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November 11, 2009
2010 Medicare Premiums, Deductibles and Coinsurance
The Centers for Medicare & Medicaid Services (CMS) has announced the changes to the Medicare Part A and Part B premiums, deductibles and coinsurance paid by beneficiaries.1 These changes take effect on January 1, 2010. Legislation pending in Congress could have an impact on the changes in the Part B premium for certain Medicare beneficiaries.
After two consecutive years without a change, the standard monthly Part B premium and deductible will both increase by more than 14 percent.2 The dollar amounts are shown in the table below. However, CMS estimates that approximately 73 percent of Medicare beneficiaries will not have an increase in their Part B premium. Instead, they will pay the 2009 Part B premium rate rather than the 2010 rate, as a result of a "hold-harmless provision" in the law that relates to Social Security benefits.3 (Because Social Security benefits will not increase in 2010, as announced by the Social Security Administration,4 certain beneficiaries will not pay the 2010 Part B premium rate.) CMS notes that approximately 27 percent of beneficiaries are not subject to the hold-harmless provision either because they do not have their Part B premiums withheld from Social Security, they have their Part B premiums paid on their behalf by Medicaid, they are subject to the income-related additional premium amount discussed below or they are new enrollees. These individuals will pay the higher 2010 premium rate.
In 2010, as shown in the table, the Part A numbers will increase by just under 3 percent. The table also includes the base Part D beneficiary premium that CMS announced in August, which will increase by 5.2 percent.5
| Cost-Sharing Requirement | 2009 | 2010 |
|---|---|---|
| Standard Monthly Part B Premium* | $96.40 | $110.50 |
| Medicare Part B Deductible | $135.00 | $155.00 |
| Base Part D Beneficiary Premium** | $30.36 | $31.94 |
| First-Day Part A Hospital Deductible*** | $1,068.00 | $1,100.00 |
| Daily Part A Coinsurance for the 61st through 90th Day of a Hospital Stay**** | $267.00 | $275.00 |
| Daily Part A Coinsurance for Hospital Stays Longer than 90 Days | $534.00 | $550.00 |
| Daily Part A Coinsurance for the 21st through 100th day in a Skilled Nursing Facility | $133.50 | $137.50 |
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Reminder: Higher Part B Premiums for the Affluent
Since 2007, as required in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, high-income Medicare-eligible individuals who enroll in the Part B program have been required to pay a monthly Part B premium that is higher than the standard premium. It varies depending upon enrollees' modified adjusted gross income and income tax filing status. The following table shows the 2010 premium rates, all of which are more than 14 percent higher than in 2009:
| Income Ranges by Tax Filing Status Individual Return* Joint Return | Part B Premium |
|
|---|---|---|
| $85,001 to $107,000* | $170,001 to $214,000 | $154.70 |
| $107,001 to $160,000* | $214,001 to $320,000 | $221.00 |
| $160,001 to $214,000 | $320,001 to $428,000 | $287.30 |
| >$214,000 | >$428,000 | $353.60 |
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Outlook for Legislative Relief from the Part B Premium Increase
Pending in Congress are two separate bills that would allow all Medicare beneficiaries to pay the 2009 Part B premium in 2010, but the prospect of legislative relief is unclear. Legislation passed the House of Representatives in late September (H.R. 3631, the Medicare Premium Fairness Act), but has stalled in the Senate. The other piece of legislation (H.R. 3597/S.1685, the Emergency Senior Citizens Relief Act) is pending.
Implications for Plan Sponsors
Plan sponsors that pay the Medicare Part B premium or deductible should carefully review their plan documents and communications to assure that they are accurately stating the amount that the plan intends to pay. For example, plans that simply promise to pay the "Part B deductible" may want to set that payment at a firm amount or maximum. If the plan is vague regarding the amount of the Part B premium that the plan will pay, costs could inadvertently increase as the Part B premium rises, and could rise substantially if the plan has participants subject to income-based indexing.
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As with all issues involving the interpretation or application of laws, health plan sponsors should rely on their legal counsel for authoritative advice on the integration of Medicare with their health benefit plans. Sibson Consulting can be retained to work with plan sponsors on their retiree health coverage.
- 1
- The CMS fact sheet, which was published on October 16, 2009, can be accessed from the fact sheet page on CMS Web site. (To return to the Capital Checkup text, click here.)
- 2
- CMS is raising the Part B premium so that funds are available in a reserve in case Congress passes legislation (as it has for the last seven years) to prevent physician fees from being cut. In the absence of legislative relief, those physician fees would be reduced in 2010 by approximately 21 percent. (To return to the Capital Checkup text, click here.)
- 3
- The hold-harmless provision in the Social Security law is designed to protect most beneficiaries from a decrease in Social Security payments that would result where there is an increase in Medicare Part B premiums that exceeds a Social Security cost of living increase. (To return to the Capital Checkup text, click here.)
- 4
- See Sibson's October 2009 Bulletin, "For 2010, IRS Dollar Limits and Social Security Wage Base Unchanged; Only PBGC Single Employer Premium to Increase, No Change in PBGC Guarantee Limit Anticipated." (To return to the Capital Checkup text, click here.)
- 5
- Information about the Part D base benefit premium for 2010 is available on the CMS Web site. (To return to the Capital Checkup text, click here.)
Capital Checkup is Sibson Consulting's periodic electronic newsletter summarizing activity in Washington with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.