October 31, 2013
2014 Medicare Premiums, Deductibles
The Centers for Medicare & Medicaid Services (CMS) has announced the Medicare Part A and Part B premiums, deductibles and coinsurance paid by beneficiaries.1 These amounts take effect on January 1, 2014.
The standard monthly Part B premium and the Part B deductible will be unchanged from 2013. The Part B dollar amounts are shown in the first two rows of the table below.
The Part A numbers will increase by less than 3 percent. See the last rows in the table below.
The table also shows the base Part D beneficiary premium that CMS announced in July, which will increase slightly to $32.42 per month.2 Next year will mark the fourth straight year that the average Medicare Part D monthly premium will remain relatively steady.
|Standard Monthly Part B Premium*||$104.90||$104.90|
|Medicare Part B Deductible||$147.00||$147.00|
|Base Part D Beneficiary Premium**||$31.17||$32.42|
|First-Day Part A Hospital Deductible***||$1,184.00||$1,216.00|
|Daily Part A Coinsurance for the 61st through 90th Day of a Hospital Stay****||$296.00||$304.00|
|Daily Part A Coinsurance for Hospital Stays Longer than 90 Days||$592.00||$608.00|
|Daily Part A Coinsurance for the 21st through 100th day in a Skilled Nursing Facility||$148.00||$152.00|
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 the same in 2014 as in 2013. The third column of the table below shows the income-related monthly Part B premiums.
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 2014 income-related monthly adjustment amounts, which were announced in July, and represent increases of around 4 percent.4
|Income Ranges |
by Tax Filing Status
|Monthly Adjustment Amount|
|Individual Return*||Joint Return||Part B |
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.
- The CMS announcements of the 2014 numbers were published in the October 30, 2013 issue of the Federal Register: (Part B) and (Part A). (Return to the Capital Checkup.)
- The base premium was announced by the Office of the Actuary. (Return to the Capital Checkup.)
- 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.)
- The announcement is available on the CMS website. (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.