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News Release

HHS ANNOUNCES MEDICARE PREMIUM AND DEDUCTIBLE RATES FOR 2003

The Department of Health and Human Services (HHS) today announced the Medicare premium, deductible and coinsurance amounts to be paid by Medicare beneficiaries in 2003.

For Medicare Part A, which pays for inpatient hospital, skilled nursing facility, and some home health care, the deductible paid by the beneficiary will be $840 in 2003, up 3.5 percent from this year's $812 deductible. The monthly premium paid by beneficiaries enrolled in Medicare Part B, which covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items, will be $58.70, an increase of 8.7 percent over the $54.00 premium for 2002.

"These legally required increases reinforce the need to strengthen Medicare and give seniors and disabled Americans more and better insurance options," HHS Secretary Tommy G. Thompson said. "Medicare beneficiaries often must face higher out-of-pocket expenses than Americans enrolled in private health plans. President Bush's plan would give Medicare beneficiaries better options to obtain prescription drugs and affordable health care."

Medicare law requires that the deductibles and premiums be updated annually in accordance with statutory formulas. The law sets the Part B premium at the amount needed to cover 25 percent of estimated program costs for aged enrollees. General revenue tax dollars cover the other 75 percent of the costs. The same statute prescribes the method for computing the Part A inpatient hospital deductible.

All Medicare beneficiaries enrolled in Part B pay the monthly premium. The Part A deductible applies only to those enrolled in the original fee-for-service Medicare program. Those who enroll in private Medicare+Choice plans may not be affected by the Part A increase, and may receive additional benefits with different cost-sharing arrangements.

Most of Medicare's 40.4 million beneficiaries are enrolled in the optional Part B, which helps pay for physician services, hospital outpatient care, durable medical equipment and other services, including some home health care. Nearly 90 percent also have some form of supplemental coverage (such as Medigap, Medicaid, or Medicare+Choice) to help reduce out-of-pocket medical costs.

The Part A deductible is the beneficiary's only cost for up to 60 days of Medicare-covered inpatient hospital care. However, for extended Medicare-covered hospital stays, beneficiaries must pay an additional $210 per day for days 61 through 90 in 2003, and $420 per day for hospital stays beyond the 90th day in a benefit period. For 2002, per day payment for days 61 through 90 was $203, and $406 for beyond 90 days.

For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 will be $105 in 2003, compared to $101.50 in 2002.

Most Medicare beneficiaries do not pay a premium for Part A service. Seniors and persons under age 65 with disabilities may obtain Part A coverage even though they have fewer than 30 quarters of Medicare-covered employment, by paying a monthly premium set according to a formula in the Medicare statute at $316 for 2003, a reduction of $3 from 2002. Seniors and certain persons under age 65 with disabilities with 30 to 39 quarters of Medicare-covered employment are entitled to pay a reduced monthly premium of $174. To be eligible for voluntary enrollment in Part A based on disability, the person must have lost disability benefits solely because earnings exceeded a certain amount.

States have programs that pay some or all of beneficiaries' premiums and coinsurance for certain people who have Medicare and a low income. Information is available at 1-800-MEDICARE (1-800-633-4227) and, for hearing and speech impaired, at TTY/TDD: 1-877-486-2048.

Information concerning the Social Security Cost of Living increase for 2003 was also released today and can be found at www.SSA.gov.

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Note: All HHS press releases, fact sheets and other press materials are available at www.hhs.gov/news.

Last Revised: October 18, 2002