The standard Medicare Part B monthly premium will be $96.40 in 2009, the same as the Part B premium for 2008, according to CMS. This is the first year since 2000 that there was no increase in the standard premium over the prior year.
 
The $96.40 premium is the same as the amount projected in March’s 2008 Medicare Trustees Report. This monthly premium paid by beneficiaries enrolled in Medicare Part B covers a portion of the cost for durable medical equipment, as well as physicians’ services, outpatient hospital services, certain home health services, and other items.
 
The standard premium covers roughly one-fourth of the average cost of Part B services incurred by beneficiaries ages 65 and older, with the remaining Part B costs financed by Federal general revenues. The income to the program from premiums and general revenues are paid into the Part B account of the Supplementary Medical Insurance trust fund, and Part B expenditures are drawn from this account.
 
 
Growth is expected in 2009 for most areas of Medicare Part B, including increases in the cost and use of DME, physician and outpatient hospital care, home health services, physician-administered drugs, ambulatory surgical center services, independent lab and physician’s office lab services, as well as growth in the Medicare Advantage program.

Normally, the Part B premium increases at the same rate as average Part B expenditures from year to year, but CMS says 2009’s increases were offset by a “substantial reduction” in the premium “margin” needed to maintain an adequate contingency reserve in the Part B trust fund account.

If needed, a portion of the Part B premium can be used to adjust the account’s asset level so that it can make up any shortfall in financing due to higher-than-expected expenditures. Due to legislative changes that increased Part B spending for a year after the financing had been determined for that year,[1] the assets in the Part B account of the Supplementary Medical Insurance trust fund were below the level considered adequate for the four years 2003-2006.  Consequently, Part B premiums and general revenue financing in recent years have been set at somewhat higher levels than would otherwise have been required in order to restore the contingency reserve to an appropriate level.  
 
“By the end of 2008, the assets in the Part B account of the SMI trust fund are expected to be somewhat above an adequate level,” a statement from CMS reads. “For 2008, the financing goal was for the difference between Part B assets and liabilities at the end of the year to represent about 20 percent of the following year’s expenditures; the actual percentage is currently estimated to be 24 percent.  

“This level is the result of (1) the planned increases in the contingency margin built into the Part B premium for several years, including 2008, and (2) the restoration of the Part B account assets for certain Part A hospice benefits that were inadvertently drawn from the Part B account. (This latter adjustment resulted in an increase in Part B assets of $9.3 billion as of June 30, 2008.)”  

Additionally, CMS says Part B deductible was increased to $110 in 2005 and, as a result of the Medicare Modernization Act, is currently indexed to the annual percentage increase in the Part B actuarial rate for aged beneficiaries.  In 2009, the Part B deductible will be $135, the same as it was in 2008.