Every year, Medicare announces a list of new updates to the insurance program. The updates might seem trivial and minor, but they can have a significant impact on enrollees’ finances and coverage.
Enrollees need to keep a close eye on the annual Medicare updates.
Historically, Medicare changes usually expand the program, but changes also involve the amount you pay in premiums, deductibles, and coinsurance – some go up, some go down.
So, what are the Medicare changes in 2021?
The Medicare changes in 2020 included:
The full-scope of Medicare changes in 2021 has yet to be revealed, but below, you will find an up-to-date breakdown of the changes you can expect.
Medicare Part A is a free coverage, often referred to as ‘hospital insurance’. The plan provides coverage for inpatient care during hospital admittance, skilled nursing facilities, and home health care in certain scenarios.
When an individual turns 65, Medicare Part A eligibility is automatic. No premium is paid unless they have less than 40 quarters – equal to about ten years – of work history (1% of enrollees).
Although most Americans do not pay a premium for Part A, out-of-pocket costs must be paid when care is needed.
For those who do not have 40 quarters of work history, the Part A premium sees a slight change every year. As usual, the premium will depend on how long they or their spouse has worked and paid Medicare taxes.
Currently, Part A premium for individuals with between 30 and 40 quarters of work history pay $252 per month, and for those with less than 30 quarters of work history, the premium is $458 per month.
The 2021 Part A premiums were not available at the time of writing, but enrollees can expect a slight increase in the 2020 amounts.
Part A deductible applies to each benefit period and can be necessary more than once per year. The deductible generally increases each year, and in 2020 it rose to $1,408 from $1,364. This increase applies to all enrollees, although many may have supplemental coverage that pays for the cost.
In 2021, enrollees can expect a similar increase of around $40, but the confirmed 2021 Part A Deductible will be revealed in fall, 2020.
Part A deductible only covers the first 60 inpatient days. Should additional inpatient coverage be required, patients will incur a daily coinsurance charge. For 2020, the Part A coinsurance fee is $352 per day for the 61st through 90th day of inpatient care and $704 per day for lifetime reserve days (an additional 60 days).
When in a skilled nursing facility, the first 20 days are covered with the Part A deductible. Coinsurance that applies to days 21 through 100 is $176 per day in 2020.
Unlike Medicare Part A, Medicare Part B requires a monthly premium – an amount that is automatically deducted from an individual’s benefit payment. Part B covers outpatient hospital services (X-rays, diagnostic tests, medical supplies), physician fees, certain home health services, and other medical services not covered by Part A.
In 2020, there were significant changes to both Part B premiums and deductibles. It has been suggested that Medicare beneficiaries will get a reprieve from high Part B costs in 2021 as the government looks to protect Medicare beneficiaries from pandemic-related economic troubles.
The standard Part B premium sees a natural change every January. The increase or decrease is often in accordance with the Social Security cost of living adjustment.
In 2020, the Social Security cost of living adjustment saw the average retiree’s total benefits increase by about $24 per month, marking a manageable $9.10 increase in Part B premium costs. The $9.10 increase saw Medicare Part B premiums rise to $144.60 per month.
The 2021 Part B premium amount wasn’t available at the time of writing, but beneficiaries can expect it to remain similar.
The annual deductible for all Medicare Part B beneficiaries is $198 in 2020, an increase of $13 from last year. Once this deductible is met, enrollees typically pay 20% of covered services.
There’s no yearly limit on what you pay out-of-pocket. It’s worth bearing in mind that supplemental coverage is available to pay for Part B deductibles. This coverage includes Medicaid, employer-sponsored plans, and Medigap plans C and F.
Although the 2021 Part B deductible will be revealed in fall, the predicted numbers show an increase to $212 in 2021.
Medicare Part D is a program introduced by the federal government as a way for Medicare beneficiaries to get prescription drug coverage. Part D plans are run by private insurance companies that follow rules set by Medicare.
Even if you don’t currently take prescription drugs, you should consider getting Medicare drug coverage. If you decide to purchase the plan after you are first eligible, you could have to pay a late enrollment penalty.
Medicare Part D plans differ substantially from provider to provider. However, in 2020, the average basic monthly premium for Medicare Part D sat at $30. The Centers for Medicare & Medicaid Services estimate that the average basic Part D premium will increase slightly to $30.50 in 2021. Just like Medicare Part B premiums, higher earners will pay extra.
And while not every coverage requires deductible payments, in 2021, the maximum it can be is $445, up from $435. The catastrophic coverage phase threshold (where out-of-pocket costs drop significantly) has also risen to $6,550 from $6,350.
The Medicare Part D donut hole remains closed in 2021. Enrollees now only have to pay 25% for both brand and generic prescription drugs in the ‘coverage gap/donut hole’ until they reach the catastrophic coverage threshold ($6,550).
In 2012, enrollees were responsible for 50% of the costs until they reached the catastrophic coverage threshold. This figure has continued to gradually decrease year on year. Although the amount now sits at 25%, the donut hole is still relevant, bridging the gap towards reaching the catastrophic coverage threshold.
It’s widely known that Medicare beneficiaries with high incomes pay higher premiums for Part B and Part D. And in 2021, the income brackets have been adjusted in accordance with inflation. The high-income threshold has been increased to $88,000, up from $87,000 in 2020.
Those earning over $88,000 per year will now meet the first tier of additional Part B premium costs – where the cost increases from $144.60 to $202.40.
As of January 2020, Medigap Plan C and Plan F are no longer available for new Medicare enrollees. These two Medigap plans were particularly popular because they covered Part B deductible costs in full, but they are now only available to those who became eligible for Medicare before 2020.
The reason for banning the sale of Medigap Plan C and Plan F to new enrollees is so that some out-of-pocket costs are incurred when they receive medical care, as opposed to all costs being covered – thus discouraging overuse.
With the Medicare enrollment periods approaching, information regarding the 2021 changes has been released. In 2021, enrollees can expect big changes to Medicare Advantage plans.
Medicare Advantage plans will increase telehealth services and coverage. Telehealth allows seniors to be treated by medical professionals without leaving the safety of their homes.
Medicare Advantage plans will include telehealth providers in certain practice areas, including:
In 2021, the 21st Century Cures Act will allow individuals with end-stage renal disease (ESRD) to choose a Medicare Advantage plan regardless of their previous coverage. Previously, individuals with ESRD could only enroll in Medicare Advantage plans under limited circumstances.
The 2021 Medicare changes will, in some situations, ease headaches, but in others, they’ll introduce extra challenges and expenses.
For expert advice relating to your unique situation, get in touch with our advisors to talk through your requirements, and find the best coverage plan for you. Get in touch with us today at 1-844-236-0228.