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Medicare Costs in 2016

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You may have heard that Medicare premiums were due for a drastic increase in 2016. However, thanks to the Bipartisan Budget Act of 2015 that was signed into effect on November 2, 2015, those costs are not going to be as high as originally thought for Medicare Part A and Part B participants.

There are 52 million Americans that are expected to be enrolled in Medicare Part B in 2016. The premiums are broken up into two categories:

1) Those that are considered to be “held harmless” from a premium increase, which constitute about 70% of Part B users.

2)  Those that are not subject to the “hold harmless provision”, including those that are not collecting Social Security benefits, those who will first enroll in Part B in 2016, beneficiaries who pay an additional income-related premium, and those who are dual eligible beneficiaries (Medicare and Medicaid) who have their premiums paid by Medicaid.

The basic cost of a Medicare Part B premium is currently $104.90 a month. In 2016 this cost is slated to remain $104.90 a month for the 70% who are considered to be “held harmless”. However, for the 30% who will be affected by the increase in 2016, your premium is calculated from your yearly income in 2014 based on IRS filing status and bracketed income levels. See https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html to determine your 2016 monthly premium.

In terms of a deductible for Part B, this will stay the same for all Medicare B users. It is currently $147 per year and will rise to $166 per year for 2016. After this deductible is met, it is typical to pay 20% of Medicare approved amount for most services. This includes: most hospital inpatient services, outpatient therapy, and durable medical equipment. Medicare supplement policies may pick-up these deductibles and co-pays.

As for Medicare Part A participants, 99% do not pay a monthly premium as they have met the required 40 quarters of Medicare covered employment. Those who are age 65 and over who have fewer than 40 quarters of coverage, as well as certain persons with disabilities, can pay a monthly premium in order to receive coverage under Part A. If you have less than 30 quarters of coverage, you can buy a Part A plan with a full premium. The premium for this is currently $407 in 2015 and will go up to $411 in 2016. People with 30-39 quarters of coverage can buy into Part A at a reduced premium of $226 in 2016, which is only a $2 increase from 2015.

In terms of the Part A annual deductible, for those admitted to the hospital the cost will be $1,288 in 2016, which is a small increase from the $1,260 it cost in 2015. This Part A  deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care during a specific benefit period. Meanwhile, the daily coinsurance amount will be $322 for the 61st through 90th day of hospitalization in a benefit period and then $644 for lifetime reserve days. As for those in skilled nursing facilities, the daily coinsurance for days 21 through 100 in a benefit period will be $161.00 in 2016 while it was $157.50 in 2015.

What does all this information mean for you? Luckily, the Bipartisan Budget Act of 2015 went through and is saving seniors a significant portion of money. However, it’s up to you to make sure you understand your coverage- including the Medicare Supplement policy, the cost, and whether you have the correct plan in place for you and your family. Consider talking to a healthcare planning professional if you have further questions. Do your research, know your options, and you should be set for healthcare in 2016.

Sources:

2015 & 2016 Costs at a Glance. The Official US Government Site for Medicare. 17 Nov. 2015. <https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html>.

2016 Medicare Parts A & B Premiums and Deductibles Announced. Centers for Medicare and Medicaid Services. 17 Nov. 2015.

<https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-11-10.html>.

By: Melissa Barnickel, CPA, CLTC

Baygroup Insurance LLC