2013 Medicare Premiums, Deductibles and Coinsurance

 

November 20, 2012

2013 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, 2013.

The standard monthly Part B premium will increase 5 percent, from $99.90 in 2012 to $104.90 in 2013. Similarly, the Part B deductible will increase to $147.00. The Part B dollar amounts are shown in the first two rows of the table below.

The Part A numbers will increase at a lower rate: 2.4 percent. See the last rows in the table below.

The table also shows the base Part D beneficiary premium that CMS announced in August, which will increase by a few cents over its 2012 level.2

Cost-Sharing Requirement 2012  2013 
Standard Monthly Part B Premium* $99.90 $104.90
Medicare Part B Deductible $140.00 $147.00
Base Part D Beneficiary Premium** $31.08 $31.17
First-Day Part A Hospital Deductible*** $1,156.00 $1,184.00
Daily Part A Coinsurance for the 61st through 90th Day of a Hospital Stay**** $289.00 $296.00
Daily Part A Coinsurance for Hospital Stays Longer than 90 Days $578.00 $592.00
Daily Part A Coinsurance for the 21st through 100th day in a Skilled Nursing Facility $144.50 $148.00
*
Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items. The monthly Part B premium varies for high-income enrollees, as noted in the chart below.
**
The actual premium paid by a Medicare beneficiary for a Part D Prescription Drug Plan will vary due, in part, to the type of plan he or she selects. Factors could include the amount of the deductible, the level of coverage through the coverage gap (“donut hole”) and the range of covered drugs in the plan’s formulary. For more information about the “donut hole,” see the chart in Sibson’s April 18, 2012 Capital Checkup, “CMS Announces 2013 Medicare Part D Amounts,” which is available as a web page and a printer-friendly PDF.
***
Part A pays for inpatient hospital, skilled nursing facility, hospice and certain home health care services.
****
There is no cost-sharing requirement for the 2nd through 60th day of a hospital stay.


Higher Part B and Part D 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. All of the income adjusted Part B premium rates will be 5 percent higher than in 2012. The third column of the table below shows the income-related adjustment to the monthly Part B premium for 2013.

There is also an income-related monthly adjustment for enrollees in Part D prescription drug plans, which started in 2011. The Affordable Care Act3 requires Part D enrollees whose incomes exceed the thresholds established for Part B to pay their regular Part D premium to their plan (that amount will vary based on the plan they choose) and also pay an income-related adjustment to Medicare. The last column of the following table shows the 2013 income-related monthly adjustment amounts.

These premium adjustments range from $42.00 to $230.80 a month for Medicare Part B.

Income Ranges
by Tax Filing Status
  Monthly Adjustment Amount
Individual Return* Joint Return   Part B
Premium
Part D
Premium
$85,001 to
$107,000*
$170,001 to
$214,000
  $42.00     $11.60
$107,001 to
$160,000*
$214,001 to
$320,000
  $104.90       $29.90
$160,001 to
$214,000
$320,001 to
$428,000
  $167.80       $48.30
$214,000 $428,001+   $230.80       $66.60
*
Married beneficiaries with income in 2013 of more than $85,000 and less than or equal to $129,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following monthly premium adjustment in 2013: $167.80. (The Part D monthly adjustment for these couples will be $48.30.) Married beneficiaries with income in 2012 of more than $129,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following monthly premium adjustment in 2013: $230.80. (The Part D monthly adjustment for these couples will be $66.60.)


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” or the “Part B premium” may want to set that payment at a fixed amount or maximum, so that it does not increase automatically. In addition, if the plan has participants who are subject to income-based higher rates, then it is important that the plan language is specific about how much of the Part B premium the plan pays. If the plan language is vague regarding the amount that the plan will pay, costs could inadvertently increase when premiums begin to rise again, and could rise substantially in any year if the plan has participants subject to income-based indexing.

• • •

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 can be retained to work with plan sponsors on their retiree health coverage.

1
The November 16, 2012 CMS announcements of the 2013 numbers are on the following pages of the Federal Register website: (Part B) and (Part A). (Return to the Capital Checkup.)
2
The base premium was announced on August 6, 2012 in a memo from the Office of the Actuary. (Return to the Capital Checkup.)
3
The Affordable Care Act is the abbreviated name for the new health care reform law, the Patient Protection and Affordable Care Act (PPACA), Public Law No. 111-48, as modified by the subsequently enacted Health Care and Education Reconciliation Act (HCERA), Public Law No. 111-52. (Return to the Capital Checkup.)

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 and should not be construed as legal advice. 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.

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