Key Takeaways:
- Medicare premiums and deductibles have increased in 2024, and planning ahead can help you manage these rising costs and avoid unexpected expenses.
- Reviewing your coverage options annually, especially during open enrollment, is essential for staying on top of Medicare costs and keeping your healthcare affordable.
Understanding the 2024 Medicare Cost Increases
As we move through 2024, one thing is certain: Medicare costs have risen across the board. Whether it’s premiums, deductibles, or out-of-pocket expenses, many beneficiaries are feeling the financial pinch. And while these changes can be daunting, the good news is that with the right preparation, you can avoid getting caught off guard by the rising costs.
Medicare can be complicated, with different parts—A, B, C, and D—each with its own cost structure. As healthcare costs rise nationwide, it’s important to know what you’ll be paying and how to plan for these expenses. Let’s take a look at what’s changed in 2024, and how you can avoid surprises.
Medicare Part A: Rising Hospital Insurance Costs
Medicare Part A covers inpatient hospital stays, care in skilled nursing facilities, hospice care, and some home healthcare services. In 2024, these costs have increased slightly, particularly if you don’t qualify for premium-free Part A.
Premiums and Deductibles for Part A in 2024
Most people don’t have to pay a premium for Medicare Part A because they have worked and paid Medicare taxes for at least 40 quarters (10 years). However, if you or your spouse didn’t meet this work requirement, you’ll face monthly premiums:
- $505 per month for those with fewer than 30 quarters of covered employment.
- $278 per month if you have between 30-39 quarters of covered employment.
The Part A deductible in 2024 has risen to $1,632 per benefit period. This is the amount you need to pay before Medicare starts covering hospital costs. Each benefit period begins when you’re admitted to the hospital and ends 60 days after you leave. If you need multiple hospital stays throughout the year, you’ll likely have to pay this deductible more than once.
Once you’ve met the deductible, coinsurance costs apply:
- Days 1-60 of inpatient care: No coinsurance after the deductible is met.
- Days 61-90: $408 per day in coinsurance.
- Days 91 and beyond: $816 per day for lifetime reserve days (you have 60 lifetime reserve days to use during your lifetime).
- Skilled Nursing Facility: After a qualifying hospital stay, Medicare will cover the first 20 days of care in a skilled nursing facility at no cost to you. From days 21-100, however, you’ll be responsible for $204 per day.
If you’re expecting hospital stays or nursing facility care, knowing these costs will help you plan better and avoid financial surprises.
Medicare Part B: Higher Outpatient Costs
Medicare Part B is responsible for covering outpatient services, such as doctor visits, lab tests, preventive care, and some home healthcare services. In 2024, the costs for Part B have also gone up, and if you rely on these services frequently, it’s important to budget for these increases.
2024 Part B Premiums and Deductibles
The standard monthly premium for Part B in 2024 is $174.70. However, this amount can be higher if your income exceeds certain thresholds. Higher-income beneficiaries are subject to the Income-Related Monthly Adjustment Amount (IRMAA), which increases your premium depending on your modified adjusted gross income from two years ago (2022 in this case).
The annual deductible for Part B in 2024 is $240. After meeting this deductible, Medicare will cover 80% of the Medicare-approved amount for covered services, leaving you responsible for 20% coinsurance. For some, this 20% may not seem significant, but over time, particularly with ongoing treatments or multiple doctor visits, the out-of-pocket costs can add up.
It’s also important to note that Part B doesn’t have an out-of-pocket maximum, meaning there’s no cap on how much you may have to pay in a year. If you have frequent medical needs, this is an essential cost to factor into your planning.
Medicare Part D: Increased Prescription Drug Costs
Medicare Part D, which covers prescription drugs, has also seen cost increases in 2024. If you rely on medications to manage chronic conditions, these changes are especially important to consider.
Part D Premiums, Deductibles, and the Donut Hole
The average monthly Part D premium in 2024 is $55.50, although premiums vary depending on the specific plan you choose and your income. Like Part B, higher-income beneficiaries will also face an IRMAA surcharge on their Part D premiums.
The Part D deductible is capped at $545 in 2024. After meeting this deductible, you’ll typically pay a percentage of the cost of your medications, known as coinsurance, or a flat copayment amount. The cost structure varies depending on your plan and the type of drug you need.
One of the biggest concerns for Part D beneficiaries is the donut hole, also known as the coverage gap. In 2024, you’ll enter the donut hole once your total drug spending (including both your contributions and your plan’s payments) reaches $5,030. While in this gap, you’ll pay 25% of the cost for brand-name and generic drugs.
Fortunately, if your out-of-pocket drug costs reach $8,000, you’ll exit the donut hole and enter catastrophic coverage, where you’ll pay much lower costs for the rest of the year. However, if you expect to hit this limit, it’s important to budget for those higher costs early in the year.
How to Avoid Being Caught Off Guard by Rising Medicare Costs
With these rising costs in 2024, how can you protect yourself from unexpected medical expenses? There are a few strategies you can use to better prepare and ensure your healthcare remains affordable.
1. Review Your Coverage Every Year
Medicare plans can change from year to year, and your health needs may change as well. That’s why it’s essential to review your coverage annually during open enrollment, which runs from October 15 to December 7. This is the perfect time to switch plans, add supplemental coverage, or make other adjustments to better manage your healthcare costs.
If you’re enrolled in a Medicare Advantage plan, make sure to review changes in premiums, out-of-pocket maximums, and provider networks. If you’re using a Part D plan, check whether your medications are still covered and whether there are more affordable alternatives available.
2. Plan for Out-of-Pocket Costs
While Medicare provides valuable coverage, it’s important to plan for out-of-pocket costs like deductibles, copayments, and coinsurance. Some beneficiaries choose to purchase Medigap plans to help cover these expenses. Medigap policies can help with costs like Part A deductibles and Part B coinsurance, making your healthcare costs more predictable.
3. Understand Income-Related Premium Adjustments
If your income has changed significantly in the past two years, you may be subject to higher premiums due to IRMAA. These surcharges apply to both Part B and Part D premiums. However, if you’ve experienced a life event such as retirement, marriage, or divorce that has reduced your income, you can appeal the surcharge to potentially lower your premiums.
4. Maximize Preventive Care
Medicare offers a variety of preventive services at no cost to you, including screenings, vaccines, and an annual wellness visit. By staying proactive about your health, you can catch potential issues early and avoid more costly treatments down the road. Taking advantage of these preventive services can reduce your overall healthcare expenses and improve your long-term health.
Keeping Ahead of Rising Medicare Costs in 2024
The reality of rising Medicare costs in 2024 is challenging, but with careful planning and informed decision-making, you can avoid being caught off guard. Reviewing your coverage during open enrollment, budgeting for out-of-pocket expenses, and understanding how income impacts your premiums are all key steps in managing your healthcare costs effectively.
By staying proactive and exploring your options, you can ensure that you’re prepared for the financial challenges Medicare presents this year. Don’t wait until bills start arriving—start planning now to keep your healthcare expenses under control.
