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Medicare News
Medicare Part B Monthly Premium Goes Up 3.1% to
$96.40, in 2008
CMS hails it as the smallest premium increase in six
years but partially due to accounting change
 Oct. 2, 2007 – The monthly charge for Medicare’s
Part B in 2008 will be $96.40. This 3.1 percent increase over this year
is heralded as the smallest rate increase in six years, but how it got
there is partially due to an accounting error that was corrected by the
Centers for Medicare & Medicaid Services (CMS).
The agency said the premium would have increased to
about $99 per month without the accounting error correction.
This monthly premium paid by those enrolled in
Medicare Part B covers physicians’ services, outpatient hospital
services, certain home health services, durable medical equipment, and
other items.
CMS also announced increases in the deductibles
senior citizens must pay. For Part B – the deductible goes from $131
this year to $135 in 2008.
CMS yesterday pointed out several reasons for the
increase, including costs associated with the controversial Medicare
Advantage program. Increases in the “average risk of enrolled
beneficiaries as well as the impact of fee-for-service cost growth on
Medicare Advantage county benchmarks,” was cited in a fact sheet from
CMS.
Other costs mentioned by CMS included growth in
home health services, physician-administered drugs, ambulatory surgical
center services, durable medical equipment, independent lab and
physician’s office lab services.
Medicare Part A, which pays for inpatient hospital,
skilled nursing facility, hospice, and certain home health care
services, does not have a monthly premium for the vast majority of
enrollees but does have a deductible. The 2008 deductible will be
$1,024, paid by the beneficiary when admitted as a hospital inpatient.
This is an increase of $32 from $992 in 2007.
The Part A deductible is the beneficiary’s only
cost for up to 60 days of Medicare-covered inpatient hospital care in a
benefit period. Beneficiaries must pay an additional $256 per day for
days 61 through 90 in 2008, and $512 per day for hospital stays beyond
the 90th day in a benefit period. This compares with $248 and $496 in
2007. Daily coinsurance for the 21st through 100th day in a skilled
nursing facility will be $128 in 2008, up from $124 in 2007.
Higher income senior citizens, who began paying
higher rates for Part B coverage in 2007, will see their rates increase
in 2008, too. An estimated 5 percent of current Part B enrollees are
expected to be subject to the higher premium amounts which include an
income-related monthly adjustment amount. (See Fact Sheet below.)
Fact Sheet Released by CMS on 2008 Medicare Rates
CMS Announces Medicare Premiums, Deductibles For
2008
The standard Medicare Part B monthly premium will
be $96.40 in 2008, an increase of $2.90, or 3.1 percent, from the $93.50
Part B premium for 2007. The 2008 amount is the smallest percentage
increase in the Part B premium since 2001 and is $2.10 less than the
increase in the premium for 2007.
The 2008 Part B premium of $96.40 is equal to the
amount projected in the 2007 Medicare Trustees Report issued in April.
This monthly premium paid by beneficiaries enrolled
in Medicare Part B covers physicians’ services, outpatient hospital
services, certain home health services, durable medical equipment, and
other items. Several factors account for the 3.1 percent increase in
the premium.
Growth in certain areas of Medicare’s
fee-for-service program, including growth in home health services,
physician-administered drugs, ambulatory surgical center services,
durable medical equipment, independent lab and physician’s office lab
services, as well as growth in the Medicare Advantage program and a rise
in other Part B services contributed to the increase. In particular,
increases attributed to the Medicare Advantage program reflect the
increase in the average risk of enrolled beneficiaries as well as the
impact of fee-for-service cost growth on Medicare Advantage county
benchmarks.
In addition, a portion of the Part B premium
increase resulted from a need to raise the contingency margin in the
Part B trust fund to a more adequate level. Since 2003, statutory
changes have resulted in higher than expected Part B expenditures.
Accordingly, while Part B trust fund assets increased from 2005– 2007,
the asset level continues to remain lower than intended for contingency
purposes.
The planned increase in contingency reserves for
2008 is intended to restore these reserves to a fully adequate level
defined as the upper end of the asset range recommended by the Medicare
Board of Trustees. If actual Part B expenditures are higher than
estimated when the program financing is set, the assets in the
contingency reserve can be drawn down to make up the shortfall.
For example, current law requires reductions in
physician fees of approximately 10 percent in 2008 and another 5 percent
per year for approximately ten more years. In each of the last five
years, Congress has acted to prevent physician fee reductions from
occurring, and there is a strong possibility that this pattern will
continue.
In recognition of the higher probability of
increases in Part B expenditures that result from such legislative
intervention to override the statutorily mandated decreases in physician
fees in 2008 or later years, it is appropriate to maintain a somewhat
larger Part B contingency reserve than would otherwise be necessary.
However, it should be noted that the Administration supports reforms in
physician payments that do not increase costs for taxpayers or for
Medicare and its beneficiaries.
