Compliance News | October 18, 2023
The Centers for Medicare & Medicaid Services (CMS) recently released the Medicare Part B premiums and deductible and the Part A deductible and coinsurance that will take effect on January 1, 2024. The standard Part B premium will increase by nearly 6 percent and the Part B deductible for all Medicare beneficiaries will increase by just over 6 percent. The Medicare Part A inpatient deductible and coinsurance for hospital stays and care in a skilled nursing facility will increase by 2 percent.
Sponsors of group health plans that cover retirees need to know this information when reviewing their coverage for Medicare-eligible retirees, including those enrolled in Medicare Advantage Plans.
Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items. According to the October 12, 2023 announcement, the standard monthly Part B premium will be $174.70, an increase of $9.80. In 2024, the annual deductible for Medicare Part B beneficiaries will be $240 in 2024, an increase of $14.
|Standard monthly Part B premium||$164.90||$174.70|
|Medicare Part B deductible||$226.00||$240.00|
Since 2007, high-income Medicare-eligible individuals who enroll in the Part B program have been required to pay a monthly Part B premium that is higher than the standard premium on a sliding scale. The Part B premium for high-income Medicare-eligible individuals varies depending upon an enrollee’s modified adjusted gross income and income tax filing status. The income-adjusted premiums for 2024 are shown in the table below.
The last column of the table shows the 2024 income-related monthly adjustments for the Part D premium. Those adjustments began in 2011. The ACA requires Part D enrollees whose incomes exceed the thresholds established for Part B to pay their regular Part D premium to their plan (that amount will vary based on the plan they choose) and also pay an income-related adjustment to Medicare.
Beginning in 2024, the Inflation Reduction Act IRA limits the annual increase in the base Part D premium to 6 percent. (Get our chart on the Inflation Reduction Act’s Implications for Medicare Part D.) CMS projects the average base monthly premium for standard Part D coverage will be $34.50 for 2024, up from $32.09 in 2023. CMS notes, “Without premium stabilization, the 2024 base beneficiary premium would have been $39.35, or $4.65 higher.”
|Income Ranges for Individual Return Tax Filing Status*||Income Ranges for Joint Return Tax Filing Status||Monthly Adjustment Amounts for Part B Premium||Total Monthly Part B Premium||Part D Premium Monthly Adjustment Amounts|
|$103,001 to $129,000||$206,001 to $258,000||$69.90||$244.60||$12.90|
|$129,001 to $161,000||$258,001 to $322,000||$174.70||$349.40||$33.30|
|$161,001 to $193,000||$322,001 to $386,000||$279.50||$454.20||$53.80|
|$193,001 to $499,999||$386,001 to $749,999||$384.30||$559.00||$74.20|
* Married beneficiaries with income of more than $103,000 but less than $397,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following Part B monthly premium adjustment in 2024: $384.30 (resulting in a total monthly premium of $559.00). (The Part D monthly adjustment for these couples will be $74.20.) Married beneficiaries with income of more $397,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following Part B monthly premium adjustment in 2024: $419.30 (resulting in a total monthly premium of $594.00). (The Part D monthly adjustment for these couples will be $81.00.)
Medicare enrollees who receive a kidney transplant lose eligibility for full Medicare coverage after 36 months. They can elect to pay a premium to continue Part B coverage of only immunosuppressive drugs. In 2024, the immunosuppressive drug premium will be at least $103.00 per month. High-income beneficiaries will pay a higher premium for this coverage, as shown in the following table.
|Income Ranges for Individual Return Tax Filing Status*||Income Ranges for Joint Return Tax Filing Status||Monthly Adjustment Amounts||Total Monthly Premium|
|$103,001 to $129,000||$206,001 to $258,000||$68.70||$171.70|
|$129,001 to $161,000||$258,001 to $322,000||$171.70||$274.70|
|$161,001 to $193,000||$322,001 to $386,000||$274.70||$377.70|
|$193,001 to $499,999||$386,001 to $749,999||$377.70||$480.70|
Part A pays for inpatient hospital, skilled nursing facility, hospice and certain home healthcare services.
|First-day Part A hospital deductible||$1,600.00||$1,632.00|
|Daily Part A coinsurance for the 61st through 90th day of a hospital stay*||$400.00||$408.00|
|Daily Part A coinsurance for hospital stays longer than 90 days||$800.00||$816.00|
|Daily Part A coinsurance for the 21st through 100th day in a skilled nursing facility||$200.00||$204.00|
* There is no cost-sharing requirement for the second through 60th day of a hospital stay.
Many public plans and employers have current and future retirees that do not have, or will not qualify for, zero-premium Part A coverage. Alternative market opportunities and strategies exist to provide benefits to these retirees in a more effective manner.
Plan sponsors that reimburse Medicare-eligible retirees for Part B premium costs will likely want to revisit their payment policies to ensure that they accurately reflect the new premiums.
Plan sponsors should ensure that if they reimburse retirees for Part B costs, they do so in a clear manner that states the reimbursable amount, and do not merely state that Medicare premiums will be reimbursed.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.