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Medicare Premiums and Deductibles for 2014

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What Are Medicare Premiums?

A premium is the monthly amount you pay for your Medicare coverage or Medicare insurance plan. Premium amounts can change each year. The Centers for Medicare & Medicaid Services (CMS) will generally publish the Medicare Part A and Medicare Part B rate changes for the following calendar year around the middle of October or November. New premium rates for Medicare Part D and Medicare Advantage Plans become available starting October 1, when sponsors are allowed to start marketing their plans.

Medicare Part A Premiums

Most beneficiaries do not pay a monthly premium for Medicare Part A coverage if they or their spouse paid Medicare taxes while working. In fact, according CMS, approximately 99 percent of Medicare beneficiaries do not have to pay Medicare premiums on Part A because they have more 10 years (or 40 quarters) of Medicare-covered employment.

The small percentage of people who do have to pay Medicare premiums will pay up to $426 each month. The monthly amount depends on the number of quarters of Medicare-covered employment the person (or his/her spouse) has:

  • People with 30 to 39 quarters of Medicare-covered employment pay a monthly premium of $234 in 2014.
  • Those with less than 30 quarters of Medicare-covered employment and who are not eligible for free or reduced Medicare premiums for any other reason pay a monthly premium of $426 in 2014.
  • Premium amounts may change for the next year. CMS generally announces rate changes for the following calendar year around the middle of October each year.

Medicare Part B Premiums

The Medicare Part B premium is set each year at a level calculated to pay for 25 percent of the average cost of coverage. The standard premium – the premium for most enrollees – applies to those with annual household incomes that do not exceed a set threshold amount. For 2014, the standard Part B premium is $104.90, and the threshold is $85,000 for single filers or married couples who file separately and $170,000 for couples who file jointly, based on 2012 tax returns.

Although most beneficiaries pay the standard rate, there are three provisions that alter the premium rate for certain Part B enrollees:

  • There is a late enrollment penalty premium surcharge for those beneficiaries who enroll after their Initial Enrollment Period
  • There are higher “income-related” premiums for those whose annual income exceeds the threshold amount.

2014 Part B Income-Related Premium Amounts

If Your Annual Income Is Percent of cost covered Actual 2014 premium
Individual Tax Return Joint Tax Return
$85,000 or less $170,000 or less 25% $104.90
$85,001 – $107,000 $170,001 – $214,000 35% $146.90
$107,001 – $160,000 $214,001 – $320,000 50% $209.80
$160,001 – $213,000 $320,001 – $426,000 65% $272.70
Over $213,000 Over $426,000 80% $335.70

Medicare Part D Premiums

Medicare Part D plans often charge a monthly premium for coverage. Actual premiums vary by plan.

As of 2011, beneficiaries with higher incomes must pay a premium adjustment based on their income. This premium adjustment is called the Income-Related Monthly Adjustment Amount (IRMAA), and is paid directly to the Federal government (it is deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management benefits).

Medicare Part A Deductibles

Medicare Part A pays all covered hospital, skilled nursing facility and home health care services for each benefit period except for the deductible. For 2014, this deductible is $1,216, and the overall cost for coinsurance will range based on the length of hospital stay:

• 1-60 days: $0
• 61-90: $304 per day
• 91 and beyond: $608 per day

For people on Medicare who receive care in a skilled nursing facility, Medicare will cover days 1 through 20 in full. In 2013, there is a copayment of $148 per day for days 21 through 100, and no coverage after day 100 in a benefit period.

Medicare Part B Deductible

Medicare Part B includes a yearly deductible of $147 in 2014. This deductible will be applied to health care costs that involve physician services, outpatient hospital services, certain home health services and durable medical equipment. Once the deductible is met, you will be required to pay only 20 percent of the Medicare-approved amount charged by providers for your health care services. Because of the new health care law, many preventive services are also provided at no cost to you. These free benefits are not subject to a deductible.

Medicare Part D Deductible

The annual deductible for the standard Medicare Part D benefit is $310 in 2014, which is a decrease of $10 from the 2013 deductible. No Medicare drug plan may have a deductible more than $310 in 2014, although some plans may have a lower deductible or no deductible at all.

What Are Medicare Premiums?

