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’ll all be eligible in the next several years. And one of the biggest 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 one 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.
Most people do, however, 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 for next 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 (COLA) 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 don’t 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 by a state agency; and pay higher premiums based on their higher incomes.
This year, as in the past, the government has worked to lessen projected premium increases for these beneficiaries, while 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, 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. This deductible covers your share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period.
Since 2007, higher-income people with Medicare have paid higher Part B premiums. These income-indexed rates affect about five percent of people with Medicare. So, for example, a person with Medicare who files an individual tax return showing an income between $85,000 and $107,000 will pay a Part B premium of $187.50 per month next year.
For more information about 2017 premiums and deductibles, go to www.medicare.gov, or call Medicare any time of day or night, at 1-800-MEDICARE (1-800-633-4227).
Cate Kortzeborn is Medicare’s acting regional administrator for Arizona, California, Hawaii, Nevada, and the Pacific Territories.