Understanding Medicare Premiums; Now Projected to
There are different types of Medicare premiums and
you can learn more about them in this Q&A from Families USA
Ron Pollack, Executive Director, Families USA
June 21, 2013 - At the end of May, the Medicare
Trustees reported that Medicare costs are expected to grow more slowly
than was previously expected. One of the positive effects of this trend
is that Medicare premiums are also expected to increase more slowly.
What does that mean for you and your family? Here’s a look at the
different types of Medicare premiums.
Q: What do people mean by “Medicare premiums”?
A: When people talk about Medicare premiums,
they’re often thinking of the Part B premium (Part B primarily covers
doctor visits and other outpatient services). For most beneficiaries,
this premium is automatically deducted from their Social Security
benefit each month. In 2013, most people with Medicare pay a Part B
premium of $104.90 a month.
Q: What other Medicare premiums exist besides
A: Most people with Medicare do not pay a premium
for Medicare Part A (which covers hospital and other inpatient care)
because they or their spouse paid enough in Medicare taxes during their
working years to qualify for premium-free Part A.
If you have a Part D prescription drug plan, you do
pay premiums. In 2013, the national average for a Part D monthly premium
is $40.18, but Part D premiums vary widely from plan to plan and region
If you have a Medicare Advantage plan, your plan
usually charges an additional premium.
Finally, you may have a private Medicare
supplemental policy, either from a former employer or private company.
The premiums for these policies vary significantly.
Q: How are Medicare premiums determined?
A: By law, the Part B premium must cover 25 percent
of Medicare’s Part B costs. When Medicare costs grow more slowly, so do
Part D premiums are similarly tied to the costs of
prescription drugs. Medicare Advantage premiums are determined by a more
complicated process, but they also reflect trends in costs. Because Part
D and Medicare Advantage plans are run by private companies, premiums
can vary a lot. But even so, when health care costs rise more slowly,
premiums usually do too.
Q: Does everyone pay the same premium?
A: If your income is more than $85,000 (for just
you, or $170,000 for you and your spouse), you pay an additional Part B
premium. How much more depends on your income: People with the highest
incomes pay the most. Also, since 2011, the same high-income
beneficiaries have paid higher Part D premiums. Part A premiums and
Medicare Advantage premiums are not affected by these rules.
Q: If I have a limited income, can I get help
paying my premiums?
A: For people with limited incomes and resources,
the Part D Extra Help program covers all or most of their Part D
premium, as well as other pharmacy costs. You can find out if you
qualify and apply online at
www.socialsecurity.gov/prescriptionhelp or by calling
1-800-MEDICARE. Each state also has Medicare Savings Programs that cover
Part B premiums for people with limited incomes. In some cases, these
programs also cover other Medicare costs. To learn more, call
1-800-MEDICARE and ask for a referral to your local state health
insurance assistance program (SHIP), or go to this website
www.familiesusa.org/resources/program-locator and click on
Q: What will happen to Medicare premiums in the
A: Medicare premiums depend greatly on what happens
to health care costs, specifically Medicare costs, in the future. No one
knows for sure if the recent slowdown in Medicare costs will continue.
The early indications from the Medicare Trustees’ report are that the
trend should continue for now, and that the 2014 Part B premium will be
unchanged from 2013. For anyone with Medicare living on a fixed
income–and that’s most people–this is encouraging news.
About Families USA
Families USA is the national organization for
health care consumers. We have advocated for universal, affordable,
quality health care since 1982. Ron Pollack is the Executive Director of
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