| SOURCE: Centers for Medicare & Medicaid Services. |
| NOTES: The structure of Medicare has become increasingly complex over the years. This table provides a summary of Medicare cost sharing and premium provisions. It should be used as an overview and general guide. It is not intended to explain fully all of the provisions or exclusions of the applicable Medicare laws, regulations, and rulings. Original sources of authority should be researched and utilized.
. . . = not applicable.
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| a. As of November 1, 2009. |
| b. The deductible and coinsurance amounts begin in January unless otherwise noted. The monthly premium amounts were effective in July through 1983 and in January for 1984 and succeeding years. |
| c. Standard premium rate for voluntary enrollment by certain aged and disabled individuals not otherwise entitled to Hospital Insurance (HI). (Most individuals aged 65 and older and many disabled individuals under age 65 are insured for HI benefits without payment of any premium.) In most (but not all) cases, a surcharge applies for those beneficiaries who enroll after their initial enrollment period. |
| d. Most (but not all) services under Part B are subject to the annual deductible and coinsurance percentages shown. Some noteworthy exceptions are footnoted. Noteworthy exceptions in recent years, as of this writing, include (1) clinical lab tests, home health agency services, and certain prescribed preventive care services, which are not subject to the deductible or coinsurance and for which the beneficiary pays nothing; (2) outpatient psychiatric services, for which the coinsurance is 50 percent but phases down to 20 percent over the 5-year period of 2010–2014; and (3) most services reimbursed under the outpatient hospital prospective payment system, for which the coinsurance percentage varies by service but currently falls in the range of 20 percent to 50 percent. Original sources of authority, such as the laws, regulations, and rulings for Part B, should be consulted for specific details. |
| e. There are substantial premium and cost-sharing subsidies for Part D beneficiaries who meet certain low-income and limited-resources criteria. Subsidy levels vary on the basis of dual-eligibility status (that is, coverage by both Medicaid and Medicare), income level, asset level, and whether institutionalized. Premiums and cost-sharing amounts for beneficiaries meeting the criteria may be reduced or waived. (The subsidies are financed by certain payments from the general fund of the U.S. Treasury and from the states.) Original sources of authority, such as the laws, regulations, and rulings for Part D, should be consulted for specific details. |
| f. Under the standard Part D benefit design, there is an initial deductible. After meeting the deductible, the beneficiary pays 25 percent of the remaining costs until the initial coverage limit is reached. The beneficiary is then responsible for all costs until the out-of-pocket threshold is reached. (Included in the total out-of-pocket expenditures are the deductible, the 25 percent of costs paid by the beneficiary after the deductible is met and until the initial coverage limit is reached, and the 100 percent the beneficiary pays for costs above the initial coverage limit. In determining out-of-pocket costs, only amounts actually paid by the enrollee or another individual, and not reimbursed through insurance, are counted; the exception to this "true out-of-pocket" provision is cost-sharing assistance from the low-income subsidies provided under Part D and from State Pharmacy Assistance programs.) For costs thereafter, there is catastrophic coverage that requires enrollees to pay the greater of 5 percent coinsurance or a small defined copayment amount ($2 in 2006, $2.15 in 2007, $2.25 in 2008, $2.40 in 2009, and $2.50 in 2010 for generic or preferred multisource drugs, and $5.00 in 2006, $5.35 in 2007, $5.60 in 2008, $6.00 in 2009, and $6.30 in 2010 for other drugs). Many Part D plans offer alternative coverage that differs from the standard coverage described above. In fact, the majority of beneficiaries are not enrolled in the standard benefit design but rather in plans with low or no deductibles, flat payments for covered drugs, and, in some cases, partial coverage in the coverage gap. Covered drugs may vary by plan. Original sources of authority, such as the laws, regulations, and rulings for Part D, should be consulted for more specific details. |
| g. The actual Part D premiums paid by individual beneficiaries equal the base beneficiary premium adjusted by a number of factors; in practice, premiums vary significantly from one Part D plan to another and seldom equal the base beneficiary premium. A surcharge for enrollment after an individual's initial enrollment period may apply. (Late enrollment penalties do not apply to enrollees who have maintained creditable prescription drug coverage.) Enrollment in Part D is voluntary. |
| h. Represents standard premium for voluntary enrollment in Part B. Although this is the amount paid by most Part B beneficiaries in most years (see footnote aa for a notable exception), there are three provisions that can alter the premium for certain enrollees. First, in most (but not all) cases, a surcharge applies for those beneficiaries who enroll after their initial enrollment period. Second, beginning in 2007, beneficiaries whose income is above certain thresholds are required to pay an income-related monthly adjustment amount, in addition to their standard monthly premium; see footnote y. Finally, a "hold-harmless" provision, which prohibits increases in the standard Part B premium from exceeding the dollar amount of an individual's Social Security cost-of-living adjustment, lowers the premium for certain individuals who have their premiums deducted from their Social Security checks. |
| i. Beginning in July 1973 for the disabled. |
| j. Benefit not provided. |
| k. Professional inpatient services of pathologists and radiologists not subject to deductible or coinsurance, beginning in April 1968. |
| l. Beginning in April 1968. |
| m. Home health services not subject to coinsurance, beginning in January 1973. |
| n. Standard monthly premiums for July and August 1973 were reduced to $5.80 and $6.10, respectively, by the Cost of Living Council. |
| o. Home health services not subject to deductible, beginning July 1, 1981. |