The increase in contingency reserves is somewhat
offset by the correction of an accounting error.
Beginning in May 2005, expenditures for certain
Part A hospice benefits were inadvertently drawn from the Part B account
of the Supplementary Medical Insurance (SMI) trust fund, rather than
from the Hospital Insurance (HI) trust fund. Correction of this error
will reduce Part B outlays in 2008 and later years. It will also result
in adjustments to the HI and SMI trust funds to account for the
misallocated hospice expenditures during fiscal years 2005 through
2007.
As a result, Part B benefit costs estimated for
2008 are lower than previously projected, and Part B assets available
for contingency purposes will be greater. Both factors serve to reduce
the level of assets needed to ensure an adequate contingency reserve.
Further, the lower anticipated level of Part B outlays in 2008 reduces
the premium increase that, together with matching general fund
transfers, is needed to finance Part B benefits and administrative
expenses.
As required in the Medicare Modernization Act,
beginning in 2007, the Part B premium a beneficiary pays each month is
based on his or her annual income. Specifically, if a beneficiary’s
“modified adjusted gross income” is greater than the legislated
threshold amounts ($82,000 in 2008 for a beneficiary filing an
individual income tax return or married and filing a separate return,
and $164,000 for a beneficiary filing a joint tax return) the
beneficiary is responsible for a larger portion of the estimated total
cost of Part B benefit coverage.
In addition to the standard 25 percent premium,
these beneficiaries will now have to pay an income-related monthly
adjustment amount.
An estimated 5 percent of current Part B enrollees
are expected to be subject to the higher premium amounts.
The 2008 Part B monthly premium rates to be paid by
beneficiaries who file an individual tax return (including those who are
single, head of household, qualifying widow(er) with dependent child, or
married filing separately who lived apart from their spouse for the
entire taxable year), or who file a joint tax return are:
|
Beneficiaries who file an individual
tax return with income: |
Beneficiaries who file a joint tax
return with income: |
Income-related monthly adjustment
amount |
Total monthly premium amount |
|
Less than or equal to $82,000 |
Less than or equal to $164,000 |
$0.00 |
$96.40 |
|
Greater than $82,000 and less than or
equal to $102,000 |
Greater than $164,000 and less than or
equal to $204,000 |
$25.80 |
$122.20 |
|
Greater than $102,000 and less than or
equal to $153,000 |
Greater than $204,000 and less than or
equal to $306,000 |
$64.50 |
$160.90 |
|
Greater than $153,000 and less than or
equal to $205,000 |
Greater than $306,000 and less than or
equal to $410,000 |
$103.30 |
$199.70 |
|
Greater than $205,000 |
Greater than $410,000 |
$142.00 |
$238.40 |
In addition, the monthly premium rates to be paid
by beneficiaries who are married, but file a separate return from their
spouse and lived with their spouse at any time during the taxable year
are:
|
Beneficiaries who are married but file
a separate tax return from their spouse: |
Income-related monthly adjustment
amount |
Total monthly premium amount |
|
Less than or equal to $82,000 |
$0.00 |
$96.40 |
|
Greater than $82,000 and less than or
equal to $123,000 |
$103.30 |
$199.70 |
|
Greater than $123,000 |
$142.00 |
$238.40 |
Part B Deductible
The Part B deductible was increased to $110 in 2005
and, as a result of the Medicare Modernization Act, is currently indexed
to the annual percentage increase in the Part B actuarial rate for aged
beneficiaries. In 2008, the Part B deductible will be $135, compared to
$131 in 2007.
Part A Premium and Deductible
Today, CMS is also announcing the Part A deductible
and premium for 2008. Medicare Part A pays for inpatient hospital,
skilled nursing facility, hospice, and certain home health care
services. The $1,024 deductible for 2008, paid by the beneficiary when
admitted as a hospital inpatient, is an increase of $32 from $992 in
2007. The Part A deductible is the beneficiary’s only cost for up to 60
days of Medicare-covered inpatient hospital care in a benefit period.
Beneficiaries must pay an additional $256 per day for days 61 through 90
in 2008, and $512 per day for hospital stays beyond the 90th day in a
benefit period. This compares with $248 and $496 in 2007. Daily
coinsurance for the 21st through 100th day in a skilled nursing facility
will be $128 in 2008, up from $124 in 2007. The accounting error
mentioned earlier has no impact on the 2008 Part A premium.
Approximately 99 percent of Medicare beneficiaries
do not pay a premium for Part A services because they have at least 40
quarters of Medicare-covered employment. However, other seniors and
certain people under age 65 with disabilities who have fewer than 30
quarters of coverage may obtain Part A coverage by paying a monthly
premium set according to a statutory formula. This premium will be $423
per month for 2008, an increase of $13 from 2007. In addition, seniors
with 30 to 39 quarters of coverage, and certain disabled persons with 30
or more quarters of coverage, will pay a premium of $233 in 2008,
compared to $226 in 2007.
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