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October 15, 2007
2008 MEDICARE
PREMIUMS, DEDUCTIBLES AND COINSURANCE
On October 1, 2007, the Centers for Medicare & Medicaid Services (CMS) announced the changes to the Medicare Part A and Part B premiums, deductibles and coinsurance paid by beneficiaries that become effective on January 1, 2008.1 The changes, which reflect increases of 3.1 to 3.2 percent, are summarized in the table below. This table also includes the base Part D beneficiary premium with the modest 0.6 percent increase announced in August.2
|
Cost-Sharing Requirement |
2007 |
2008 |
|
Standard Monthly Part B Premium* |
$93.50 |
$96.40 |
|
Medicare Part B Deductible |
$131.00 |
$135.00 |
|
Base Part D Beneficiary Premium** |
$27.35 |
$27.93 |
|
First-Day Part A Hospital Deductible |
$992.00 |
$1,024.00 |
|
Daily Part A Coinsurance
for the 61st through 90th Day of a Hospital Stay*** |
$248.00 |
$256.00 |
|
Daily Part A Coinsurance
for Hospital Stays Longer than 90 Days |
$496.00 |
$512.00 |
| Daily Part A Coinsurance
for the 21st through 100th day in a Skilled Nursing Facility |
$124.00 |
$128.00 |
 |
| * |
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, whether there is coverage in the coverage gap (“donut hole”) and range of covered drugs in the plan’s formulary. For more information about the “donut hole,” see the chart in Sibson Consulting ’s April 26, 2007 Capital Checkup. |
| *** |
There is
no cost-sharing requirement for the 2nd through 60th day of a hospital stay. |
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The 3.1 percent increase in the standard Medicare Part B monthly premium is the smallest increase since 2001. The increase is lower than the 5.6 percent increase between 2006 and 2007 and significantly lower than the 13 percent increase between 2005 and 2006.
Second Year of Higher Part B Premiums for the Affluent
High-income Medicare-eligible individuals who enroll in the Part B program must pay a monthly Part B premium that is higher than the standard premium. (This higher Part B premium was introduced in 2007 and is expected to affect an estimated 5 percent of Part B enrollees.) The premium varies for enrollees depending upon their modified adjusted gross income and income tax filing status, as noted in the following table:
| Income Ranges by Tax Filing Status* |
2008
Part B Premium |
Increase in this Premium from 2007 |
| Individual Return** |
Joint Return |
| $82,001 to $102,000** |
$164,001 to $204,000 |
$122.20 |
15.5% |
| $102,001 to $153,000** |
$204,001 to $306,000 |
$160.90 |
29.3% |
| $153,001 to $205,000 |
$306,001 to $410,000 |
$199.70 |
39.7% |
| >$205,000 |
>$410,000 |
$238.40 |
47.7% |
|
| * |
The income ranges were slightly different in 2007 because the ranges have been adjusted for 2008 to reflect inflation, as they will be every year. |
| ** |
Married beneficiaries with income in 2008 of more than $82,000 and less than or equal to $123,000 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 in 2008: $199.70. Married beneficiaries with income in 2008 of more than $123,000 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 in 2008: $238.40. |
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The substantial increases in the Part B monthly premiums for the affluent reflect the fact that income-based indexing is being phased in over three years. Affluent beneficiaries paid one-third of the increase in 2007. In 2008, they will pay two-thirds of the increase. By 2009, they will pay the full increase.
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.
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.
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| 1 |
To
see the CMS fact sheet, click here.
(To return to the Capital Checkup text, click here.) |
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2 |
To
see the CMS fact sheet, click here.
(To return to the Capital Checkup text, click here.) |
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| 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.
For back issues of Capital Checkup, click here. |
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