The federal government recently released two important changes that are relevant to seniors.
- Social Security announced more than 71 million Americans will see a 3.2% increase in their Social Security benefits. On average, that’s about $50 a month, starting in January. (Read all about that here.)
- The Centers for Medicare & Medicaid Services released the premiums, deductibles and costs for Medicare Part A, hospital insurance, and Part B, medical insurance. Unfortunately, most of these are also increasing.
2024 Part B premium Will Be $174.70
The new 2024 monthly premium will be $9.80 more than the $164.90 in 2023, a 5.9% increase. In March, the Medicare trustees estimated that the monthly Part B premium would be $174.80. It looks as though their crystal ball was not broken; they missed the actual premium by $0.10.
In a press release, CMS explains the increases in the premium and other Part B costs is mainly due to the projected increase in healthcare spending. That is not a surprise given the demographics. There were 100,000 more people on Medicare in June 2023 than in fall 2022 and healthcare costs increase as people age.
There has been speculation that the premium could rise because of Leqembi, the new Part B drug approved for those diagnosed with mild cognitive impairment or mild Alzheimer’s disease dementia. CMS included the impact of another Alzheimer’s drug on the Part B premium in the 2021 and 2022 updates. However, there is no mention of that drug in this press release and I could not find any related updates online. But whatever the contributing factors, the premium will be almost $10 more.
Other Medicare Costs Are Rising
Part B Deductible
The Part B deductible will jump $14 to $240.
Part B IRMAA
Since 2007, higher-income beneficiaries have paid more for Part B (in addition to the monthly premium) because of IRMAA, short for the Income-Related Monthly Adjustment Amount. The Part B premium is the barometer for IRMAA. When the premium goes up or down, so do the amounts higher-income beneficiaries pay. For example, in 2023, the Part B premium dropped $5.20 and so did the monthly adjustments. Next year, with the increase in premiums, those subject to IRMAA will pay more.
First, here are the new thresholds. If your income from two years ago (2022) crosses this line, you will pay more.
• The 2024 annual income thresholds will be $103,000 for beneficiaries who file an individual return or married individuals filing a separate return, up from $97,000 this year.
• For married individuals filing a joint return, the threshold will increase from $194,000 to $206,000.
Then the monthly adjustments will range from $69.90-$419.30. This year the range was $65.90-$395.60.
Part D IRMAA
Medicare Part D prescription drug coverage can come through either a stand-alone drug plan or a Medicare Advantage plan that includes prescription drug coverage. These beneficiaries will also pay more. The Part D IRMAA in 2024 will range from $12.90 to $81 a month, up $0.70 to $4.60. (Find complete IRMAA information via the CMS website here.)
Part D Deductible
Those who have Medicare prescription drug coverage can face a deductible that will be $545 in 2024; it is $505 this year.
Part A Premium and Cost Sharing
Most beneficiaries qualify for premium-free Part A hospital insurance. That’s because either they or a spouse have 40 Social Security credits (10 years of paying taxes). Those who have not earned that many credits must pay a monthly premium if they want Part A.
Unlike everything else, the premium for Part A will not increase.
- Those who have at least 30 credits will pay $278 in 2024, the same as this year.
- Those with fewer than 30 credits will see a $1 decrease to $505 a month.
However, that will not be the case for other Part A costs.
- The inpatient hospital deductible will be $1,632, an increase from $1,600.
- The hospital coinsurance for days 61-90 will go up $8 to $400.
- The daily hospital coinsurance for lifetime reserve days (91-150) will increase to $816 from $800.
- The copayment for a skilled nursing facility, days 21-100, will be $204. It is $200 this year.
Different Costs Apply Depending On Your Medicare Decisions
- The Part A premiums apply to any beneficiaries who do not qualify for premium-free Part A.
- The Part B premiums apply to all beneficiaries, no matter whether you opted for Original Medicare or Medicare Advantage.
- All higher-income beneficiaries are subject to Part B and Part D IRMAA, even if they elected Medicare Advantage.
- The Part A costs, however, apply to those with Original Medicare, Part A and Part B with or without a Medigap policy (Medicare supplement plan). Any Medigap policy will cover the daily hospital coinsurance. There are Medigap policies available that will cover the other Part A costs.
- As with Part A costs, the Part B deductible applies to those with Original Medicare. It’s possible most beneficiaries pay this amount ($240 next year). The Medigap policies that cover it, Plan C and Plan F, can no longer be sold to those who are newly eligible for Medicare.
- The Part A costs and Part B deductible do not apply to those with Medicare Advantage. That’s because plans establish their own cost sharing (deductible, copayments, and coinsurance).
Over the past couple years, we have lived with rising costs. So, realistically, we can’t expect Medicare to buck that trend. The Social Security cost-of-living adjustment will help. The balancing act goes on.