The open enrollment period, available until December 7th, has arrived, bringing with it the updated Medicare premium rates for 2024. These premiums have seen an increase from the previous year, 2023. This rise was anticipated after an unusual decrease in premium and deductible costs last year.

To maximize the benefits of your plan, it’s crucial to understand your out-of-pocket expenses. These costs will differ based on your income and the specific plan you opt for. Here’s a breakdown of what you can anticipate in 2024.

The Medicare Part B premium for 2024 will be $174.70. 

This marks an increase of $9.80 from the 2023 premium of $164.90, constituting a 5.9% rise. In March, the Medicare trustees had estimated the monthly Part B premium to be $174.80, missing the actual premium by a mere $0.10.

In an official statement, CMS clarified that the rise in the premium and other Part B expenses is primarily due to the expected surge in healthcare spending. This development is unsurprising given the changing demographics; there were 100,000 more individuals on Medicare in June 2023 compared to fall 2022, and healthcare costs tend to escalate as people age.

Other Medicare Costs

Speculation has arisen regarding a potential increase in premiums due to Leqembi, the newly approved Part B drug for individuals diagnosed with mild cognitive impairment or mild Alzheimer’s disease dementia. In the 2021 and 2022 updates, CMS factored in the impact of another Alzheimer’s drug on the Part B premium. However, this press release does not mention that drug, and I couldn’t find any related updates online. Regardless of the contributing factors, the premium will be nearly $10 higher.

Medicare part B deductible

The Part B deductible will increase from $14 to $240.

Part B IRMAA

Starting from 2007, beneficiaries with higher incomes have been paying additional amounts for Part B, known as IRMAA, which stands for the Income-Related Monthly Adjustment Amount. The Part B premium serves as the basis for IRMAA calculations. 

When the premium increases or decreases, the amounts paid by higher-income beneficiaries also adjust accordingly. For instance, in 2023, the Part B premium decreased by $5.20, leading to a reduction in monthly adjustments. However, with the upcoming rise in premiums, individuals affected by IRMAA will be paying more next year.

Here are the updated income thresholds for 2024. If your income from two years ago (2022) surpasses these limits, you will be required to pay more:

• For beneficiaries filing an individual return or married individuals filing separately, the 2024 annual income threshold will be $103,000, up from $97,000 this year.
• For married individuals filing a joint return, the threshold will rise from $194,000 to $206,000.

Monthly adjustments will now vary from $69.90 to $419.30, compared to last year’s range of $65.90 to $395.60.

Part D IRMAA

Additionally, Medicare Part D prescription drug coverage, available through stand alone drug plans or Medicare Advantage plans, will incur higher costs in 2024.  The Part D IRMAA (Income-Related Monthly Adjustment Amount) will range from $12.90 to $81 a month, increasing by $0.70 to $4.60. 

Part D Deductible

For those with Medicare prescription drug coverage, the deductible will be $545 in 2024, a rise from this year’s $505.

Part A Premium and Cost Sharing

While most beneficiaries are eligible for premium-free Part A hospital insurance due to their or their spouse’s 40 Social Security credits, those without enough credits will pay a monthly premium for Part A. The premium rates for 2024 remain unchanged for those with at least 30 credits ($278) and have decreased by $1 for those with fewer than 30 credits ($505 a month). However, other Part A costs have increased:

• The inpatient hospital deductible is now $1,632, up from $1,600.
• The hospital coinsurance for days 61-90 has risen by $8 to $400.
• The daily hospital coinsurance for lifetime reserve days (91-150) has increased to $816 from $800.
• The copayment for a skilled nursing facility, days 21-100, is now $204, compared to $200 this year.

Different costs apply depending on your Medicare decisions. Part A premiums are applicable to beneficiaries who do not qualify for premium-free Part A. Part B premiums are mandatory for all beneficiaries, regardless of whether they chose Original Medicare or Medicare Advantage. Higher-income beneficiaries are subject to Part B and Part D IRMAA, even if they have opted for Medicare Advantage.

Part A costs and the Part B deductible are relevant for those with Original Medicare. Most beneficiaries pay the Part B deductible ($240 next year), but Medigap policies that cover it, such as Plan C and Plan F, cannot be sold to new Medicare enrollees. These costs do not apply to those with Medicare Advantage, as these plans establish their own cost-sharing structures, including deductibles, copayments, and coinsurance.

Medigap

Medicare doesn’t cover all expenses, leaving a gap often referred to as the “doughnut hole.” Part B covers only 80% of doctor’s visits and outpatient services, excluding dental care, eye checkups, and hearing aids. To address these gaps, you have two options: you can buy supplemental insurance to enhance your Original Medicare coverage or opt for a Medicare Advantage plan.

Supplemental insurance, or Medigap policies, are provided by private insurers and cover deductibles and copayments. These policies are categorized from A to N. Policies sharing the same letter offer identical basic benefits, differing mainly in cost. However, they generally don’t cover long-term care, vision, dental services, hearing aids, eyeglasses, or private-duty nursing.

Plans covering the Part B deductible were discontinued for new enrollees from 2020, making Plans F and C unavailable for new sign-ups. Plan G serves as a close substitute for Plan F, covering everything Plan F did except the Medicare Part B deductible. Individuals enrolled in Medicare before 2020 can still enroll in Plans F and C.

Medicare Advantage 

Alternatively, you can choose a Medicare Advantage plan, which replaces Original Medicare rather than supplementing it. These plans, sometimes known as “Part C” or “MA Plans,” provide medical and prescription drug coverage through private insurance companies. The monthly premium, in addition to Part B, varies based on the chosen plan. According to the Center for Medicare and Medicaid Services (CMS), the average monthly premium is estimated to be $18.50 in 2024, up from $17.86 in 2023. While Advantage plans have lower premiums than Medigap plans, they may entail higher deductibles and copayments. Additionally, your choice of healthcare providers may be more limited compared to Original Medicare.

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