How Much Will Medicare Cost Me in 2017?

When calculating the finances you’ll need in retirement, one important question to ask is, “How much will Medicare Cost Me?” Here is a breakdown of the Medicare costs you’ll encounter in 2017.

Some parts of Medicare come with a premium and deductible, and most require coinsurance or a copayment. In addition, all face rising costs from year to year. In this post, we’ll take a look at the Medicare landscape for 2017 to see what your out-of-pocket costs might be.

2017 Medicare Cost of Part A

Medicare Part A, which covers hospitalization, skilled nursing care, some home health services, and hospice, will likely be premium-free as it is for 99% of seniors. This is because the premiums have been pre-paid during the course of your or your spouse’s employment through FICA payroll taxes. If you haven’t worked the requisite 10 years or 40 quarters, you may still purchase Medicare Part A coverage but the premium is steep, up to $413 per month in 2017.

The Part A deductible for 2017 rises to $1316 from $1288 and is a benefit period deductible rather than an annual deductible. This $1316 deductible is paid on admittance to a hospital or acute care facility and covers the first 60 days of care. Once your are out of the hospital for 60 days, a new benefit period begins and a new $1316 deductible would have to be paid. As you can see, it would be possible to pay several deductibles over the course of a year. In addition to the deductible, Medicare Part A requires coinsurance of $329 per day for days 60 to 90 and $658 per day for lifetime reserve days 90 to 150. Under Original Medicare, there is no coverage for days past day 150.

For care in a skilled nursing facility, the coinsurance amount in 2017 rises from $161 to $164.50 for days 21 through 100 in each benefit period.

2017 Medicare Cost of Part B

Medicare Part B, which covers doctors services, outpatient or partial hospitalization, durable medical equipment, and some prescription drugs, comes with a monthly premium. For most people, the monthly premium will increase to $109 in 2017 from the 2016 amount of $104.90.

The adjustment in the Medicare Part B premium is tied to the Social Security Cost of Living Adjustment (COLA) and, by law, may not increase more than the Social Security COLA. The linkage of the premium increase to the COLA protects seniors who are already receiving Social Security benefits. This group of seniors is known as the ‘hold-harmless” group.

Because 25% of Medicare Part B is funded through current premiums, any shortfall between the dollar amount that 25% figure represents and the amount paid by the hold harmless group must be made up by the following group of seniors:

  • Those who age into Medicare in 2017
  • Those who are directly billed for their premium (Because they aren’t yet drawing a Social Security benefit from which the premium is otherwise deducted)
  • Those who receive both Medicare and Medicaid and have their premium paid by a state agency
  • Those whose Modified Adjusted Gross Income (MAGI), as reported to the IRS two years previously, is above a certain threshold

The increased premiums paid due to higher income levels are demonstrated by this chart: (note that the charges are based on the modified adjusted gross income as reported on your IRS tax return from two years ago)

Chart demonstrating Medicare Cost of Part B premium for higher income levels.

 

2017 Medicare Cost of Part C

Medicare Part C, or Medicare Advantage, provides coverage through privately-operated plans which are free to set their own deductibles, copays, and coinsurance. The government sets a maximum out-of-pocket amount for these plans, and the cap for 2017 is $6700.

2017 Medicare Cost of Part D

For 2017, the allowable Medicare Part D deductible rises to $400. Not all drug plans charge a deductible but, if they do, it is capped at $400. This year, the coverage gap begins when you and your drug plan have spent $3700 for covered drugs and runs until you have spent $4950 out-of-pocket. Once you’ve spent $4950, you are out of the coverage gap and will pay a $3.30 copayment for a generic drug with a retail price under $66 and a 5% coinsurance payment for a drug with a retail price that exceeds $66.00. For a brand-name drug, the copayment is $8.24 for a drug with a retail price up to $165 or a 5% coinsurance payment for any drug with a retail price that exceeds $165.

As with Medicare Part B, if your modified adjusted gross income (as reported to the IRS from two years ago) exceeds a certain amount,  you may have to pay an income-related monthly adjustment. This additional charge isn’t part of your plan premium but is paid directly to Medicare. If you are receiving Social Security benefits, this charge will be deducted from your monthly payment. If this is not the case, you will receive a bill from Medicare of the Railroad Retirement Board. You will have to pay this amount to keep your Medicare Part D drug plan. The additional charges are demonstrated in the chart below:

Medicare Part D-IRMAA charges

For more information, call us at (888) 860-1002 and a licensed agent will be happy to help you find answers to your own unique situation.

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