Last month, the Centers for Medicare and Medicaid Services (CMS) announced the new 2024 Medicare premiums, deductibles, and cost-sharing amounts. These new numbers will impact all Medicare beneficiaries, so it’s important to adjust your budget now to be prepared for the new year. We’ve got you covered.
Medicare Part A Changes
Medicare Part A offers hospital or inpatient coverage when you stay at a hospital or skilled nursing facility.
Most beneficiaries don’t pay a premium for Part A. A current premium, that is. When you worked and paid taxes, part of that money was going toward your future Part A premium. As long as you or your spouse paid taxes for 40 quarters, you’ll enjoy premium-free Part A. Almost all beneficiaries fall into this category.
However, if you haven’t met that requirement, you’re still allowed to purchase Part A. Your premium will depend on how many of the 40 credits you have. You’ll fall into one of two premiums.
- 30 quarters or more: $278 per month
- Less than 30 quarters: $505 per month
The 2024 Part A premiums aren’t much different than they are today. In fact, the lower amount stayed the same, and the full Part A premium actually dropped by $1.
Premiums aren’t the only thing we have to consider. Part A also has a deductible, which applies to every benefit period, not the calendar year. You may have more than one benefit period each year, assuming you’re hospitalized multiple times. The Part A deductible will increase from $1,600 to $1,632 in 2024.
While that is a hefty number, the good news is that for hospitalizations, Part A covers the first 60 days at no cost to you. You’ll begin paying on day 61.
- Day 61 – Day 90: $408 per day
- Lifetime Reserve Day: $816
Each beneficiary has 60 lifetime reserve days. Once those are gone, you’ll be responsible for the full cost of each day. This is just one reason why we recommend our clients enroll in a Medigap plan or a Medicare Advantage plan.
Skilled nursing facilities have slightly different cost-sharing amounts. Part A only covers the first 20 days at no charge. Then, you’ll pay $204 per day from day 21 through day 100.
Medicare Part B Changes
Part B is your outpatient or medical insurance. It covers outpatient services like visits to your doctor, imaging, lab tests, surgeries, preventive care services, and more.
Part B does come with a monthly premium that nearly all beneficiaries must pay. (Those who qualify for Medicaid may not be responsible for certain Medicare costs, such as the Part B premium.) CMS has set the 2024 Part B premium at $174.40, up from $164.90 in 2023. The Part B deductible also increased a total of $14, coming in at $240 for 2024.
Some Medicare beneficiaries (about 8% of all enrollees) will actually pay a higher Part B premium. Individuals and couples who earn high incomes will be subject to IRMAA, the Income-Related Monthly Adjustment Amount. IRMAA is tacked onto your Part B and Part D premiums.
Your income from two years ago will be used to determine if you owe IRMAA. For the 2024 Part B premium, the government will look at your income from 2022. There are several IRMAA thresholds, so your premium may vary from the standard of $174.40 all the way up to the full amount of $419.30.
Medicare Part D Changes
Part D is how Medicare beneficiaries get their prescription drug coverage. You can enroll in a stand-alone Part D plan or have one included in your Medicare Advantage plan. (Medicare Advantage plans with prescription drug coverage are often called MAPD plans.)
CMS does not set a standard Part D premium since Part D plans are run by private insurance companies. Each individual chooses a Part D plan based on their current prescriptions. Part D plans, coverage, and premiums can vary by region.
We mentioned earlier that IRMAA also applies to Part D. If you owe IRMAA for Part B, you’ll also owe it for Part D since the government uses the same income thresholds. You can have anywhere from $12.90 to $81 added to your Part D premium. This amount is paid to the Medicare program, not the private insurance company.
CMS does set the standard Part D deductible. Insurance carriers can choose to use the standard amount or a lower amount if they please. The 2024 Part D deductible will be $545, an increase of $40 from 2023.
The coverage phases will also change. Part D is often the cause of most of the confusion when it comes to Medicare, and the coverage phases are often to blame.
The first phase is the deductible phase. Once you’ve met the $545 deductible in 2024, you’ll enter the second phase, initial coverage. You’ll stay in phase two until you and your plan have spent a total of $5,030, at which point you’ll enter the Medicare donut hole. You can get out of the donut hole and into catastrophic coverage when you’ve spent a total of $8,000. During the final phase of coverage, you will not have any cost-sharing responsibility, which is a new change coming in 2024.
If you have questions about the 2024 Medicare changes, don’t hesitate to reach out to your advisor at Carolina Senior Benefits.