4.07 2025 Medicare and Medicaid (AHCCCS) Information

General Information & Authorization

This presentation contains information regarding 2025 Medicare, specifically for the year 2025. Please note that this information cannot be copied or redistributed without explicit authorization from Arizona State University and the Arizona Board of Regents.

Medicare Part A (Hospital Insurance)

Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

Premiums

  • Most individuals do not pay a premium for Part A if they are eligible for Medicare, typically after working and paying Medicare taxes for at least 10 years (or 40 quarters).

  • If a person does not qualify for premium-free Part A, the cost is 518/month.

  • Failure to purchase Part A when first eligible (at age 65) may result in a penalty later once enrollment begins. The premium penalty for late enrollment is 10\% for twice the number of years you could have been enrolled but were not.

Inpatient Hospital Care

A benefit period for inpatient hospital care begins when an individual enters a hospital and ends when they have been out of a hospital or skilled nursing facility for 60 consecutive days. A new benefit period begins after 60 days of not receiving inpatient hospital or skilled nursing facility care.

  • First 60 days: Medicare pays for all covered costs, less an inpatient hospital deductible of 1,676. This includes a semi-private room, meals, general nursing, and other hospital services and supplies.

  • 61st through 90th day: Medicare pays for all covered costs, except for a daily coinsurance charge of 419 per day.

  • After 90 days (Lifetime Reserve Days): If hospitalization continues beyond 90 days, individuals can use up to 60 additional lifetime reserve days, subject to a daily coinsurance charge of 838 per day. These 60 days are non-renewable and are used only once over a beneficiary's lifetime.

Skilled Nursing Facility (SNF) Care

  • Maximum Benefit: A maximum of 100 days in a skilled nursing facility per benefit period for services requiring daily skilled nursing or rehabilitation care provided by professional staff.

  • First 20 days: Paid in full by Medicare, resulting in a 0 cost to the patient.

  • Days 21 to 100: The patient pays a daily coinsurance of 209.50.

  • After day 100: The patient is responsible for all costs for each day after the 100^{th} day of the benefit period.

  • Requirement: To be eligible for SNF coverage, the patient must have been hospitalized for at least 3 days before entering the skilled nursing facility. This stay must be a medically necessary inpatient hospital stay, not observation status.

2025 Medicare Part B & Part D Costs
2025 Medicare Part B Costs

Medicare Part B covers medically necessary services and preventive services. Premiums are income-based.

  • Income-Based Premiums: Premiums are determined by the individual's Modified Adjusted Gross Income (MAGI) from two years prior. For 2025 Part B premiums, the MAGI from 2023 is used. These higher premiums are known as Income-Related Monthly Adjustment Amounts (IRMAA).

    • Higher income earners pay higher premiums.

    • Examples for 2024 (using 2023 MAGI, lowest to highest premiums):

      • For 2023 MAGI at or below 106,000 (single) / 212,000 (Married Filing Jointly - MFJ), the monthly premium is 185.00.

      • For 2023 MAGI at or above 500,000 (single) / 750,000 (MFJ), the monthly premium is 628.90.

  • 2025 Part B Deductible: Before Original Medicare begins to pay, there is an annual deductible of 257.

  • After the deductible, Medicare generally pays 80\% of the Medicare-approved amount, and the patient is responsible for the remaining 20\% coinsurance for most services. Medically necessary services include doctor's visits, outpatient care, medical equipment, and some home health services. Preventive services include screenings, shots, and annual wellness visits.

2025 Medicare Part D (Prescription Drug Coverage)

Medicare Part D offers prescription drug coverage through private insurance plans approved by Medicare.

  • Deductible Stage: No Medicare drug plan may have a deductible exceeding 590. Some plans may not have a deductible at all. During this stage, the beneficiary pays the full cost of their prescriptions until the deductible is met.

  • Initial Coverage Stage: After meeting the full deductible (if applicable), individuals pay 25\% of the cost as coinsurance for both generic and brand-name drugs. This stage continues until their total out-of-pocket spending on covered Part D drugs, which includes the deductible, coinsurance, and copayments, reaches 2,000 in 2025.

  • Catastrophic Coverage Stage: Beginning in 2025, once this 2,000 out-of-pocket spending threshold is met, beneficiaries enter the catastrophic coverage stage where they are no longer required to pay any out-of-pocket costs (deductible, coinsurance, or copayments) for covered Part D drugs for the remainder of the calendar year. This eliminates the "Donut Hole" or coverage gap for beneficiaries.

How Medicare is Funded

Medicare is primarily funded through a dedicated payroll tax. This is part of the Federal Insurance Contributions Act (FICA) tax.

  • Payroll Tax: This tax typically appears as "HI" (Hospital Insurance) or "Medicare" on an individual's pay stub.

  • Employer and Employee Contributions: Both the employer and the employee each contribute 1.45\% of all wages earned towards Medicare.

  • Self-Employed Individuals: Self-employed individuals are responsible for paying both the employer and employee portions of the Medicare tax.

  • Excess Tax on High Wage Earners: An additional 0.9\% Medicare tax is applied to wages exceeding certain thresholds, which applies to earned income only and helps fund Medicare:

    • 200,000 for individual tax returns.

    • 250,000 for joint tax returns.

2025 Medicaid Eligibility (AHCCCS - Arizona Health Care Cost Containment System)

Medicaid, known as AHCCCS in Arizona, provides medical coverage for low-income individuals and families who meet specific qualifications.

  • Purpose: AHCCCS offers medical coverage for individuals and families generally at or below the federal poverty level. Eligibility is primarily based on Modified Adjusted Gross Income (MAGI) relative to the Federal Poverty Level (FPL).

  • No Monthly Premiums: Individuals enrolled in AHCCCS do not pay monthly premiums.

  • State-Set Requirements: Each state establishes its own unique eligibility requirements for Medicaid.

  • AHCCCS Model in Arizona: In Arizona, AHCCCS operates similarly to a Health Maintenance Organization (HMO), utilizing multiple healthcare providers to deliver services to its members. AHCCCS covers a wide range of medical services, including doctor visits, hospital care, prescription drugs, mental health services, and long-term care for eligible individuals.