Q: I have Medicare A & B. I have heard the premiums are changing for 2014, but don't know how much they will be. Can you please clarify this for me?
A: Medicare premiums usually change every year for Part A and Part B. This year we are in a slightly different situation. The media always makes the changes sound pretty scary. This year we have great news.
Social Security also has increased with a 1.5 percent Cost Of Living Adjustment (COLA), so that all of those on Social Security will see an increase in their monthly Social Security benefits.
Now on to the changes for 2014: Most Americans do not pay any premium for Medicare Part A-Hospitalization. Medicare A is free if you or your spouse have worked 40 quarters (10 years). If you do have to pay a premium for Part A, it will cost up to $426 monthly (this is lower than last year). The 2014 Medicare Part B premium will stay at $104.90. As I stated, there will be a COLA (Cost Of Living Adjustment) for Social Security. This means the COLA increase will not be taken up by higher Part B costs.
For those individuals who are already enrolled in Medicare Part B and collect Social Security, you will never see your monthly benefit amount reduced. The laws regarding these benefits include a "Hold Harmless" protection clause. This protection clause dictates that Social Security net benefits cannot go down due to an increase in Medicare Part B premiums.
Some individuals may pay a higher premium for Medicare Part B and Part D; those individuals who make more than $85,000 (couples more than $170,000) will pay the higher Medicare Part B premium in 2014. These individuals paid more than others for their Medicare Part B & Part D coverage in the past due to their higher income.
The Medicare deductibles changed as well. The Medicare Part A Hospital Deductible increased to $1,216 for each hospitalization in 2014. For those individuals who are hospitalized for longer than 60 days, there are additional co-insurance costs. Day 61 to 90 costs $304 per day, and day 91 to 150 is $608 per day. After 150 days you would pay all costs. This extended hospital stay rarely happens anymore.
The Medicare Part B Annual Medical Deductible stays at $147. After the deductible, Medicare covers 80 percent of approved charges and you would pay 20 percent of approved charges.
Most individuals have additional insurance that helps to cover these deductible and co-insurance costs. Many individuals have Medicare Advantage Plans, which have an entirely different cost structure for these services.
It is significant to notice that your cost shares have increased very little in 2014. I take that as a sign that health care reform changes are helping to control costs for those individuals with Medicare.