Q: How are Medicare benefits changing in 2018?
A: There are several changes for Medicare enrollees in 2018:
Part B premiums
Premiums for Medicare Part B were higher in 2017 than they were in 2016. For about 70 percent of enrollees, the average premiums in 2017 were about $109/month — about a 4 percent increase over 2016’s premiums (the exact amount people pay in 2017 varies depending on the dollar amount of the cost of living adjustment on their Social Security checks). Medicare costs necessitated a larger increase, but the very small Social Security cost of living adjustment, or COLA (0.3 percent) for 2017 limited the amount of the rate increase for most seniors, since Part B premiums are deducted from Social Security checks, and there’s a provision that prevents those checks from declining from one year to the next (ie, the “held harmless” provision).
For the other 30 percent of enrollees, average standard premiums (before any increase for high-income enrollees) were $134/month in 2017, which was a 10 percent increase from the $121.80/month that this group paid in 2016.
The $134/month premium for Part B in 2018 applied to enrollees who are not receiving a Social Security check (either because they’re covered by a state pension instead of Social Security, or because they’ve elected to delay their Social Security benefits). It also applied to people who were new to Medicare for 2017, and people who pay higher-than-standard premiums due to high income.
For low-income Part B enrollees who are also covered by Medicaid or a Medicare Savings Program, the Part B premium also increased to $134/month, but state Medicaid programs pay the Part B premium for those enrollees. So those enrollees weren’t directly impacted by the higher price in 2017.
So what does all of this mean for 2018 premiums? COLA numbers for the coming year aren’t released until October, but it’s widely expected that there will be a COLA of around 2 percent for 2018 (as opposed to 0.3 percent for 2017, and zero percent for 2016). CMS has not yet set Part B premiums for 2018, but it’s likely that premiums will level out for all enrollees (except those with high incomes, who always pay more), as any necessary rate change will be covered by the COLA and thus able to spread across the full population, rather than just those not “held harmless.”
For high-income Part B enrollees (income over $85,000 for a single individual, or $170,000 for a married couple), premiums in 2017 range from $187.50/month to $428.60/month, depending on income.
They will likely rise again for 2018, but there’s another change coming that will affect some high-income Part B enrollees in 2018. As part of the Medicare payment solution that Congress enacted in 2015 to solve the “doc fix” problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees, and they’ll take effect in 2018.
The high-income brackets start at $85,001 for a single individual, and $170,001 for a married couple. Enrollees with income between $85,001 and $107,000 ($170,001 and $214,000 for a married couple) won’t see any changes to their bracket.
But enrollees with income above those limits might be bumped into a higher bracket in 2018, which means their premiums could jump considerably. The highest bracket (ie, with the highest Part B premium) will now apply to those with income above $160,000 ($320,000 for a married couple), whereas the highest bracket didn’t apply in 2017 until an enrollee’s income reached $241,000 ($428,000 for a married couple). Medicare Part B premiums for 2018 have not yet been set, but slightly less wealthy Medicare enrollees will begin paying the highest prices for Medicare Part B in 2018.
Part B deductible
The Part B deductible was $166 in 2016, and for 2017 it increased to $183. The Part B deductible is likely to increase again for 2018, although the Centers for Medicare and Medicaid Services (CMS) won’t announce the official amount until closer to the end of 2017.
Any Part B deductible increase will apply uniformly for all Part B enrollees, but some enrollees have supplemental coverage that pays their Part B deductible. This includes Medicaid, employer-sponsored plans, and Medigap plans C and F; note that Medigap plans that cover the Part B deductible can only be sold through 2019 — after that, people can keep Plans C and F if they already have them, but new enrollees will no longer be able to buy plans that cover the Part B deductible.
In addition, many Medicare Advantage plans have low copays and deductibles that don’t necessarily increase the way the Part B deductible increases (Medicare Advantage enrollees pay the Part B premium, but their Medicare Advantage plan wraps Part A, Part B, and various supplemental coverage together into one plan, with out-of-pocket costs that are different from Original Medicare).
