The Centers for Medicare and Medicaid Services (CMS) recently announced the premiums and deductibles for Medicare Part A (for inpatient hospital services) and Medicare Part B (for physician and outpatient hospital services) in 2016. Not only beneficiaries, but providers, insurers and medical billing experts also should remain vigilant as there are significant changes in store for the next year. Although there will be no change in standard Part B premiums, around 30 percent beneficiaries will have an increase in premiums, in the light of the Bipartisan Budget Act signed into law by President Obama on November 2. Let’s take a detailed look at the changes announced for 2016.
Medicare Part B
As per the Bipartisan Budget Act of 2015, Part B premiums will rise to around 15 percent for about 16 million (30%) beneficiaries who are not subject to the ‘hold harmless’ provision and the Part B deductible will rise also by the same amount. So, what’s this ‘hold harmless’ provision? According to what the Social Security Administration announced earlier, there will be no increase in the Social Security cost of living for 2016. Because of that, most people having Medicare Part B will be ‘held harmless’ from any rise in 2016 premiums and they will have to pay the same amount as last year as premium. However, there are some Medicare Part B beneficiaries who are not subject to this “hold-harmless” provision, which include the following:
- Those who are not collecting Social Security benefits
- Those who will enroll in Part B for the first time in 2016
- Dual eligible beneficiaries who pay premiums for Medicare and Medicaid
- Those beneficiaries who pay an additional income-related premium
These beneficiaries form around 30 percent of the 52 million Americans and there will be an increase in premium amount for them in 2016 to make Part B premiums affordable. To be more specific, they have to pay $121.80 a month in 2016 instead of $104.90 a month last year.
At the same time, beneficiaries with higher income will have to pay higher Part B premiums than before.
- Individuals having annual incomes between $85,000 and $107,000 and married couples having annual incomes between $170,000 and $214,000 will have to pay a premium of $170.50 (was $146.90) per month
- Individuals having annual incomes between $107,000 and $160,000 and married couples having annual incomes between $214,000 and $320,000 will have to pay a premium of $243.60 (was $209.80) per month
- Individuals having annual incomes between $160,000 and $214,000 and married couples having annual incomes between $320,000 and $428,000 will have to pay a premium of $316.70 (was $272.70) per month
- Individuals having annual incomes of $214,000 or more and married couples having annual incomes of $428,000 or more will have to pay a premium of $389.80 (was $335.70) per month
The premiums rates for beneficiaries who are married, but file tax return separately from their spouse are as follows.
- Those having incomes between $85,000 and $129,000 will have to pay a premium of $316.70 (was $272.70) per month
- Those having incomes greater than $129,000 will have to pay a premium of $389.80 (was $335.70) per month
However, there will be an increase in Part B deductible for all beneficiaries in 2016. The beneficiaries will have to pay $166 in 2016 from current $147.
Medicare Part A
Beneficiaries aged 65 and more having fewer than 40 quarters of coverage and some persons with disabilities pay an amount of premium monthly to receive coverage under Part A. The premium rates for 2016 are as follows.
- Individuals having 30-39 quarters of coverage will pay a monthly premium of $226.00 in 2016, a $2.00 increase from 2015
- Individuals having less than 30 quarters of coverage will pay the full premium – $411.00 per month, a $4.00 increase from 2015
The annual deductible Medicare Part A beneficiaries have to pay when admitted to a hospital will increase slightly to $1,288 in 2016 from $1,260 in 2015. The Part A deductible covers the share of costs of the beneficiaries for the first 60 days of Medicare-covered inpatient hospital care during a benefit period. There will be daily coinsurance amounts of $322 for the 61st through 90th day of hospitalization during a benefit period and $644 for lifetime reserve days. The daily coinsurance amounts for beneficiaries in skilled nursing facilities will be $161.00 in 2016 ($157.50 in 2015) for days 21 through 100 during a benefit period.