There are several parts of Medicare, and for each one, there are changes in both the premiums and out-of-pocket costs for Medicare beneficiaries that happen every year. Original Medicare includes Part A (hospital insurance), and Part B (Medical Insurance). The benefits for Part A and Part B are provided by the government when you enroll in Medicare. Part C (Medicare Advantage), Part D (Prescription Drug), and Medicare Supplement (Medigap) plans are sold by private insurance companies with federal and state regulators’ oversight.
Each year, Medicare and private insurance companies review the Medicare plans and make changes to premiums and out-of-pocket costs like deductibles, copays, and coinsurance due to a variety of factors like inflation, medical costs, claims, and more. With Part C and Part D, there can be changes in the benefits provided as well. In this article, we will review the changes to the various parts of Medicare for 2021.
Changes to Medicare Part A and Part B costs for 2021
Every year, the Centers for Medicare and Medicaid Services (CMS), the Federal Government agency responsible for Medicare, updates the premiums, coinsurance, and copay amounts for Medicare Part A and Medicare Part B. The same services and tests provided under Part A and Part B are updated continuously throughout the year, but the high-level categories of benefits covered do not change often. If you are interested in seeing if Original Medicare covers a particular service, item, or test, you can search for it on the Medicare website. As is the case in most years, the costs for Medicare Part A and B services have increased slightly. Below are the changes for 2021.
2020 & 2021 Part A & Part B costs at a glance
Part A premium – Most people don’t pay a monthly premium for Part A
If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $458. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $252.
If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $471. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $259.
Part A hospital inpatient deductible and coinsurance
· Beyond lifetime reserve days: all costs
Skilled nursing facility stay
Part B premium
The standard Part B premium amount is $144.60 (or higher, depending on your income).
The standard Part B premium amount is $148.50 (or higher, depending on your income).
Part B deductible and coinsurance
$198 Deductible. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment (DME)
$203 Deductible. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment (DME)
Most Medicare Beneficiaries pay a premium for their Part B insurance. The standard premium is $148.50 for 2021. However, Medicare adjusts the amount you may have to pay based on how much money you make. They call this adjustment the Medicare Income-Related Monthly Adjustment Amount (IRMAA), and it impacts both Medicare Part B and Part D premiums. We will discuss the impacts on Part D premiums in the section about Part D 2021 changes, but they are listed in the table below along with the Part B changes. It is important to understand these Medicare income limits for 2021.
Understanding Medicare Part C, Part D, and Medicare Supplements
Similar to Medicare Part A and B, the costs associated with Part C (Medicare Advantage), Part D (Prescription Drugs), and Medicare Supplements can change each year. In addition, the insurance companies that sell these plans can change the benefits provided by each plan for Medicare Advantage and Part D plans. Medicare Supplement benefits do not change year over year; they are standardized plans, and no matter which insurance company sells a Medicare Supplement Plan, the benefits are the same.
Before we get into the cost changes, it is essential to understand how the benefits for Medicare Advantage and Part D plans work. When you purchase a Medicare Advantage plan, it completely replaces your Part A and B benefits, and at a minimum, they must offer the same benefits as provided by Part A and B. In most cases, they include supplemental benefits as well. These include things like lower out-of-pocket costs, dental, vision, hearing, transportation, over-the-counter drugs, and many more not included in Part A and B. Medicare Advantage plans are not standardized like Medicare Supplements, so the plans offered by different insurance companies all have unique and different benefit designs.
Most prescription drugs are not covered by Part A or Part B, so if you want prescription drug coverage, and you should, you will have to buy a Part D Plan if you are enrolled Original Medicare or have a Medicare Supplement (they don’t cover drugs either). Most Medicare Advantage plans have the Part D benefits build in, so you won’t have to buy a separate Part D plan.
Changes to Medicare Advantage (Part C), Part D, and Medicare Supplements for 2021
As we have discussed, Medicare Advantage plans can change benefits, premiums, and out-of-pocket costs each year. One of the things all insurance companies must provide every year is a document called the Annual Notice of Change (ANOC). This is a long and complicated document that outlines all of the changes made to your Medicare Advantage plan for the coming year. If you are currently enrolled in a Medicare Advantage plan, you will receive it at the beginning of October for the following plan year. This can be a complicated document to understand, so it is vital to review it with an independent agent or call the insurance company if you have questions about changes for the coming year.
As mentioned earlier, Medicare Advantage and Part D plans are not standardized, so every plan has different benefits and costs. Part D plans can change the covered drugs (the list is called a formulary) as well as the deductibles, copays, and coinsurance. Earlier in this article, we talked about IRMAA, which adjusts the Part B and Part D premiums you pay based on your income. The changes to Part D are listed in that chart. The amounts listed for Part D are in addition to the plan premium you pay the insurance company so take this into account if your income requires an IRMAA adjustment. Your insurance company will provide an ANOC for any changes to your Part D plan for the coming year.
Moderate year over year changes for Medicare Advantage and Part D
One good thing about Medicare Advantage and Part D plans is CMS limits the changes an insurance company can make from one year to the next. This helps eliminate large changes in benefits or premiums from one year to the next. Some years you will see no premium changes to the benefits provided and copays, coinsurance, and deductibles applied. If you enroll in a Medicare Advantage or Part D plan, you will still have to pay your Part B premium and Part A premium (most don’t have a Part A premium, but some do), so any changes for the upcoming year to those premiums will also apply.
Let’s talk about Medicare Supplement (Medigap) changes. Your premiums can change from year to year with Medicare Supplement plans as well. If they do can depend on how the plan you bought is rated. There are several ways an insurance company can set your rates/premiums. With some plans, your premiums may go up because of inflation, age, and other factors, and with others, your age may not be a factor. The insurance companies will notify you if there are changes to your premiums for the coming year. It is important to note that these changes do not always occur at the beginning of the year and depend on the insurance company you bought your policy from. If you have questions, it is important to talk to your independent agent or the insurance company.