Medicare Beneficiaries to Save with Historically Low Premiums and Deductibles

Medicare and Medicaid beneficiaries may see significant savings in 2014, courtesy of health reform efforts, as CMS announced that the 2014 Part B premiums and deductibles for Medicare will not increase next year, and Part A premiums and deductibles are meeting or beating expectations. Additionally, the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) provision to close the prescription drug donut hole took effect, and more than 7.1 million seniors and people with disabilities who reached the donut hole have saved $8.3 billion on their prescription drugs.

Part A Premiums and Deductibles

CMS also announced a decrease in the Medicare Part A premium, which pays for inpatient hospital, skilled nursing facility, and some home health care services. The premium will drop $15 in 2014 to $426, and is paid by enrollees age 65 and over who are not otherwise eligible for benefits under Medicare Part A and by certain disabled individuals who have exhausted other entitlement. Although about 99 percent of Medicare beneficiaries do not pay a premium for Part A since they have at least 40 quarters of Medicare-covered employment, enrollees age 65 and over and certain persons with disabilities who have fewer than 30 quarters of coverage pay a monthly premium in order to receive coverage under Part A. Beneficiaries who have between 30 and 39 quarters of coverage may buy into Part A at a reduced monthly premium rate which is $9 less than 2013, at $234 for 2014.

The Medicare Part A inpatient hospital deductible is set to increase in 2014, but only slightly. The Medicare Part A deductible that beneficiaries pay when admitted to the hospital will be $1,216 in 2014, an increase of $32 from the 2013 deductible of $1,184. This payment covers beneficiaries’ costs for up to 60 days of Medicare-covered inpatient hospital care in a benefit period. After that time, beneficiaries must pay $304 per day for days 61 through 90 in 2014, and $608 per day for hospital stays beyond the 90th day. This is a slight increase from 2013, when the per day payment for days 61 through 90 was $296, and $592 for beyond 90 days. For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 in a benefit period will be $152.00 in 2014, compared to $148.00 in 2013.

Part B Premiums and Deductibles

CMS indicated that the standard monthly Part B premium rate for all enrollees for 2014 will remain at the 2013 amount of $104.90. This marks the third year that the premium has either been less than projected or remained the same. Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. Beginning in 2007, Medicare beneficiaries with higher incomes have paid higher Part B monthly premiums. According to CMS, these income-related monthly premiums, which affect less than 5 percent of people with Medicare, also will remain the same as they were in 2013.

The Part B deductible for 2014 also remains unchanged at $147.00 for all Part B beneficiaries. If a beneficiary has to pay an income-related monthly adjustment, they may have to pay a total monthly premium of about 35, 50, 65, or 80 percent of the total cost of Part B coverage. According to CMS, the last five years have been among the slowest periods of average Part B premium growth in the program’s history. These rates are scheduled to be published in the Federal Register on October 30, 2013.

“We continue to work hard to keep Medicare beneficiaries’ costs low by rewarding providers for producing better value for their patients and fighting fraud and abuse. As a result, the Medicare Part B premium will not increase for 2014, which is good news for Medicare beneficiaries and for American taxpayers,” said CMS Administrator Marilyn Tavenner in a CMS release.

Donut Hole

As of September, 2013, close to 2.8 million people nationwide who reached the donut hole have saved $2.3 billion, an average of $834 per beneficiary. These figures are higher than at this point last year (2.3 million beneficiaries had saved $1.5 billion for an average of $657 per beneficiary). Under PPACA, Medicare beneficiaries who reached the donut hole in 2010 were given a one-time $250 check, then discounts and coverage for brand-name and generic prescription drugs began phasing in, beginning in 2011. PPACA will provide additional savings each year until the coverage gap is closed in 2020.

Jonathan Blum, CMS Principal Deputy Administrator noted that, “since 2010, more than 7.1 million seniors and people with disabilities who reached the donut hole have saved $8.3 billion on their prescription drugs, an average of $1,167 per person.” According to Blum, “health care spending has grown more slowly in the past few years than it has since the 1960s. We’re working hard to make sure these gains continue. Meanwhile, lower costs and better care is great news for the Trust Funds, great news for taxpayers, and really great news for people with Medicare.”