Medicare Costs 2018

Medicare costs vary from year to year regardless of whether you’re enrolled in original Medicare or an increasingly popular Medicare Advantage plan. Created in 1965 to help seniors afford healthcare, the Medicare program has served a vital role in the lives of seniors and those with certain disabilities for over 50 years. Even though it costs something to sign up for the program, Medicare offers a more affordable alternative to health insurance than what you could buy on the individual market. If you’re new to the program this year or need to find new coverage, then you’ll need to know what to expect in terms of cost. How much you pay for coverage and services will change in 2018 since prices change every year. Here’s what you can expect for 2018 Medicare costs.

Medicare Part A In 2018

Original Medicare comprises Parts A and B. Medicare Part A is the hospital portion, covering services related to hospital stays, skilled nursing facilities, nursing home care, hospice and home healthcare. Under the Affordable Care Act, Part A alone counts as minimum essential coverage, so if this is all you sign up for, you’ll meet the law’s requirements. Most people don’t pay a premium for Part A because it’s paid for via work-based taxes. If, over the course of your working life, you’ve accumulated 40 quarter credits, then you won’t pay a premium for Part A. This applies to nearly all enrollees, but some do pay a premium as follows:

• If you earn between 30 and 39 quarter credits, the cost is $227 a month in 2017
• If you earn fewer than 30 quarter credits, the cost is $413 a month in 2017

Few people might pay the premium for Part A, but everyone with this coverage still must meet certain deductibles, and cost-sharing is still required. In 2017, you can expect the following costs:

• The Part D deductible is $1,316 per benefit period
• Once you meet the deductible, you’ll pay nothing out of pocket for the first 60 days of your stay
• For days 61 to 90, you’ll pay $329 per day
• For days 91 and beyond, you’ll pay $658 per day

After day 90, each day counts as a “lifetime reserve day,” and you get 60 of these total. Once you use up all of the reserve days, you’ll be responsible for all of the costs associated with your hospital or nursing home care. These rates are current for 2017. Costs for 2018 have not yet been released for Medicare Part A.

Medicare Part B In 2018

Medicare Part B covers medical care, including regular trips to the doctor and anything considered “medically necessary” for you. How much you pay for Part B coverage depends on different factors, such as when you enroll and your yearly income. The standard premium in 2017 is $134 a month for new enrollees, but this number actually only applies to about 30 percent of Part B beneficiaries. The remaining majority pay about $109 a month – but this will change in 2018. The standard premium applies to:

• People who enroll for the first time in 2017
• Those who aren’t currently receiving Social Security benefits
• Those paying for their Part B premiums directly
• People who are dual-enrolled in Medicaid
• Higher-income enrollees

Most people pay less than the standard amount in 2017 because of the hold harmless provision under the Social Security Act. Usually, Social Security beneficiaries get a cost-of-living adjustment (COLA) to their payments each year, but in 2016, there was no COLA. The hold harmless clause protects people getting Social Security from rising Medicare costs. In 2017, there was a very small COLA of about 0.3 percent, which kept people in the hold harmless group protected from the higher standard premium. This rule doesn’t apply to new enrollees or people who don’t have Part B premiums deducted from Social Security payments.

Next year, the 2018 COLA is expected to be around 2.2 percent, which will effectively raise the Part B premium for everyone who was protected before – everyone in the hold harmless group. New Part B enrollees in 2018 may see a slight increase in premiums, but the majority of enrollees will actually see a much higher increase because they’ve been protected from premium hikes for the last two years. Official 2018 Part B premium rates have not yet been released, but current enrollees can expect to pay about $134 a month next year.

Of course, higher-income enrollees are subject to even higher rates for Medicare Part B. If you earn above the standard income threshold, then you’ll be charged an “Income-Related Monthly Adjustment Amount” (IRMAA) along with the standard premium. When determining income, Medicare uses income information from the IRS, which dates two years back. In 2018, income determinations will be based on what you earned in 2016.

The following table lists what people paid in 2017 (for income earned in 2015). Next year, the income categories and thresholds will change, but IRMAA amounts have not yet been released.

If you earned (single tax filing):	If you earned (joint tax return):	You’ll pay:
Up to $85,000	Up to $170,000	$134 a month
Over $85,000 to $107,000	Over $170,000 to $214,000	$187.50 a month
Over $107,000 to $160,000	Over $214,000 to $320,000	$267.90 a month
Over $160,000 to $214,000	Over $320,000 to $428,000	$348.30 a month
Over $214,000	Over $428,000	$428.60 a month

Remember that these amounts only apply to people with original Medicare, specifically Part B. If you have Medicare Advantage, then you will pay the Part B premium as well as any premiums that your plan charges. Medicare Advantage must cover Part B services.

Income thresholds will change in 2018. For people who earn above $85,000, the categories for higher Part B IRMAA surcharges will change in the middle tiers as follows:

• Up to $85,000 for single filers; up to $170,000 for joint filers
• $85,001 to $107,000 for single; $170,001 to $214,000 for joint
• $107,001 to $133,500 for single; $214,001 to $267,000 for joint
• $135,501 to $214,000 for single; $267,001 to $428,000 for joint
• $214,001 and up for single; $428,001 and up for joint

Signing up for Medicare Part B is optional, as is signing up for any portion of Medicare. But if you need medical coverage, then it’s an affordable option. Just remember to sign up when you first become eligible if you want medical coverage unless you have a better option elsewhere, such as a job-sponsored plan that costs less.

