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Questions and Answers About The Medicare Part B Premium

What is the Medicare Part B premium?

The Part B premium is the monthly amount paid by individuals for health coverage in Medicare Part B - a voluntary program that covers physician services, hospital outpatient care, durable medical equipment and other services including some home health care. The vast majority (about 92 percent) of Medicare beneficiaries are enrolled in Part B. Most individuals have the premium for their Part B coverage deducted from their Social Security, Railroad Retirement, or Federal government retirement checks.

How much is the Medicare Part B premium?

The 2014 standard premium for Medicare Part B health coverage is $104.90. However, higher income beneficiaries are required to pay more, as shown in the following chart.

Beneficiaries who file an individual tax return with income

Beneficiaries who file a joint tax return with income

Total monthly premium amount

Less than or equal to $85,000

Less than or equal to $170,000

$104.90

Greater than $85,000 and less than
or equal to $107,000

Greater than $170,000 and less than
or equal to $214,000

$146.90

Greater than $107,000 and less than
or equal to $160,000

Greater than $214,000 and less than
or equal to $320,000

$209.80

Greater than $160,000 and less than
or equal to $214,000

Greater than $320,000 and less than
or equal to $428,000

$272.70

Greater than $214,000

Greater than $428,000

$335.70

What determines the amount of the Part B premium?

The standard Medicare Part B premium is determined by a formula contained in the 1997 Balanced Budget Act, which set the premium at 25 percent of total program costs. The remaining 75 percent of program costs are financed through general revenues. The Medicare Modernization Act of 2003 (MMA) requires higher-income beneficiaries to pay a higher percentage of program costs, resulting in multiple tiers of premiums based on income.

Does the Medicare Part B premium increase every year?

In recent years the Part B premium has not increased.  In fact, Part B premiums have stabilized because the premium formula is tied to the cost of health care, which has been increasing more slowly in recent years than was previously projected.  Since 2012 premiums have either decreased or remained the same. However, if health care costs begin to escalate again, a "hold harmless" provision in the Social Security Act mandates that the Part B premium increase cannot exceed any beneficiary's cost-of-living adjustment (COLA) in their Social Security check. As a result, the net amount of the individual's Social Security check does not decrease.

Government Relations and Policy May 2014



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