PUBLISHED FRI, DEC
25 202010:49 AM EST Sarah O’Brien@SARAHTGOBRIEN
KEY POINTS
·
Cost-sharing for
Medicare is headed higher for 2021, including Parts A and B premiums and
deductibles.
·
While average premiums
are down for both Advantage Plans and Part D prescription drug plans, other
aspects related to them may cost you more.
·
If you struggle to pay
for coverage, there may be ways to trim your share of those expenses.
As
happens every time the calendar flips to a new year, Medicare cost adjustments
are about to take effect.
This
generally means paying more for some parts of your coverage, effective Jan. 1.
For
Medicare’s 63 million beneficiaries — most of whom are 65 or older — certain
costs change year to year and can affect premiums, deductibles and other
cost-sharing. While the upward adjustments don’t necessarily involve huge
dollar amounts, they can add up.
“Though
the increases are small, we do see retirees worry over them,” said Danielle
Roberts, co-founder of insurance firm Boomer Benefits. “For folks living on
just Social Security, increases of even just a few dollars are a concern.”
For folks living on just Social Security,
increases of even just a few dollars are a concern.
Danielle Roberts CO-FOUNDER
OF BOOMER BENEFITS
Basic
Medicare consists of Part A (hospital coverage) and Part B (outpatient care).
About 40% of beneficiaries choose to get those benefits delivered through
Advantage Plans, which are offered by private insurers. Most of those plans
also include Part D prescription drug coverage and extras such as dental or
vision.
Other
beneficiaries stick with basic Medicare and pair it with a standalone Part D
prescription drug plan. Some also purchase a supplement plan — aka Medigap — which picks up some expenses in
basic Medicare, such as coinsurance or copays.
Here
are 2021 costs, as well some tips for reducing your outlay.
Parts A and B
Most
Medicare beneficiaries pay no premium for Part A because they (or their spouse)
have enough of a work history — at least 10 years — of paying into the program
through payroll taxes to qualify for it premium-free.
If
you don’t meet the minimum requirement, though, monthly premiums for 2021 could
be as much as $471 a month, depending on whether you’ve paid any
taxes into the Medicare system at all. That maximum is up from $458 in 2020.
MEDICARE PART A
DEDUCTIBLE AND COINSURANCE
|
TYPE OF COST-SHARING |
2020 |
2021 |
|
INPATIENT HOSPITAL
DEDUCTIBLE |
$1408 |
$1484 |
|
DAILY COINSURANCE FOR
61ST-90TH DAY |
$352 |
$371 |
|
DAILY COINSURANCE
LIFETIME RESERVE DAYS |
$704 |
$742 |
|
SKILLED NURSING
FACILITY COINSURANCE DAYS 21 - 100 |
$176 |
$185.50 |
Also
for Part A, if you have no additional coverage — 6.1 million beneficiaries did
not, at last count —
you’d pay a $1,484 Part A deductible if you’re admitted to the hospital in 2021
(up from $1,408 this year).
That
deductible would cover the first 60 days per benefit period. Beyond that, daily
copays of $371 (up from $352) apply through the 90th day. Anything above dips
from “lifetime reserve” days at a daily rate of $742 (up from $704).
The
standard Part B premium for 2021 is $148.50, up from $144.60. The 2021 Part B
deductible is $203, compared with $198 this year.
Once
you meet that deductible, you typically pay 20% of covered services. Keep in
mind that beneficiaries in Advantage Plans might pay a different amount through
copays, and Medigap policies either fully or partially cover that coinsurance.
If
you struggle to pay for coverage, you may qualify for a Medicare Savings Program,
which is administered through state Medicaid offices and are generally
available to beneficiaries with low income.
There
are several versions of the program, each of which depends at least partly on
your income. The options also come with limits on your available resources
(i.e., savings).
Depending
on which program you qualify for, your Part B premiums could be paid, as well
as other out-of-pocket costs such as deductibles, coinsurance and copayments.
Higher income, extra charge
If
your modified adjusted gross income exceeds $88,000 ($176,000 for married
couples), based on your most recent tax return, you will pay more for Parts B
and D premiums in 2021 due to a so-called income-related monthly adjustment
amount, or IRMAA. These income thresholds compare to 2020 amounts of $87,000
for individuals and $174,000 for married couples.
For
Part B, this means shelling out anywhere from $207.90 monthly to $504.90 in
2021 premiums. For Part D prescription drug coverage, the additional amounts
range from $12.30 to $77.10. That’s on top of any premium you pay, whether
through a standalone plan (whose premiums vary) or via an Advantage Plan.
If
your most recent tax return — probably 2019 — does not reflect an income drop
this year and you’re scheduled to pay IRMAAs, you can ask the Social Security
Administration to reconsider, said Elizabeth Gavino, founder of Lewin &
Gavino and an independent broker and general agent for Medicare plans.
“I
have a client who was at the base level but just got hit with a large IRMAA
since her 2019 income was significant,” Gavino said. “She’s appealing because
now she has no income coming in.”
Events
that qualify as justification for reducing or eliminating the IRMAAs include
marriage, death of a spouse, divorce, loss of pension or the fact that you
stopped working or reduced your hours.
You’ll
also need to provide supporting documents to justify your appeal. Suitable
proof may include a letter from your former employer (if you’re no longer
working) or something similar that shows evidence of reduced income.
There’s a form you can fill out or you can call
the Social Security Administration for help.
Part D costs and help
Premiums
for Part D prescription drug plans vary. The average for 2021 has slid to
$30.50 from about $32.50 this year, according to the Centers for Medicare and
Medicaid Services. However, if there’s a deductible with your coverage, it can
be up to $445 for 2021 (an increase from $435 this year).
For
people with high drug costs, be aware the amount that Part D enrollees pay out
of pocket before qualifying for “catastrophic coverage” is $6,550, up from
$6,350 in 2020. In that phase of coverage, your share of prescription costs
drops markedly.
Keep
in mind that there is no out-of-pocket maximum for Part D coverage, whether you
have a standalone plan or get benefits through an Advantage Plan.
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If
you meet certain income and resource limits, you might qualify for extra help paying
for premiums, deductibles and copays or coinsurance related to prescription
costs. If you qualify for a Medicare Savings Program, getting assistance for
Part D coverage is typically automatic.
There
are other ways to save, as well. You can use generics when possible to help
lower costs or check to see if your state has a pharmaceutical assistance program that’s
available to Medicare beneficiaries, Gavino said.
Advantage Plan costs
While
some Advantage Plans come with no monthly premium, the 2021 average is an
estimated $21, down from just under $24 in 2020, according to Medicare
officials. Either way, you must still pay your Part B premium — although
depending where you live, you might find an Advantage Plan that provides a
partial or full rebate of that monthly charge, said Roberts at Boomer Benefits.
Unlike
basic Medicare, Advantage Plans come with annual out-of-pocket maximums.
For
2021, that amount can be as high as $7,550 (up from $6,700 this year) for
in-network coverage before the plan pays 100% of covered services (excluding
your prescription drug costs, which do not count toward that cap). The combined
in- and out-of-network maximum for 2021 is $11,300.
Generally
speaking, the lower the premium, the more you’ll pay in cost-sharing, experts
say. And the specifics of that — whether out-of-pocket limit, deductibles,
copays or coinsurance — differ from plan to plan.
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