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Medicare Premiums and Deductibles for 2016

Justin Mack by Justin Mack | Licensed since 2008
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This article was updated on: 07/25/2016

Medicare beneficiaries are responsible for certain out-of-pocket costs, including premiums, deductibles, copayments and/or coinsurance for Medicare Part A and Part B. If you’re enrolled in a Medicare Advantage plan or Medicare Part D Prescription Drug Plan, your costs may vary by plan.

A premium is the monthly amount you pay for your Medicare coverage or Medicare insurance plan. A deductible is the amount you must pay out-of-pocket each year before your Medicare plan begins sharing costs with you. (Your other out-of-pocket costs may include coinsurance and copayments.)

Premium and deductible amounts may change each year. The Centers for Medicare & Medicaid Services (CMS) usually publishes the Medicare Part A and Medicare Part B rates for the following plan year around the middle of October or November. Medicare-approved private insurance companies publish the new Medicare Part D Prescription Drug Plan and Medicare Advantage plan premium and deductible rates for the following year starting October 1, and beneficiaries can enroll in those plans at those rates during the Annual Election Period (October 7 through December 15) for the following plan year.

Medicare Part A premiums

Most beneficiaries over age 65 don’t pay a monthly premium for Medicare Part A coverage if they or their spouse paid Medicare taxes for at least 10 years (or 40 quarters) while working. In fact, according to CMS, most Medicare beneficiaries do not have to pay Medicare premiums on Part A because of their employment Medicare tax history. If you don’t qualify for premium-free Medicare Part A, you may have to pay up to $411 each month.

Medicare Part A deductible and coinsurance

Medicare Part A pays all covered hospital, skilled-nursing facility, and home health-care services for each benefit period except for the deductible and coinsurance.

For 2016, the Medicare Part A deductible is $1,288 for each benefit period.

The 2016 hospital coinsurance you pay per benefit period varies based on the length of your hospital stay:

  • 1 through 60 days: $0 coinsurance
  • 61 through 90 days: $322 per day coinsurance
  • 91 days and beyond: $644 per day coinsurance for each lifetime reserve day (You get 60 lifetime reserve days)
  • After lifetime reserve days are used up: You pay all costs

The 2016 skilled-nursing facility coinsurance you pay per benefit period also varies based on the length of your stay:

  • 1 through 20 days: $0 coinsurance
  • 20 through 100 days: $161 per day coinsurance
  • 101 days and beyond: You are responsible for all costs.

Medicare Part B premiums

The Medicare Part B premium is set each year by CMS. In 2016, the amount you pay may vary depending on your situation, including when you signed up for Part B.

Here’s how to help determine what you’ll pay for your Part B premium:

  • If you were already enrolled in Part B before 2016, you’ll generally pay $104.90 per month.
  • If any of the below situations applies to you, you’ll generally pay $121.80 for your monthly premium:
    • You enrolled in Part B for the first time in 2016.
    • You aren’t currently receiving retirement benefits from Social Security or the Railroad Retirement Board.
    • You’re a dual eligible (have both Medicare and Medicaid), and the Medicaid program pays for the cost of your premiums.
    • You’re billed directly for your Part B premium.

One factor that may raise your Medicare Part B premium is the late enrollment penalty. If you don’t enroll in Medicare Part B during your Initial Enrollment Period (or if you drop Part B and then get it again later), you may pay a penalty for as long as you have Part B. For 2016, the late-enrollment penalty is calculated by multiplying 10% by each full 12-month period that you could have had Part B, but didn’t sign up for it. This amount is applied to your monthly premium for as long as you have Part B.

You may be able to avoid paying this late enrollment penalty if you delayed Medicare Part B because you had other health coverage, such as through an employer-sponsored group plan (either through your own or your spouse’s work). In this case, you can enroll through a Special Enrollment Period when you or your spouse stop working or that other health coverage ends, whichever comes first. If you have to pay a monthly premium for Medicare Part A, you may decide to delay enrollment in Part A as well and sign up during your Special Enrollment Period. If you enroll in Medicare with a Special Enrollment Period, you generally won’t have to pay a late enrollment penalty.

Another factor that may increase your Medicare Part B premium is your income level. Premiums can be higher for beneficiaries with annual household incomes that exceed specific thresholds. See the table below for details.

2016 Medicare Part B premiums based on income (as reported on your tax return 2 years ago)

Your Annual Income 2016 Premium Amount
Individual Tax Return Joint Tax Return You Pay
$85,000 or less $170,000 or less $121.80
$85,001 up to $107,000 $170,001 up to $214,000 $170.50
$107,001 up to $160,000 $214,001 up to $320,000 $243.60
$160,001 up to $214,000 $320,001 up to $428,000 $316.70
Over $214,000 Over $428,000 $389.80

 

Medicare Part B deductible and coinsurance

Medicare Part B requires you to pay a yearly deductible of $166 in 2016. This deductible will be applied to health-care costs that involve physician services, outpatient hospital services, certain home health services, and covered durable medical equipment.

Once you’ve met the deductible, you will be required to pay a coinsurance of 20% of the Medicare-approved amount charged by providers for your health-care services. Many preventive services are also provided at no cost to you; these services are available without requiring you to meet your deductible. In 2016, there may be limits on physical therapy, occupational therapy, and speech language pathology services. If so, there may be exceptions to these limits.

Medicare Part D premiums

Medicare Part D Prescription Drug Plans often charge a monthly premium for coverage. Since these plans are provided by Medicare-approved private insurance companies, the actual premium you pay varies by plan.

Be aware that if you go without Medicare Part D prescription drug coverage or other creditable coverage (that is, prescription drug coverage that covers at least as much as Medicare) for 63 consecutive days or more, you may be charged a late-enrollment penalty when you do enroll in a Medicare Part D Prescription Drug Plan.

Medicare calculates your late-enrollment penalty by multiplying 1% of the national base beneficiary premium ($34.10 per month in 2016) by the number of full months you didn’t have Medicare Part D or creditable coverage. That penalty is added to your monthly Medicare Part D premium. The national base beneficiary premium may increase each year, so your late- enrollment penalty may likewise increase each year.

Medicare Part D deductible

The annual deductible for a standard Medicare Part D Prescription Drug Plan is a maximum of $360 in 2016. Medicare Prescription Drug Plans may have a lower deductible than that or even have a $0 deductible.

As you can see, premiums and deductibles may vary depending on the specific Medicare plan option you select. I’m available to clarify the costs you could expect for your particular situation. Learn more about me by clicking the “View profile” link below. There are also links that let you schedule a phone appointment or have me email you more information. Want to compare plans on your own? Use the Compare Plans buttons on this page. Or, for personalized assistance, just call us as described below.

Call Medicare.com’s licensed insurance agents at 1-844-847-2659, TTY users 711; Monday through Friday, 8AM to 8PM ET.

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Justin Mack |
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Licensed Insurance Agent since 2008
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