Part A premiums, deductible and coinsurance
Medicare Part A covers hospitalization costs. For most enrollees, there’s no premium for Part A. But people who don’t have 40 quarters of work history (or a spouse with 40 quarters of work history) must pay premiums for Part A coverage. Those premiums increased very slightly for 2017: The premium for people with 30+ (but less than 40) quarters of work history is $227/month in 2017, up from $226 in 2016. And for people with fewer than 30 quarters of work history, the premium for Part A is $413/month in 2017, up from $411 in 2016.
Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans) In 2015, the deductible was $1,260. In 2016, it was $1,288. For 2017, the Part A deductible increased to $1,316. This increase applied to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.
The Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the enrollee needs additional inpatient coverage during that same benefit period, there’s a daily coinsurance charge. In 2017, it’s $329 per day for the 61st through 90th day of inpatient care (up slightly from $322 per day in 2016). The coinsurance for lifetime reserve days is $658 per day in 2017 (up from $644 per day in 2016).
For care in received in skilled nursing facilities, the first 20 days are covered with the Part A deductible that was paid for the inpatient hospital stay that preceded the stay in the skilled nursing facility. But there’s a coinsurance that applies to days 21 through 100 in a skilled nursing facility. In 2017, it is $164.50 per day (up from $161 per day in 2016).
For 2018, the premiums, deductible, and coinsurance for Part A are likely to increase again, although CMS has not yet finalized them.
Medicare Advantage – premiums decreased in 2017
CMS announced in September 2016 that the average Medicare Advantage premium would be about $31.40/month in 2017. That was a decrease of about 4 percent from 2016’s average premiums (note that Medicare Advantage premiums are in addition to Part B premiums).
Enrollment in Medicare Advantage plans was projected to increase to 18.5 million people in 2017, continuing the steady rise in enrollment that Advantage plans have seen over the past several years (according to a mid-2017 analysis by the Kaiser Family Foundation, enrollment actually grew to 19 million in 2017).
CMS also noted that there are more plans that cover more extra benefits — like dental and vision — in 2017 than there were in 2016.
But a Kaiser Family Foundation analysis found that 147 counties in the US — mostly in rural areas in the western half of the country — have no Medicare Advantage plans available at all in 2017, and this is likely to continue to be an issue in some rural areas in 2018.
Part D prescription drug coverage: premiums expected to decline
For stand-alone Part D prescription drug plans, average premiums are expected to decline by about $1.20 per month in 2018, dropping to a projected average premium of $33.50/month, down from $34.70/month in 2017. That assumes enrollees keep the same plans they had in 2017, although Part D enrollees have the option to switch plans during open enrollment (October 15 to December 7). It’s noteworthy that in 2016, CMS expected premiums for Part D plans to increase by about 9 percent, to $42.10/month in 2017, and the actual average for 2017 ended up far below that amount after everyone had picked their coverage for the year.
Although the average premiums are likely to be in the $30-40/month range, there’s significant variation in the actual premiums people will pay, with premiums for the top ten plans in 2017 (by enrollment) ranging from $16.81/month to $71.66/month.
The maximum allowable deductible for Part D plans will increase to $405 in 2017, up from $400 in 2017.
The good news is that the Affordable Care Act is gradually closing the donut hole in Medicare Part D. In 2018, enrollees will pay just 35 percent of the plans cost for brand-name drugs while in the donut hole, and 44 percent of the cost of generic drugs.
The Medicare therapy cap is the benefit limit that applies to outpatient therapy, including physical therapy, speech-language pathology, and occupational therapy. It includes the amount that Medicare pays (generally 80%) and the amount the patient pays (the remaining 20%). For 2017, the therapy caps increased by $20:
- Physical therapy (PT) and speech-language pathology (SLP) combined therapy cap is $1,980 in 2017.
- Occupational therapy (OT) therapy cap is $1,980 in 2017.
Once the caps are reached, there’s an exception process that allows for medically necessary therapy costs to be covered up to $3,700 (for PT and SLP combined, and also for OT), and a manual review process is available for medically necessary therapy services that exceed $3,700. These amounts are unchanged from 2016. But the exceptions process and the manual review process are set to expire on December 31, 2017. Congress and CMS have not yet sorted out the details for how this will work in 2018 and beyond.