Medicare Beneficiaries To Save Again In 2014 With Historically Low Premiums And Deductibles

Medicare and Medicaid beneficiaries may see significant savings in 2014, courtesy of health reform efforts, as the Centers for Medicare and Medicaid Services (CMS) announced that the 2014 Part B premiums and deductibles for Medicare will not increase next year, and Part A premiums and deductibles are meeting or beating expectations. Additionally, the Patient Protection and Affordable Care Act (ACA) provision to close the prescription drug donut hole took effect, and more than 7.1 million seniors and people with disabilities who reached the donut hole have saved $8.3 billion on their prescription drugs. The 2014 premium rates were published in the October 30 Federal Register.

Part A premiums and deductibles. CMS also announced a decrease in the Medicare Part A premium, which pays for inpatient hospital, skilled nursing facility, and some home health care services. The premium will drop $15 in 2014 to $426, and is paid by enrollees age 65 and over who are not otherwise eligible for benefits under Medicare Part A and by certain disabled individuals who have exhausted other entitlement. Although about 99 percent of Medicare beneficiaries do not pay a premium for Part A since they have at least 40 quarters of Medicare-covered employment, enrollees age 65 and over and certain persons with disabilities who have fewer than 30 quarters of coverage pay a monthly premium in order to receive coverage under Part A. Beneficiaries who have between 30 and 39 quarters of coverage may buy into Part A at a reduced monthly premium rate which is $9 less than 2013, at $234 for 2014.

Part B premiums and deductibles. CMS indicated that the standard monthly Part B premium rate for all enrollees for 2014 will remain at the 2013 amount of $104.90. This marks the third year that the premium has either been less than projected or remained the same. Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. Beginning in 2007, Medicare beneficiaries with higher incomes have paid higher Part B monthly premiums. According to the CMS, these income-related monthly premiums, which affect less than 5 percent of people with Medicare, also will remain the same as they were in 2013.

Donut hole. As of September 2013, close to 2.8 million people nationwide who reached the donut hole have saved $2.3 billion, an average of $834 per beneficiary. These figures are higher than at this point last year (2.3 million beneficiaries had saved $1.5 billion for an average of $657 per beneficiary). Under the ACA, Medicare beneficiaries who reached the donut hole in 2010 were given a one-time $250 check, then discounts and coverage for brand-name and generic prescription drugs began phasing in, beginning in 2011. The ACA will provide additional savings each year until the coverage gap is closed in 2020.

Jonathan Blum, CMS Principal Deputy Administrator noted that, “Since 2010, more than 7.1 million seniors and people with disabilities who reached the donut hole have saved $8.3 billion on their prescription drugs, an average of $1,167 per person.” According to Blum, “Health care spending has grown more slowly in the past few years than it has since the 1960s. We’re working hard to make sure these gains continue. Meanwhile, lower costs and better care is great news for the Trust Funds, great news for taxpayers, and really great news for people with Medicare.”

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