Medicare Will Not Increase Part B Monthly Premium
for 2009 But High Income Seniors to Pay More
Part A deductible for hospital care boosted $44 to
$1,068
Sept.
19, 2008 – While most of the country is worrying about the devastating
blows being suffered by the U.S. economy, senior citizens find something
to smile about in their financial outlook for 2009. Medicare announced
today the standard Medicare Part B monthly premium will stay the same
next year - $96.40 per month. This follows reports earlier this week by
SeniorJournal.com that the increase in the Social Security
cost-of-living adjustment could be around 6 percent. It wasn’t all good
news from Medicare, however – the highest income seniors will pay higher
rates on Part B and the Part A deductible for hospital care is jumping
to $1,068, $44 over 2008.
The Centers for Medicare & Medicaid Services says
2009 will be the first year since 2000 that there is no increase in the
standard Part B premium.
CMS also points out that the 2009 Part B premium of
$96.40 is the same as the amount projected in the 2008 Medicare Trustees
Report issued in March.
This monthly premium paid by beneficiaries enrolled
in Medicare Part B covers a portion of the cost of physicians’ services,
outpatient hospital services, certain home health services, durable
medical equipment, and other items.
By law, the standard premium is set to cover
approximately one-fourth of the average cost of Part B services incurred
by beneficiaries aged 65 and over. The remaining Part B costs are
financed by Federal general revenues.
The income to the program from premiums and general
revenues are paid into the Part B account of the Supplementary Medical
Insurance trust fund, and Part B expenditures are drawn from this
account.
Normally, the Part B premium increases at the same
rate as average Part B expenditures from year to year.
CMS says, however, “A number of factors explain why
the premium can be kept level for 2009.”
Part A Premium and Deductible for
2009
CMS also announced the Part A deductible
and premium for 2009. Medicare Part A pays for inpatient
hospital, skilled nursing facility, hospice, and certain home
health care services. The $1,068 deductible for 2009, paid by
the beneficiary when admitted as a hospital inpatient, is an
increase of $44 from $1024 in 2008.
The Part A deductible is the beneficiary’s
only cost for up to 60 days of Medicare-covered inpatient
hospital care in a benefit period. Beneficiaries must pay an
additional $267 per day for days 61 through 90 in 2009, and $534
per day for “lifetime reserve days” that can be used for
hospital stays beyond the 90th day in a benefit period.
The corresponding amounts for calendar year
2008 are $256 and $512, respectively. Daily coinsurance for the
21st through 100th day in a skilled nursing facility will be
$133.50 in 2009, up from $128 in 2008.
Approximately 99 percent of Medicare
beneficiaries do not have to pay a premium for Part A services
because they have at least 40 quarters of Medicare-covered
employment (or are the spouse or widow[er] of such a person).
However, other seniors and certain people under age 65 with
disabilities who have fewer than 30 quarters of coverage may
obtain Part A coverage by paying a monthly premium set according
to a statutory formula.
This premium will be $443 per month for
2009, an increase of $20 from 2008. In addition, seniors with
30 to 39 quarters of coverage, and certain disabled persons with
30 or more quarters of coverage, will pay a premium of $244 in
2009, compared to $233 in 2008.
Growth is expected in 2009 for most areas of the
Medicare Part B program, including growth in the cost and use of
physician and outpatient hospital care, home health services,
physician-administered drugs, ambulatory surgical center services,
durable medical equipment, independent lab and physician’s office lab
services, as well as growth in the Medicare Advantage program.
In most years, this would result in the need for an
increase in the Part B premium and general revenue financing.
The effect of higher expected Part B costs in 2009,
however, is offset by a substantial reduction in the premium “margin”
needed to maintain an adequate contingency reserve in the Part B trust
fund account.
If needed, a portion of the Part B premium can be
used to adjust the account’s asset level so that it can make up any
shortfall in financing due to higher-than-expected expenditures.
Due to legislative changes that increased Part B
spending for a year after the financing had been determined for that
year, the assets in the Part B account of the Supplementary Medical
Insurance trust fund were below the level considered adequate for the
four years 2003-2006.
Consequently, Part B premiums and general revenue
financing in recent years have been set at somewhat higher levels than
would otherwise have been required in order to restore the contingency
reserve to an appropriate level.
Note: These legislative changes include the
Consolidated Appropriations Resolution (2003), Medicare Modernization
Act (2003), and the Deficit Reduction Act (2006). More recently, the
Tax Relief and Health Care Act (2006), the Medicare, Medicaid, and SCHIP
Extension Act (2007), and the Medicare Improvements for Patients and
Providers Act (2008) also increased Part B expenditures after the
program’s financing had been set.
