Working with your advisor to update your financial plan for next year? Maybe, sitting down to do your budget? Here are Medicare’s 2021 costs. Prepare to spend more.
Costs that apply to any Medicare beneficiary
There are some costs that everyone who has Medicare for healthcare coverage must pay.
Part B premium
Every Medicare beneficiary is responsible for the Part B, medical insurance, premium.
Enrollment is a requirement for getting a Medicare Advantage plan or Medigap policy. Beneficiaries also need Part B if they have retiree or COBRA coverage after age 65.
In 2021, the premium will be $148.50, an increase of $3.90 a month. If you’re receiving Social Security benefits, the premium will come out of your benefit. Those not on Social Security will continue to receive invoices.
Part D deductible
Medicare drug coverage, no matter how one gets it, has standardized costs.
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The deductible for Part D prescription drug coverage is the amount one must pay for prescription drugs before the plan pays anything. The 2021 deductible will be $445, an increase of $10 from this year. A plan can charge no deductible or any amount up to $445. The threshold for entering and leaving the Coverage Gap (donut hole) also changed and can have an impact on how much you spend. (A previous post explains this in more detail.)
Higher-income beneficiaries will pay more in premiums for Part B and Part D. This is called the Income-related Monthly Adjustment Amount (IRMAA). In 2021, the thresholds will increase by $1,000 to $88,000 for single filers or married individuals filing a separate return, and by $2,000 to $176,000 for married individuals filing a joint return.
The additional amounts in 2021 for Part B will range from $59.40-$356.40. Part D adjustments will range from $12.30-$77.10. (This year, the Part B adjustments ranged from $57.80-$347 and for Part D, from $12.20-$76.40.)
Costs that apply to Original Medicare beneficiaries
Original Medicare beneficiaries are those who have Medicare Part A and Part B alone, or with or without a supplement, retiree plan, or some other coverage that works with these two parts. They will face costs related to hospital and medical coverage.
The hospital deductible in 2021 will be $1,484, up from $1,408 this year. This is not an annual deductible; it covers a 60-day benefit period. Extended days of hospitalization will also cost more–$371 a day for days 61-90 and $742 for days 91-150.
Medicare covers the complete cost for the first 20 days of medically necessary care in a skilled nursing facility (SNF), after a three-day inpatient hospital admission; beneficiaries do not have a copayment. However, for days 21-100, the copayment will be $185.50 next year, an increase of $9.50.
Part B deductible
The Part B deductible is the amount that you must pay for outpatient services, such as doctor visits, therapy, day surgery, or radiation treatments, before Part B starts paying its share. Next year, the deductible will be $203, an increase of $4.
This does not apply to those who have Medicare Advantage. (These plans can have their own deductibles.)
Medicare Advantage costs
The most significant change is the increase in the maximum out-of-pocket limit. After a beneficiary writes this amount in checks, the plan covers all costs for the remainder of the year. For the last nine years, the limit for in-network services was $6,700 and in- and out-of-network combined was $10,000. The 2021 limits will be $7,550 and $11,300.
Beyond that change, Medicare Advantage plans set their costs following established criteria.
It’s difficult to follow such an array of increasing costs with any specific cost-saving advice. So, follow the advice that can control your costs: stay healthy, stay out of the hospital, and stay in-network.