| p. Professional inpatient services of pathologists and radiologists not subject to deductible or coinsurance, but only when physician accepts assignment. |
| q. Effective October 1, 1982, professional inpatient services of pathologists and radiologists are subject to deductible and coinsurance. |
| r. Unlike all other years, the 1989 deductible was applied on an annual basis rather than a benefit period basis. Once the deductible was paid by the beneficiary, Medicare paid the balance of expenses for covered hospital services, regardless of the number of days of hospitalization (except for psychiatric hospital care, which was still limited by the 190-day lifetime maximum). |
| s. The coinsurance amount in 1989 was equal to 20 percent of the estimated national average daily cost of covered skilled nursing facility care, rather than 1/8 of the inpatient hospital deductible. The beneficiary paid the coinsurance amount for the first 8 days of care in 1989, rather than for days of care 21 to 100 in a benefit period as in all other years. Skilled nursing facility benefits were available for up to 150 days of care per year in 1989, rather than for up to 100 days of care per benefit period as in all other years. |
| t. Includes the standard monthly Part B premium and a supplemental monthly flat premium under the Medicare Catastrophic Coverage Act of 1988. Amount shown is for most Part B enrollees. Residents of Puerto Rico and other territories and commonwealths, as well as persons enrolled in Part B only, paid different supplemental flat premiums, resulting in a lower premium than that shown. |
| u. A reduced premium is available to individuals aged 65 and older who are not otherwise entitled to HI but who have (or who were married to, widowed, or divorced from a spouse for certain periods of time who has or had) at least 30 quarters of Medicare-covered employment. The reduced premium is $184, $183, $188, $187, $170, $170, $166, $165, $175, $174, $189, $206, $216, $226, $233, $244, and $254, for 1994 to 2010, respectively. |
| v. A temporary Medicare-endorsed prescription drug discount card program was offered. For eligible beneficiaries voluntarily enrolling and paying up to $30 annually, discounts on certain prescription drugs were available, as specified by card sponsors. Under a Transitional Assistance (TA) provision, drug-card eligible beneficiaries whose incomes did not exceed 135 percent of the federal poverty level and who did not have third-party prescription drug coverage were eligible for (1) financial assistance of up to $600 per year for purchasing prescription drugs and (2) a subsidized enrollment fee for the discount card. Enrollment began May 2004, discount availability began June 2004, and the program phased out during 2006, as full Part D became available in January 2006. |
| w. The 2006 out-of-pocket threshold of $3,600 is equivalent to total covered drug costs of $5,100. The 2007 out-of-pocket threshold of $3,850 is equivalent to total covered drug costs of $5,451.25. The 2008 out-of-pocket threshold of $4,050 is equivalent to total covered drug costs of $5,726.25. The 2009 out-of-pocket threshold of $4,350 is equivalent to total covered drug costs of $6,153.75. The 2010 out-of-pocket threshold of $4,550 is equivalent to total covered drug costs of $6,440.00. |
| x. See footnote g. Prior to the start of each calendar year, the average monthly premium that beneficiaries will pay for standard Part D coverage during the upcoming calendar year is estimated and announced. The estimate is based on the bids submitted by Part D plans, and reflects the specific plan-by-plan premiums and, for most years, the estimated number of beneficiaries in each plan. (For 2006, each plan bid was given equal weight, without weighing for enrollment. For 2007, the average was calculated using 80 percent of the equally-weighted average bid and 20 percent of the enrollment-weighted average bid. In 2008, the average was calculated using 40 percent of the equally-weighted average bid and 60 percent of the enrollment-weighted average bid. Starting in 2009, the average is the enrollment-weighted average bid.) The announced estimated average monthly premium is $23, $22, $25, $28, and $30, for 2006 to 2010, respectively. |
| y. See footnote h. The 2010 Part B income-related monthly adjustment amounts and total monthly premium amounts to be paid by beneficiaries, according to income level and filing status, are shown in the Medicare section of "Program Descriptions and Legislative History" in this Supplement. The analogous amounts for 2009, 2008, and 2007 are shown on page 41 of the 2008 Supplement, 2007 Supplement, and 2006 Supplement, respectively. |
| z. For most Part B beneficiaries. For beneficiaries paying an income-related adjustment, the government amounts are to be reduced accordingly. See also footnotes h and y. |
| aa. Under the "hold-harmless" provision described in footnote h, the Part B premium for 2010 will remain at the 2009 amount of $96.40 for about 73 percent of Part B enrollees because the Social Security cost-of-living adjustment is 0 percent for 2010. The standard premium rate of $110.50 will be in effect for only about 27 percent of Part B enrollees, all of whom are not eligible for protection under the "hold-harmless" provision. (Those not protected include most new enrollees during the year; enrollees with high incomes who are subject to the income-related monthly adjustment amount; and enrollees—such as certain Federal, State, and local government retirees—who do not have their Part B premium withheld from a Social Security check. Also not protected are premiums paid on behalf of dual Medicare-Medicaid beneficiaries by State Medicaid programs.) In order for Part B to be adequately funded in 2010, the 2010 contingency margin had to be increased to account for this situation, and, as a result, a larger-than-usual premium increase will be borne by a minority of Part B enrollees. It must be noted that the above description of Part B premium amounts for 2010 is accurate as of November 1, 2009. It is possible that Congress will override the increase in the standard Part B premium to $110.50 and instead set it at the 2009 amount of $96.40. As of November 1, the House of Representatives had passed such legislation, and the bill was under consideration in the Senate. |
| CONTACT: Sol Mussey (410) 786-6386 or supplement@ssa.gov. |