By the end of 2008, the assets in the Part B
account of the SMI trust fund are expected to be somewhat above an
adequate level.
For 2008, the financing goal was for the difference
between Part B assets and liabilities at the end of the year to
represent about 20 percent of the following year’s expenditures; the
actual percentage is currently estimated to be 24 percent.
This level is the result of
(1) the planned increases in the contingency margin built into the
Part B premium for several years, including 2008, and
(2) the restoration of the Part B account
assets for certain Part A hospice benefits that were inadvertently drawn
from the Part B account. (This latter adjustment resulted in an increase
in Part B assets of $9.3 billion as of June 30, 2008.)
Because of the more-than-adequate asset level
expected at the end of 2008, no increase is needed in the Part B premium
to maintain an adequate asset level for 2009, and the margin included in
prior years for this purpose can be eliminated.
If actual Part B expenditures are higher than
estimated when the program financing is set, the Part B assets will be
drawn down to make up the shortfall. The formula specified in current
law will result in a reduction in physician fees of approximately 20
percent in 2010 and is projected to cause additional reductions in
subsequent years.
Part B Deductible
The Part B deductible was increased to $110
in 2005 and, as a result of the Medicare Modernization Act, is
currently indexed to the annual percentage increase in the Part
B actuarial rate for aged beneficiaries. In 2009, the Part B
deductible will be $135, the same as it was in 2008.
For each year from 2003 through 2009, Congress has
acted to prevent physician fee reductions from occurring. In
recognition of the strong possibility of increases in Part B
expenditures that would result from similar legislative intervention to
override the decreases in physician fees in 2010 or later years, it is
appropriate to maintain a somewhat larger Part B contingency reserve
than would otherwise be necessary.
The asset level projected for the end of 2009
(equivalent to a reserve ratio of 25 percent of 2010 expenditures) is
adequate to temporarily accommodate this contingency. Such legislation,
however, would raise the future cost of Part B compared to current law
and would necessitate additional increases in the premium and general
revenue financing after 2009.
As noted, from year-to year the monthly Part B
premium and general revenue financing are adjusted to match increases in
program costs and to maintain an appropriate contingency reserve in the
trust fund. When assets exceed a normal, adequate level, the premium
increase for the following year can be somewhat lower than would
otherwise be necessary.
Since the enactment of Medicare, there have been
five prior years for which no Part B premium increase was required
because the contingency reserve was more than adequate.
Those with incomes over $85,000 may pay more in
2009
As required in the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, beginning in 2007 the Part B
premium a beneficiary pays each month is based on his or her annual
income.
Specifically, if a beneficiary’s “modified adjusted gross
income” is greater than the legislated threshold amounts ($85,000 in
2009 for a beneficiary filing an individual income tax return or married
and filing a separate return, and $170,000 for a beneficiary filing a
joint tax return) the beneficiary is responsible for a larger portion of
the estimated total cost of Part B benefit coverage.
In addition to the standard 25 percent premium,
such beneficiaries now have to pay an income-related monthly adjustment
amount. These income-related Part B premiums have been phased-in over
three years, beginning in 2007. 2009 is the first year in which affected
Part B enrollees will pay the full amount of the income-related
premiums.
About 5 percent of current Part B enrollees are expected to be
subject to the higher premium amounts
The 2009 Part B monthly premium rates to be paid by
beneficiaries who file an individual tax return (including those who are
single, head of household, qualifying widow[er] with dependent child, or
married filing separately who lived apart from their spouse for the
entire taxable year), or who file a joint tax return are:
Beneficiaries who file an individual tax return with income:
Beneficiaries who file a joint tax return with income:
Income-related monthly adjustment amount
Total
monthly premium amount
Less
than or equal to $85,000
Less
than or equal to $170,000
$0.00
$96.40
Greater
than $85,000 and less than or equal to $107,000
Greater
than $170,000 and less than or equal to $214,000
$38.50
$134.90
Greater
than $107,000 and less than or equal to $160,000
Greater
than $214,000 and less than or equal to $320,000
$96.30
$192.70
Greater
than $160,000 and less than or equal to $213,000
Greater
than $320,000 and less than or equal to $426,000
$154.10
$250.50
Greater
than $213,000
Greater
than $426,000
$211.90
$308.30
In addition, the monthly
premium rates to be paid by beneficiaries who are married, but file a
separate return from their spouse and lived with their spouse at any
time during the taxable year are:
Beneficiaries who are married but file a separate tax return
from their spouse:
Income-related monthly adjustment amount
Total
monthly premium amount
Less
than or equal to $85,000
$0.00
$96.40
Greater
than $85,000 and less than or equal to $128,000
$154.10
$250.50
Greater
than $128,000
$211.90
$308.30
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