Your Medicare costs can change each year based on the total cost of running the program. These costs come in several different forms including monthly premium payments, deductibles and coinsurance for care received, and Income Related Adjustment Amounts [IRMAA].
The Centers for Medicare & Medicaid Services [CMS] announced the 2024 Medicare costs on October 12th. Overall, monthly and per-visit costs will increase modestly next year.
Medicare Part A Costs to Increase in 2024
Medicare Part A covers inpatient hospital visits as well as other services including skilled nursing care, inpatient rehabilitation, and hospice. This part of Medicare is available at no monthly cost to any American over age 65 who has worked – or whose spouse has worked – more than 40 quarters at a covered job during their lifetime. While most people don’t pay a monthly premium for Medicare Part A, these services are still subject to deductibles and coinsurance.
The Medicare Part A deductible is the only cost you will owe if you are admitted to the hospital and your stay lasts 60 days or less. This deductible will increase by $32 to $1,632 in 2024.
For hospital stays that last longer than 60 days, you will owe a daily coinsurance amount for days 61 – 90. This cost will increase by $8 to $408 per day.
If you need to stay in the hospital longer than 90 days, you begin to use your lifetime reserve days – which are subject to a higher coinsurance amount. That coinsurance amount will increase by $16 to $816 per day.
Stays in a skilled nursing facility are treated differently than hospital stays. You begin to owe coinsurance after day 20 spent in a skilled nursing facility and Medicare stops paying for your care after day 100. The cost of this coinsurance will increase by $4 to $204 per day in 2024. The chart below summarizes the changes to Medicare Part A costs in 2024.
Medicare Part B Premiums and Deductibles Will Rise In 2024
Medicare Part B covers healthcare costs that are not covered by Part A including outpatient hospital services and doctor visits. Unlike Medicare Part A, Part B requires each recipient to pay a monthly premium. This standard premium will increase by $9.80 to $174.70 per month in 2024.
In addition to a monthly premium, Part B is subject to an annual deductible. This deductible will increase by $14 to $240.
Medicare Part B and D IRMAA in 2024
High earners are subject to IRMAA which increases the monthly premiums for Medicare Part B and D – prescription drug coverage. Like other Medicare costs, IRMAAs will increase in 2024.
Only 8% of Medicare recipients have incomes high enough to trigger IRMAA. Those who are single or married filing separately and have a Modified Adjusted Gross Income [MAGI] of $103,000 or less are not subject to IRMAA. This threshold is higher for married couples filing jointly – $206,000.
Those with incomes above the threshold are subject to higher monthly premiums based on several tiers of income. The highest IRMAA applies to individuals with income of $500,000 or more, married couples filing jointly with income of $750,000 or more, and married couples filing separately with income of $397,001 or more. These people will pay a total of $675 per month for Part B and D – up from $560.50 in 2023.
The chart below summarizes Part B and D IRMAA for 2024.
For the IRMAA calculation, income is based on MAGI from your tax return two years ago. If you’ve had a life changing event such as marriage, divorce, or loss of income and your income has changed drastically since that time, you can appeal IRMAA (click here for the exhaustive list of life changing events). For more information on the appeal process, contact an experienced financial advisor.
While Medicare cost increases will be mild in 2024, you may still need to adjust your financial plan to account for them. As you do this, it is also wise to review your Medicare supplement plan – which can help cover your share of Medicare costs. Medicare open enrollment runs from October 15 through December 7, and this is the time when you can make changes to your coverage for the upcoming year. If you need help reviewing your policy or understanding your Medicare options, consult a trustworthy financial advisor who can guide you through the process.
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