years prior. Most single people and couples making up to $170,000 a year will just pay the normal premium amount each month of $104.90 in 2015. The deductible per year is $147.00. If single people made above $85,000 on your tax returns two years ago, and couples made $214,000, their monthly premium will be $146.90. Those singles and couples with an income of over $107,000 will pay a monthly premium of 209.80. Folks who made over $160,000 in addition to couples who made over $320,000 will pay a monthly premium of 272.70. Singles who made over 214,000 and couples who made over $428,000 will pay $335.70 each month. The copay is 20 percent of the cost of covered services. Rates for 2016 have not been released yet.

The good news is that Medigap policies will pay monthly premiums, copays, coinsurance and deductibles for Part B if people have trouble paying them.

There are proposed changes for Part B beginning in 2015 and lasting the length of the ACA. The purpose of the changes is to decrease Medicare spending over the next eight years, as well as to cover the tens of thousands of seniors who are just coming into their Medicare years. These changes will ask that more prosperous seniors pay a larger monthly premium in order to help lower income seniors pay their premiums.

At some point in the next few years, that income-related premium will be frozen, at approximately 35 percent of Part B costs. Over the next five years, Part B costs will rise at a rate of 2 percent each year, until 2023 when the premium would be $200 per month.

2016 Medicare Part C (Medicare Advantage) Costs

Like an HMO or PPO, Medicare Part C (also known as Medicare Advantage) covers everything Parts A and B cover under Original Medicare plans. But it also covers some prescription drugs, specialists and some necessary medical devices.

People simply must have Parts A and B in order to get C. Part C doesn’t come from Medicare, but is carried by private insurance companies. Seniors will locate an insurance company that carries all the plans they will need, like Medigap plans and Advantage plans. They will pay the plan for these, not Medicare. They will pay just like Part A, with a check, credit card or debit from their checking account.

Medicare Advantage plans usually have a co-pay of $10 or $20. Each plan has an out-of-pocket limit on what people will pay. For instance, a short stay of perhaps three days in hospital might cost the insured $150 per day. The insured will be responsible for the total cost, because the maximum amount of days was not reached. Since private insurers carry Medicare Advantage plans, costs will vary. People will need to compare plans and prices, depending upon each insured’s medical conditions and financial circumstances.

2016 Medicare Part D costs

This is the prescription drug portion of Medicare. And, this is where seniors might get a bit confused. There is something called a “donut hole,” a coverage gap that the government is working to get closed in 2020. Until then, seniors needing prescription drugs will pay a copay. The senior will pay this until the total drug amount is $2,960; this increases to $3,310 in 2016.

Now, the senior is in the donut hole. She or he will pay 45 percent of the cost of name brand prescription drugs and 58 percent of the cost of generic drugs, up to $4,700; this increases to $4,850 in 2016. After this is a payment of which Medicare picks up a portion, and the senior pays a copay. This will last until the end of the benefit period.

Part D is set up on tiers or levels. The highest level of prescription drugs is the name brands, and they are the most expensive. The middle tier or level is medium in expense. This level is for seniors who could use some extra “oomph” in their prescription drugs. The bottom tier or level includes generic drugs.

Private insurance companies carry Medicare Part D. If folks have trouble paying for their medications, and they fall within 100 percent of the Federal Poverty Line, they might be eligible for Medicaid. This program will pay pretty much everything but the copay. There are also state-sponsored subsidies for those who have trouble paying for their medications. However, they are not offered; you have to ask for them. Additionally, there are Medigap plans that will cover some of Part D’s costs.

There are a few changes that have been approved by the Centers for Medicare and Medicaid Services (CMS) to Medicare Part D for 2015. For instance, CMS has approved a new system to notify Medicare Part D beneficiaries of changes to their plan. In addition, the initial deductible will be increased by $10 a year to $320, the donut hole will commence at $2,960 in 2015 from $2,850 in 2014; it increases to $3,310 in 2016. The out-of-pocket threshold to clear the donut hole will also increase to $4,700; this increases to $4,850 in 2016. However, while in the donut hole, participants will only pay 45 percent of the cost of name brand drugs and 58 percent of the costs of generic drugs.

2016 Medigap Plan costs

In all but three states, Medigap plans are the same. They are organized into plans A through N. These plans are offered by private insurance companies and are not part of Medicare. They offer the same things Medicare does and then some.

Plans A, B and C: These plans offer what their Medicare counterparts offer, with a twist. Coverage provided outside of the country is offered, along with hospice care and coverage for Plan B coinsurance, copays and deductibles. These plans offer lower costs and manageable premiums.

Plan F: This plan offers all the above, plus 100 percent of Plan B’s out-of-pocket expenses. This may have a higher deductible, so premiums will be less.

Plan D: Plan D covers all the above, minus Part B’s deductible and out-of-pocket charges.

Plan F: Covers everything.

Plan G: Covers everything, but the Plan B deductible.

Plan K: This plan only covers 50 percent of Plan A and B coinsurance and copayment. It only pays 50 percent of Part A’s deductible. It doesn’t cover Part B deductible or out-of-pocket expenses, nor does it pay for foreign travel emergency care.

Plan L: This plan pays for 75 percent of Plans A and B coinsurance and copays. It only pays 75 percent of everything in Plans A and B. It doesn’t cover Part B deductibles or out-of-pocket expenses or out of the country emergency care.

Plan M: This plan pays for everything except the Part A deductible; it pays 50 percent of that. It does not pay for Part B’s deductible at all. It does not pay for Part B out-of-pocket expenses or foreign travel emergency care.

Plan N: This plan pays for everything except Part B’s deductible and out-of-pocket expenses.

Payroll deductions

More people are working into their 60s and 70s, in an effort to simply stay alive. Social Security is paying later and later. Folks need to eat and have shelter, so they work. Remember, if you don’t work, you have to pay for Medicare yourself.

A portion of the Social Security tax has gone each year to pay for Medicare. In the early 90s, Medicare and Social Security taxes were itemized separately on paycheck stubs to show how much was going into which kitty. The maximum employer-employee contribution was removed. This means that since then, 1.45 percent of wages earned went into Medicare. Employers match the employee deduction.

Other ways to pay for Medicare

There is state and federal programs that help people pay their Medicare premiums and deductibles if they have trouble affording them. Some programs will even pay for coinsurance and copays. These programs can be researched online at Medicare.gov.

A federal program called Extra Help is available to those who cannot afford their prescription drugs. If you fall below a certain level on the Federal Poverty Line and are signed up for Supplemental Security Income (SSI), Medicaid or another assistance program, you are already eligible for Extra Help. This means that, you don’t need to sign up for it.

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If people take a name brand prescription drug for their medical condition, check with the pharmaceutical company that manufactures the medication. Several pharmaceutical companies have programs to help people who cannot afford their medications. In many cases, these prescription medications can be gotten free or for a notable discount.

Folks who suffer from a particular disease, such as diabetes, might also check with national disease companies and councils. Help with diabetic supplies, for instance, is most always forthcoming from such places. Check online to see if a particular condition or illness has some sort of support group. These will often have information on ways to pay for prescription drugs, supplies or medically necessary equipment.

With prices on everything rising every day, it can be difficult, if not impossible to afford it all. Medical help and medications should not cost you a meal or the roof over someone’s head. There is help for those who in need to pay for Medicare costs. Many states combine with federal agencies to give assistance to those needing help paying for Medicare. Charities and pharmaceutical companies will help people pay for their prescription drugs and their Medicare charges. We hope this information helps.

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