2011 Medicare Cost Sharing Details

On November 9, 2010, the Centers for Medicare and Medicaid Service (CMS) released three notices detailing the Medicare Part A and Part B premiums and Deductibles for calendar year 2011. See, 75 Fed. Reg. 68790-68802 (Nov. 9, 2010).

Advocates need to be aware of changes and complications for 2011 with regard to premiums in order to assist their clients.

PART B PREMIUMS

"Hold Harmless" Part B Premiums: As previously reported, the majority of Medicare beneficiaries will not see an increase in their Part B premium because there will be no Social Security cost-of-living adjustment for 2011. [1] A hold harmless provision in the Social Security Act disallows an increase in the Medicare Part B premium for qualifying Social Security recipients if their COLA is not large enough to cover the increase in the Part B premium. [2] The Part B premium amount that protected beneficiaries will pay, however, will depend on whether they were protected by the hold harmless provision in 2010, or whether they first become eligible for hold harmless protection in 2011.

Assuming no change in their circumstances, people who were protected by the hold harmless clause in 2010 will be protected again in 2011. They will continue to pay the same Part B premium, $96.40, which they paid in 2009 and 2010. In addition, some beneficiaries who were not protected by the hold harmless clause in 2010 – primarily because they were new to Medicare in 2010 or because they did not have Part B premiums withheld from their Social Security or Railroad Retirement checks at the end of 2009 – will be protected by the hold harmless clause for 2011. These beneficiaries will continue to pay the same Part B premium, $110.50, which they paid in 2010.

Standard Part B Premium: In addition to the two "hold harmless" Part B premium amounts, there will be a standard Part B premium amount of $115.40 for 2011. Individuals who are new to Medicare in 2011 or who did not have Medicare premiums withheld from their Social Security or their Railroad Retirement checks in 2010 will pay $115.40. Individuals who currently have their Part B premiums paid for by the Qualified Individual (QI) program[3] are in jeopardy of having to pay the $115.40 Part B premium in 2011 if Congress does not extend the QI program beyond the end of the year. That is because their Part B premiums were not withheld from their Social Security checks during the requisite time periods to be eligible for the hold harmless protection. Their premiums were paid for by their state under the QI program. People who lose eligibility for one of the other Medicare Savings Programs, Qualified Medicare Beneficiary (QMB) and Specified Low-Income Medicare Beneficiary (SLMB), will also have to pay the $115.40 Part B premium.

Income-Related Part B Premium: Individuals who pay the income-related Part B premium are not protected by the hold harmless clause. The amount of the premium they will pay depends on their modified adjusted gross income and is indicated in the chart below.

The Social Security Administration (SSA) modified and clarified its definition of major life-changing events that allow a beneficiary to request a review of a determination which states that she must pay an income-related premium. Under the new rules, a beneficiary may request that SSA use more recent tax information to make the calculation if:

1. A beneficiary receives a settlement payment from a former employer in lieu of periodic pension payments and/or health insurance coverage as a result of the former employer's closure, bankruptcy or reorganization;
2. A beneficiary experiences a loss of investment property as a result of fraud or theft due to a criminal act by a third party;
3. A beneficiary experiences a reduction in or loss of income from an employer's pension plan due to termination or reorganization of the pension plan or a scheduled cessation of pension, regardless of whether the pension is insured. [4]

PART D PREMIUMS

Beginning in 2011, people who pay the income-related Part B premium will also pay an additional income-related Part D premium, known as a monthly adjustment amount. The monthly adjustment amount is not related to the premium of the plan in which such beneficiaries are enrolled, but is based on a percentage of the Base Beneficiary Premium for the year as determined by CMS. Thus, an individual with modified adjusted gross income of $86,000 will have a Part D monthly adjustment amount of $12.00 withheld from his/her check regardless of whether s/he enrolls in a plan with a premium of $14.85 or a premium of $40.

The monthly adjustment amount will be paid directly to Medicare through withholding from Social Security checks. Beneficiaries who pay the Part D monthly adjustment amount will continue to pay their regular Part D premium to the drug plan in which they enroll.

2011 COST SHARING FOR MEDICARE BENEFICIARIES

Hospital Deductible: $1,132 per spell of illness

Hospital Coinsurance:

• Days 0-60: $0
• Days 61-90: $283 / day
• Days 91-150: $566 / day

Skilled Nursing Facility Coinsurance

• Days 0-20: $0
• Days 21-100: $141.50 / day

Part A Premium (for voluntary enrollees only)

• With 30-39 quarters of Social Security coverage: $248 / month (a reduction from 2010)
• With 29 or fewer quarters of Social Security coverage: $450 / month (a reduction from 2010)

Part B

• Deductible: $162 / year
• Standard Premium: $115.40 / month*

Part B Income-Related Premium

Beneficiaries who file an individual tax return with income:	Beneficiaries who file a joint tax return with income:	Beneficiaries who are married, but file a separate tax return with income:	Income-related monthly adjustment amount	Total monthly Part B premium amount
Less than or equal to $85,000	Less than or equal to $170,000	Less than or equal to $85,000	$0.00	$115.40
Greater than $85,000 and less than or equal to $107,000	Greater than $170,000 and less than or equal to $214,000		$46.10	$161.50
Greater than $107,000 and less than or equal to $160,000	Greater than $214,000 and less than or equal to $320,000		$115.30	$230.70
Greater than $160,000 and less than or equal to $214,000	Greater than $320,000 and less than or equal to $428,000	Greater that $85,000 and less than or equal to $129,000	$184.50	$299.90
Greater than $214,000	Greater than $428,000	Greater than $129,000	$253.70	$369.10

* The majority of beneficiaries will not see an increase in their Part B monthly premium from the 2010 amount ($96.40) thanks to the "hold harmless" provision of the Social Security Act (42 U.S.C. §1395r(f)). See the discussion of the hold harmless provision that is included in the following weekly alert: https://www.medicareadvocacy.org/InfoByTopic/PartB/PartB_10_01.21.PremiumIssues.htm.

Part D Income-Related Premium Adjustment