If you don’t enroll in Part B when you first become eligible – the 7-month window that starts three months before the month you turn 65 and ends three months after that month – then you may have to pay a penalty fee if you decide to enroll later. For Part B, the penalty is 10 percent of your premium (charged on top of the premium rate) for each 12-month period that you didn’t have Part B coverage when you could have. The penalty lasts for as long as you have Part B.

Medicare Part B has other costs as well. Regardless of the premium you pay, you’ll be subject to the standard Part B deductible. In 2017, that’s $183 for the year. Once you hit the deductible, you’ll have to cover about 20 percent of Medicare-approved costs for your medical care, including doctor’s services, outpatient therapy, and durable medical equipment.

Medicare Part C (Medicare Advantage) In 2018

Medicare Advantage is the private portion of Medicare. Sold through individual companies, Part C covers everything that Parts A and B offer along with additional coverage options that vary by plan. Many (but not all) Advantage plans cover prescription drugs, for instance, whereas drug coverage is a separate option with an added cost under original Medicare. Advantage plans offer a wide range of options, and plan types and coverage varies by insurer.

Costs for these plans typically increase each year. In 2018, however, average premiums for Medicare Advantage plans are expected to decrease slightly over 2017 rates. Enrollees in MA plans will pay around $30 a month, on average, which is nearly $2 less per month than last year. If you’d like to learn more about Advantage, check out our guide to the program.

Medicare Part D In 2018

Added to the Medicare lineup in 2003, Medicare Part D is the prescription drug coverage portion. These plans are sold separately from original Medicare and cover prescription drugs. Because seniors tend to need more drug coverage as they age, Part D is a popular portion. What you pay for this coverage will depend on the carrier and plan that you choose, but there are certain limits imposed by the government to help people afford medication. As with Part B, if you earn more than the standard income threshold, then you’ll pay a surcharge for your Part D coverage on top of your plan’s premium. In 2017, surcharges are as follows:

If you earned (single tax filing):	If you earned (joint tax return):	You’ll pay:
Up to $85,000	Up to $170,000	The plan premium
Over $85,000 to $107,000	Over $170,000 to $214,000	$13.30 + plan premium
Over $107,000 to $160,000	Over $214,000 to $320,000	$34.20 + plan premium
Over $160,000 to $214,000	Over $320,000 to $428,000	$55.20 + plan premium
Over $214,000	Over $428,000	$76.20 + plan premium

In 2018, premium brackets will change for Part D just as they have for Part B. Those who earn above the standard thresholds will pay more for coverage.

Part D coverage varies by plan, but as mentioned above, there are caps in place that all plans must follow. Your plan may have no deductible, but if it does, it must adhere to the caps set forth by Medicare. In 2018, Part D costs include:

• A standard deductible of $405
• An initial coverage limit of $3,750
• A catastrophic coverage limit of $5,000

The Medicare Part D Donut Hole 2018

If you have Medicare Part D, then you may face a situation known as the donut hole (or coverage gap). This happens when you hit your plan’s initial coverage limit ($3,750 in 2018) but still need to buy prescriptions. Until you hit the catastrophic coverage limit – i.e., the other side of the “donut” – you’ll be responsible for the full cost of your medications.

Not everyone falls into the coverage gap. In fact, you’re not likely to reach your plan’s limits if you don’t need many medications. But if you do, costs while you’re in the donut hole can be burdensome. Fortunately, the Affordable Care Act proposed a way to help people during the coverage gap. If you fall into the donut hole, you’ll get a discount on the cost of your prescriptions. In 2018, the discount is:

• 56 percent for generic medications (you pay 44 percent)
• 65 percent for brand name drugs (you pay 35 percent)

Discounts on prescriptions while you’re in the donut hole will increase each year until 2020, at which point you’ll pay 25 percent of the cost of your medications, which is the normal rate. This will effectively close the coverage gap. As it stands, the catastrophic limit prevents you from paying higher prescription drug costs forever. Once you hit the catastrophic limit ($5,000 in 2018), you’ll only be responsible for about 5 percent of the cost of your medications for the rest of your plan year.

The Part D annual deductible, any coinsurance payments and/or copayments that you make, the discount that you get for brand name drugs, and anything that you pay while you’re in the donut hole all count toward your catastrophic limit. Excluded costs include premiums, pharmacy dispensing fees and non-covered drugs.

Keep in mind that Part D charges a penalty fee for late enrollment. If you go for more than 63 consecutive days after your initial sign-up window (the 7-month time frame surrounding your 65th birthday) without enrolling in one of the following, then you may have to pay a penalty fee on top of your Part D premium: Part D coverage, a Medicare Advantage plan with prescription drug coverage, a separate Medicare plan that covers drugs, or another creditable prescription drug plan.

You don’t have to sign up for Medicare Part D, but if you need a lot of prescriptions or costly brand name ones, it’s a good idea to get a health or drug plan that covers them. You can enroll in Part D or a Medicare Advantage plan with drug coverage.