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The Medicare Part B monthly premium will be $50 in 2001, an increase of $4.50 from this year, but still significantly lower than earlier year projections. The Part B premium covers physician services, hospital outpatient care, durable medical equipment and other services outside hospitals. Most of Medicare's 39 million beneficiaries opt for this voluntary coverage. In addition to health care costs, this year's increase reflects legislative changes that increase Part B spending. The beneficiary-paid Part B premium represents 25 percent of total Part B spending.

The Part B premium has been relatively flat in recent years. There was no increase in the premium last year, an increase of $1.70 in 1999, and no increase in 1998. Accounting for inflation, the premium has risen by less than a dollar since 1994.

"While the increase for 2001 is necessary to cover higher costs and legislative changes, we have still succeeded in significantly holding down Part B beneficiary premiums over recent years," said Michael Hash, acting administrator of the Health Care Financing Administration (HCFA), which runs the Medicare program. "Total premium increases for our beneficiaries have been less than half the amount originally projected when the Balanced Budget Act was passed."

Estimates following enactment of the Balanced Budget Act of 1997 had projected that Part B premiums would increase from $43.80 in 1997 to $59.40 in 2001, a four-year increase of more than $15. However, the premium announced today for 2001 represents an actual four-year increase of less than $7.

HHS also announced that the Part A deductible for inpatient hospital care will rise by $16, to $792. This increase is only about 2 percent, reflecting savings from reductions in Medicare hospital payments and other program changes signed into law in the BBA to help protect and preserve the Medicare Hospital Insurance Trust Fund. Last year, the deductible rose by $8.

The Part A deductible is a beneficiary's only cost for up to 60 days of Medicare-covered inpatient hospital care. The daily cost to beneficiaries for hospital days 61 through 90 in a benefit period is rising by $4, to $198 per day, and by $8, to $396 per day, for hospital days beyond the 90th in a benefit period. The skilled nursing facility daily coinsurance amount, which must be paid after the first 20 days of such care in a benefit period, is rising by $2, to $99 per day.

The Part A premium, paid by only a small percentage of beneficiaries, is decreasing again in 2001. For the 388,000 beneficiaries who pay a premium for Medicare Part A coverage, premiums will decrease by $1, to $300. This amount is paid by seniors with less than 30 quarters of Medicare-covered employment (and by certain people with disabilities who are under age 65, have lost disability benefits because of work and earnings and have less than 30 quarters of Medicare-covered employment). Seniors with 30 to 39 quarters of Medicare-covered employment (and certain people with disabilities who are under age 65, have lost disability benefits because of work and earnings, and have at least 30 quarters of Medicare-covered employment) are entitled to a reduced monthly premium, which is falling by $1, to $165.

States have programs that pay some or all of beneficiaries' Medicare premiums and coinsurance for certain people who have Medicare and a low income. Information is available at 1-800-MEDICARE (1-800-633-4227, TTY/TDD: 1-877-486-2048 for hearing and speech impaired) with questions about your Medicare premiums. Medicare information is also at www.medicare.gov on the Internet.

NOTE: Information concerning the Social Security Cost of Living increase for 2001 was also released today and can be found at www.SSA.gov.

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