Q: How are Medicare benefits changing in 2017?
A: There are several changes for Medicare enrollees in 2017:
Part B premiums
Premiums for Medicare Part B will be will be higher in 2017 than they were in 2016. For about 70 percent of enrollees, the average increase is a little more than $4/month, and average premiums will be about $109/month. Medicare costs necessitated a larger increase, but the very small Social Security cost of living adjustment (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.
So for most Medicare part B enrollees, the average $109/month Part B premium in 2017 represents roughly a 4 percent increase from the $104.90/month they paid in 2016. But the exact amount they’ll pay in 2017 will vary depending on the dollar amount of the cost of living adjustment on their Social Security checks (the COLA will be applied to the higher Part B premiums that are deducted from Social Security checks, so net checks will remain unchanged).
For the other 30 percent of enrollees, average standard premiums (before any increase for high-income enrollees) will be $134/month, which is a 10 percent increase from the $121.80/month they paid in 2016.
The $134/month premium for Part B applies 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 applies to people who are 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 is also increasing to $134/month, but state Medicaid programs pay the Part B premium for those enrollees. So those enrollees aren’t directly impacted by the higher price in 2016.
For high-income Part B enrollees (income over $85,000 for a single individual, or $170,000 for a married couple), premiums in 2016 ranged from about $171/month to about $390/month. For 2017, they range from $187.50/month to $428.60/month, depending on income.
Part B deductible
The Part B deductible was $147 in 2015, and it increased to $166 in 2016. For 2017, it will increase again, to $183. The deductible increase applies 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).
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 are increasing 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 is increasing to $1,316. This increase applies to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.
The 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 will be $164.50 per day (up from $161 per day in 2016).
Medicare Advantage – premiums decreasing
CMS announced in September 2016 that the average Medicare Advantage premium would be about $31.40/month in 2017. That’s 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 is 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. CMS also notes that there are more plans that cover more extra benefits — like dental and vision — in 2017 than there were in 2016.
Part D prescription drug coverage
For stand-alone Part D prescription drug plans, average premiums are expected to increase by about 9 percent, to $42.10/month in 2017. That assumes enrollees keep the same plans they had in 2016, although Part D enrollees have the option to switch plans during open enrollment (October 15 to December 7). And there’s significant variation in the actual premiums people will pay, with premiums for the top ten plans (by enrollment) ranging from $16.81/month to $71.66/month.
The maximum allowable deductible for Part D plans will increase to $400 in 2017, up from $360 in 2016. The Kaiser Family Foundation found that the average Part D deductible is increasing by 7 percent.
The good news is that the Affordable Care Act is gradually closing the donut hole in Medicare Part D. In 2017, enrollees will pay just 40 percent of the plans cost for brand name drugs while in the donut hole, and 51 percent of the cost of generic drugs.
The Medicare therapy cap is increasing again for 2017. The 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 are again increasing by $20:
- Physical therapy (PT) and speech-language pathology (SLP) combined therapy cap is $1,980
- Occupational therapy (OT) therapy cap is $1,980
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.