Medicare Part B premiums will remain the same in 2015 as in 2014 and 2013, according to the Department of Health and Human Services.
That means for most of the 49 million Americans enrolled in the program—those who make $85,000 per year as individuals and $170,000 jointly—premiums will still be $104.90, and deductibles will still be $147. Since Part B covers physician visits, outpatient care, and limited home health services and durable medical equipment, retirees will be able to worry a little less about their medical expenses in the coming year.
This stable premium is actually $125 lower than the Congressional Budget Office predicted in 2009, and the Affordable Care Act’s Medicare cuts and the slowing growth of healthcare costs are likely reasons. HHS figures show that over the past four years, per capita Medicare spending growth has averaged 0.8 percent – just over a quarter of the same period’s 3.1 annual increase in per capita GDP.
In an HHS press release, Secretary Burwell said that, “Thanks to slower health care cost growth within Medicare since the passage of the Affordable Care Act, next year’s Medicare Part B monthly premium will remain unchanged for the second consecutive year. The Affordable Care Act is working to improve affordability and access to quality care for seniors and people with disabilities.”
Should these trends continue, retirees and pre-retirees may be able to count on lower personal healthcare costs over the next few years. “The stabilization of Part B premiums is another example of how we are containing healthcare costs to provide a more sustainable and affordable health delivery system,” said CMS Administrator Marilyn Tavenner in a statement. “The Administration has taken important steps to improve the quality of care while keeping the cost of Medicare premiums and deductibles the same. This means even greater financial and health security for our seniors next year as their premiums will remain unchanged.”
However, deductibles for Medicare Part A—coverage for hospital inpatient care and skilled nursing facility visits—are still increasing. The 2015 deductible will be $1,260, a $44 increase from this year. After the initial 60 days of inpatient care covered by Medicare during a given benefit period, beneficiaries will also have to pay $315 per day for days 61 through 90, and $630 per day for each day beyond that. Additionally, skilled nursing facility patients’ co-insurance payments for days 21 through 100 will rise from $152.00 to $157.50.
That may seem a modest increase, but for seniors living on fixed incomes, an additional $440 expense per year can be a challenge. Most retirees also incur their greatest medical costs during their last six months of life, and those costs typically include the inpatient and skilled nursing services that Part A only covers for 60 to 80 days. And, while prescription drug coverage is slated to improve with the closing of the Part D “donut hole,” seniors will have to wait until 2020 for it to be completely closed.
Given the uncertainties in the current political and economic environment, the best option for retiree and pre-retiree clients is to save and plan for growing medical expenses – even in light of recently stabilizing healthcare costs. Over-reliance on Social Security puts clients at risk, and even if the 2015 cost of living adjustment doesn’t have to be allotted to premium increases, it may be needed for other rising costs.
For those who retire early, smart planning may include the use of a healthcare exchange policy, often a more affordable option than individually purchased private insurance or COBRA coverage. For seniors with cancer or other chronic conditions, purchasing a supplemental Medicare policy may be a cost-effective way to offset likely future costs, such as lengthy hospital stays, that won’t be covered by Part A or B. And, for almost every senior, strategic tax and asset planning will go a long way in managing large, unforeseen medical expenses.