The announcement of the 2018 Medicare premium is good news for some beneficiaries and bad news for many others. The good news is that the standard monthly Part B premium, which about 30 percent of Medicare beneficiaries pay, will again be $134 next year, unchanged from 2017.
But most Medicare recipients pay a lower premium because they have been protected from any increase in premiums when Social Security benefits remain stagnant, as has been the case for the last several years. This year, that premium has averaged $109 a month, but due to the 2 percent Social Security increase for 2018, the premiums of these formerly protected beneficiaries could rise significantly.
An estimated 42 percent of these beneficiaries will pay the full monthly premium of $134 due to the increase in their Social Security benefit. The rest will pay less than $134 because the increase in their Social Security benefit will not be large enough to cover the full Part B premium increase. The average premium for these beneficiaries will jump from $109 to $130 a month, according to the Centers for Medicare and Medicaid Services (CMS).
So, in other words, Medicare beneficiaries who have been protected from a premium increase in past years will see their premiums go up, while those who have been unprotected in recent years will pay the same. Beneficiaries who have been unprotected from premium rises in the past few years include those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and “dual eligibles” who receive both Medicare and Medicaid benefits. Philip Moeller, author of Get What’s Yours for Medicare, offers a handy way to figure out what your Part B change will be: “Subtract your current Part B premium from $134. Then multiply your current monthly Social Security benefit by 2 percent. Your 2018 Part B premium change should be the smaller of these two numbers.”
The Part B deductible will remain at $183 in 2018, although the Part A deductible will go up by $24, to $1,340. For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will inch up from $164.50 to $167.50. Medicare coverage ends after day 100.
Here are all the new Medicare payment figures:
- Part B premium for protected beneficiaries: Average of $130/month
- Part B premium for those not protected: $134 (unchanged)
- Part B deductible: $183 (unchanged)
- Part A deductible: $1,340 (was $1,316)
- Co-payment for hospital stay days 61-90: $335/day (was $329)
- Co-payment for hospital stay days 91 and beyond: $670/day (was $658)
- Skilled nursing facility co-payment, days 21-100: $167.50/day (was $164)
So-called “Medigap” policies can cover some of these costs.
Premiums for higher-income beneficiaries will remain the same in 2018 as they were in 2017:
- Individuals with annual incomes between $85,000 and $107,000 and married couples with annual incomes between $170,000 and $214,000 will pay a monthly premium of $187.50 (unchanged).
- Individuals with annual incomes between $107,000 and $160,000 and married couples with annual incomes between $214,000 and $320,000 will pay a monthly premium of $267.90 (unchanged).
- Individuals with annual incomes between $160,000 and $214,000 and married couples with annual incomes between $320,000 and $428,000 will pay a monthly premium of $348.30 (unchanged).
- Individuals with annual incomes of $214,000 or more and married couples with annual incomes of $428,000 or more will pay a monthly premium of $428.60 (unchanged).
Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $85,000 will pay a monthly premium of $428.60.
The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2016 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2018. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.
Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will decrease by $1.91 (about 6 percent) in 2018, from an average of $31.91 in 2017 to $30 in 2018.
For Medicare’s press release announcing the new premium and deductible amounts, click here.
For Medicare’s “Medicare costs at a glance,” click here.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.