A premium is the monthly amount you pay for your Medicare coverage or Medicare insurance plan. Premium amounts can change each year. The Centers for Medicare & Medicaid Services (CMS) will generally publish the Medicare Part A and Medicare Part B rate changes for the following calendar year around the middle of October or November. New premium rates for Medicare Part D and Medicare Advantage Plans become available starting October 1, when sponsors are allowed to start marketing their plans.

Medicare Part A Premiums

Most beneficiaries do not pay a monthly premium for Medicare Part A coverage if they or their spouse paid Medicare taxes while working. In fact, according CMS, approximately 99 percent of Medicare beneficiaries do not have to pay Medicare premiums on Part A because they have more 10 years (or 40 quarters) of Medicare-covered employment.

The small percentage of people who do have to pay Medicare premiums will pay up to $426 each month. The monthly amount depends on the number of quarters of Medicare-covered employment the person (or his/her spouse) has:

  • People with 30 to 39 quarters of Medicare-covered employment pay a monthly premium of $234 in 2014.
  • Those with less than 30 quarters of Medicare-covered employment and who are not eligible for free or reduced Medicare premiums for any other reason pay a monthly premium of $426 in 2014.
  • Premium amounts may change for the next year. CMS generally announces rate changes for the following calendar year around the middle of October each year.

Medicare Part B Premiums

The Medicare Part B premium is set each year at a level calculated to pay for 25 percent of the average cost of coverage. The standard premium – the premium for most enrollees – applies to those with annual household incomes that do not exceed a set threshold amount. For 2014, the standard Part B premium is $104.90, and the threshold is $85,000 for single filers or married couples who file separately and $170,000 for couples who file jointly, based on 2012 tax returns.

Although most beneficiaries pay the standard rate, there are three provisions that alter the premium rate for certain Part B enrollees:

  • There is a late enrollment penalty premium surcharge for those beneficiaries who enroll after their Initial Enrollment Period
  • There are higher “income-related” premiums for those whose annual income exceeds the threshold amount.

2014 Part B Income-Related Premium Amounts

If Your Annual Income Is Percent of cost covered Actual 2014 premium
Individual Tax Return Joint Tax Return
$85,000 or less $170,000 or less 25% $104.90
$85,001 – $107,000 $170,001 – $214,000 35% $146.90
$107,001 – $160,000 $214,001 – $320,000 50% $209.80
$160,001 – $213,000 $320,001 – $426,000 65% $272.70
Over $213,000 Over $426,000 80% $335.70

Medicare Part D Premiums

Medicare Part D plans often charge a monthly premium for coverage. Actual premiums vary by plan.

As of 2011, beneficiaries with higher incomes must pay a premium adjustment based on their income. This premium adjustment is called the Income-Related Monthly Adjustment Amount (IRMAA), and is paid directly to the Federal government (it is deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management benefits).

Medicare Part A Deductibles

Medicare Part A pays all covered hospital, skilled nursing facility and home health care services for each benefit period except for the deductible. For 2014, this deductible is $1,216, and the overall cost for coinsurance will range based on the length of hospital stay:

• 1-60 days: $0
• 61-90: $304 per day
• 91 and beyond: $608 per day

For people on Medicare who receive care in a skilled nursing facility, Medicare will cover days 1 through 20 in full. In 2013, there is a copayment of $148 per day for days 21 through 100, and no coverage after day 100 in a benefit period.

Medicare Part B Deductible

Medicare Part B includes a yearly deductible of $147 in 2014. This deductible will be applied to health care costs that involve physician services, outpatient hospital services, certain home health services and durable medical equipment. Once the deductible is met, you will be required to pay only 20 percent of the Medicare-approved amount charged by providers for your health care services. Because of the new health care law, many preventive services are also provided at no cost to you. These free benefits are not subject to a deductible.

Medicare Part D Deductible

The annual deductible for the standard Medicare Part D benefit is $310 in 2014, which is a decrease of $10 from the 2013 deductible. No Medicare drug plan may have a deductible more than $310 in 2014, although some plans may have a lower deductible or no deductible at all.

A premium is the monthly amount you pay for your Medicare coverage or Medicare insurance plan. Premium amounts can change each year.

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