A person who is 65 years of age and who will be entitled to Social Security or Railroad Retirement benefits is automatically enrolled in Medicare Part A and will be deemed to have enrolled in Medicare Part B. A person who is not receiving Social Security or Railroad Retirement benefits must enroll for Medicare Part A during the initial enrollment period.

A person aged 65 and older (or a person under age 65 who is disabled) who has not received credit from Social Security for 40 quarters of coverage may enroll in Medicare Part A, but he or she may have to pay a $450 per month premium in 2011 if the individual has 29 or fewer quarters of Social Security credits. Eligible individuals with 30-39 quarters of Social Security credits must pay a $248 per month premium for Part A coverage in 2011.

Medicare Part A will pay for inpatient hospital care that is medically necessary for treatment or diagnosis after the patient meets the initial first day deductible that is $1,132 in 2011. Benefits cover 90 days of inpatient hospital care for each spell of illness. There is a $283 per day deductible for the 61st through 90th day in the hospital during the same spell of illness in 2011. In addition, a patient is allowed a maximum of 60 lifetime reserve days with a $556 per day deductible in 2011. Each year, there is an adjustment to the initial deductible, coinsurance amount and lifetime reserve daily amount. This adjustment is normally published in October of the year preceding the new calendar year in which the new deductible will apply.

Maximum Coverage for Hospital Care (2011)

Days in Hospital	How Much You Pay	How Much Medicare Pays
First 60 days	$1,132 for first day	Balance
61-90 days	$283/day	Balance
91-150 days	$556/day	Balance
After 150 days	All Costs	Nothing

Skilled Nursing Facility Care

Medicare Part A will pay all the costs for a covered skilled nursing home stay for the first 20 days and all but $141.50 per day for the next 80 days in 2011.

Medicare Part B

Most Medicare Beneficiaries will pay a $96.50 Part B premium amount in 2011 if they have an income of $85,000 or less (or $170,000 for joint filers). New Part B beneficiaries will pay $110.50 per month. Individuals with annual incomes greater than $85,000 and less than $107,000 and married couples with annual incomes greater than $170,000 and less than $214,000 in 2011 will pay a monthly premium of $154.70 each. Individuals with annual incomes greater than $107,000 and less than $160,000 and married couples with annual incomes greater than $214,000 and less than $320,000 in 2011, will pay a monthly premium of $221.00 each. Individuals with annual incomes greater than $160,000 and less than $214,000 and married couples with annual incomes greater than $320,000 and $428,000 in 2011 will pay a monthly premium of $287.50 each. Individuals with annual incomes greater than $214,000 and married couples with annual incomes greater than $428,000 in 2011 will pay a monthly premium of $353.60 The income test is determined from the gross income reported by the Medicare beneficiary on his or her income tax return filed 3 years ago.

Medicare Part D

The annual deductible for 2011 is the first $310 of prescription drug expenses incurred during 2011 for drugs on the plan’s list of covered drugs or formulary. The enrolled Medicare beneficiary then pays a coinsurance amount equal to 25 percent of his or her prescription costs, for formulary drugs, in excess of the annual deductible up to the initial coverage limit in 2011 of $2040. The Medicare beneficiary’s prescription drug plan sponsor is to pay the remaining 75 percent until total drug expenses paid for by the plan and the beneficiary reach $2,840. The enrolled Medicare beneficiary then pays the next $3,730.00, in prescription drug expenses in 2011 before receiving any additional financial assistance. This additional prescription drug expense to the Medicare beneficiary is referred to as the doughnut hole since the plan pays nothing toward this additional prescription drug expense. There is no additional prescription drug assistance until an enrolled Medicare beneficiary’s annual prescription drug expense for formulary drugs and monthly expenses exceeds $4,550 in 2011 plus his or her monthly premiums. A person with total prescription drug expenses for formulary drugs exceeding $6,448 in a year then pays a co-payment of $2.50 for each generic for each generic drug and $6.30 for any other drug prescription, or 5 percent of the cost of the prescription drug, whichever is greater. The new Affordable Care Act also gives the beneficiary who reaches the donut hole in prescription expenses in 2011 a 50% reduction in the cost of brand name drugs and a 7% reduction in the cost of generic drugs. This reduction does not decrease the amount of the prescription cost applied toward the deductible.
The annual premium and the deductibles are expected to increase each year as the cost of this additional Medicare benefit increases. Prescription costs will be treated as incurred by the Medicare beneficiary only if they are paid by the eligible beneficiary or by another individual on behalf of the eligible beneficiary. If the eligible individual is reimbursed for such costs through insurance, a group health plan, or other third-party payment arrangement, the prescription cost may not count toward the beneficiary’s incurred share of cost of $4,550.

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