Medicare covers more than 57 million Americans, providing the healthcare coverage they need. Every year, though, the cost of Medicare typically goes up, and the program passes through those increases to its participants in the form of higher premiums, deductibles, and other expenses. Below, we'll look at the changes that are slated to take effect for Medicare in 2017.
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Part A costs
Most Medicare participants get hospital insurance coverage under Part A without paying a premium. However, for those who didn't collect enough credits for paying Medicare taxes during their career and don't have a qualifying spouse, Medicare charges a monthly premium of up to $413 per month. That's $2 higher than the maximum amount for 2016.
In addition, deductibles and coinsurance payments for hospital coverage under Part A will also go up in 2017. The table below describes the amounts for the initial deductible, as well as the coinsurance amounts depending on length of stay.
Type of Cost
2017 Cost (Change From 2016)
$1,316 (up $28)
Coinsurance for days 61-90 of hospital stay
$329 (up $7)
Coinsurance for days 91 and beyond of hospital stay using lifetime reserve days
$658 (up $14)
Coinsurance for skilled nursing facility stays
$164.50 (up $3.50)
DATA SOURCE: MEDICARE.GOV.
Part B costs
Medical care coverage under Medicare Part B will also see cost increases in 2017. The deductible that you have to pay on doctors' visits and other outpatient services goes up to $183 per year in 2017, climbing $17 from 2016.
In addition, unlike Part A, Part B always comes with a monthly premium. The standard Part B premium amount is slated to go to $134 per month in 2017, up $12.20 from the corresponding amount of $121.80 in 2016. The complication, though, is that most participants didn't pay $121.80 in 2016, and they won't pay $134 in 2017 either because of a special rule linking Social Security and Medicare.
In 2016, there was no cost-of-living increase for Social Security recipients, and the hold-harmless provision of Medicare therefore kicked in and prevented an increase from the 2015 Part B monthly premium of $104.90 for those who had their premiums taken directly from their Social Security checks. That makes up more than two-thirds of Medicare beneficiaries, but the remaining roughly 30% saw their premiums go up to $121.80.
In 2017, there will be a Social Security cost-of-living increase. But at just 0.3%, it's smaller than the rise in Medicare costs for most beneficiaries. As a result, for most beneficiaries, Medicare Part B premiums won't go by the full amount that they otherwise would. Medicare predicts that the average person who qualifies for the hold-harmless rule will pay about $109 per month in 2017, up about $4.10 from what they actually paid in 2016. However, your actual amount will vary depending on how much your Social Security benefits are and how large your cost-of-living increase ends up being in actual dollars.
Finally, those who are considered high-income individuals have to pay more than the standard amount in Part B premiums. The chart below gives the premiums for various income levels in 2017:
DATA SOURCE: MEDICARE.GOV.
These figures are up between $17 and $38.80 per month from 2016 levels. Moreover, higher-income individuals aren't eligible for the hold-harmless provision, and so even if they have their Medicare premiums taken directly from their Social Security benefits, they'll still end up having to pay the higher amounts.
For retirees living on a fixed income, any additional cost for Medicare can be hard to deal with. Even though rules like the hold-harmless provision protect some Medicare recipients, everyone who relies on Medicare will have to plan for at least some potential cost increases that will hit their pocketbooks in 2017.
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.