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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 |
|
||
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 | |
|
||||
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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