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Medicare Premiums 2021

Medicare is the health insurance program devised to help citizens aged 65 or older cover their medical costs. The program is also open to younger individuals with disabilities and end-stage renal disease.

Over 60 million Americans are enrolled in Medicare, and with hundreds becoming eligible for the program every day, the big question for most is what premiums can you expect to pay? 

As a result of spiraling healthcare costs, advancing medical equipment, and longer life expectancy, it’s normal for Medicare costs to gradually increase year on year. 

In 2020, enrollees can expect to see another rise in premiums and out-of-pocket costs. 

2021 Medicare Premiums – How Much Will Medicare Cost You?

The Medicare premium is the recurring monthly payment for the health benefits you are receiving. Medicare consists of several parts, with the most prominent being:

Medicare Part A

Medicare Part A covers in-patient hospitalization of a beneficiary. It provides skilled nursing facilities and other related health services. It is financed predominantly through payroll taxes.

Medicare Part B

Medicare Part B medical insurance caters to those not admitted, by general medically necessary needs like doctor’s office visits, lab work, and x-rays, to name a few. Part B is financed by premiums and federal reserves.

Medicare Part D

Medicare Part D is specifically for prescription drug coverage and is a popular option for those reliant on drug usage for health reasons.

How Much Are Medicare Part A Costs Increasing?

Medicare Part A is premium-free if the enrollee or their spouse worked 40 calendar quarters (10 years) in any job where you paid Social Security taxes in the U.S. Individuals who worked below 40 calendar quarters are not eligible for premium-free coverage and must pay Medicare Part A premiums.

Medicare Part A premiums 2020

The Medicare Part A premium is dependent on the number of quarters the individual has worked in their lifetime. Those who worked more than 40 quarters while paying Medicare taxes receive a $0 premium. 

Medicare Part A Premiums 2020

Medicare Part A deductible and coinsurance 2020

Although Medicare Part A helps enrollees cover medical bills, deductibles and coinsurances must be paid by the enrollee. 

For 2020, the deductible amount for Medicare Part A has risen to $1,408. Likewise, the coinsurance amount for hospital stays and skilled-nursing facilities has seen a steady increase:

Medicare Part A Deductibles 2020

Part A Late Enrollment Penalty 2020

Although most Medicare enrollees do not pay any premium for Medicare Part A, those who do not qualify for premium-free Part A can face a late enrollment penalty if they do not enroll on time. 

If you do not enroll in Medicare Part A when first eligible, your monthly premium may go up 10%. This higher premium will be enforced for twice the number of years you didn’t sign up. For example, if you failed to sign up for three years, you’ll need to pay a higher premium for six years. 

How Much Are Medicare Part B Costs Increasing?

Unlike Medicare Part A, Medicare Part B requires a monthly premium from all enrollees. This premium is based on the beneficiary’s monthly income, meaning individuals in different income brackets pay varying premiums. 

In 2020, the Centers for Medicare and Medicaid Services revealed an increase in Medicare Part B premiums and Medicare Part B deductibles.

Medicare Part B premiums 2020

The Medicare Part B premium is the monthly fee enrollees must pay – a figure that fluctuates depending on the income bracket they fall into. 

In 2020, the standard Part B premium has risen to $144.60 per month – an increase of $9.10 in 2019. Although $144.60 is the most common monthly premium, it can be higher, depending on your income.

You can view your expected Medicare Part B premium using the table below: 

Your 2018 Yearly Income2020 Cost
File individual tax returnFile joint tax returnFile married & separate tax return
$87,000 or less$174,000 or less$87,000 or less$144.60
Above $87,000 up to $109,000Above $174,000 up to $218,000n/a$202.40
Above $109,000 up to $136,000Above $218,000 up to $272,000n/a$289.20
Above $136,000 up to $163,000Above $272,000 up to $326,000n/a$376.00
Above $163,000 up to $500,000Above $326,000 up to $750,000Above $87,000 up to $413,000$462.70
$500,000 or above$750,000 or above$413,000 or above$491.60

Part B Deductible and coinsurance

Alongside the monthly premium, enrollees are required to pay deductibles and coinsurances.

In 2020, the annual deductible for Medicare Part B has increased to $198, up $13 from $185 last year. This means individuals must pay $198 in fees before Medicare Part B covers outpatient services.

Once you meet that deductible, you will typically pay 20% coinsurance for covered services.

Part B Late Enrollment Penalty 2020

If you enroll in Part B after you have passed the Initial Enrollment Period, the monthly premium is multiplied by 10% for every 12 months you miss the deadline. 

For example, if you delay signing up for six years, your monthly premium would be 60% higher for as long as you have Medicare. So, for the Part B premium in 2020 ($144.60), your monthly premium with the penalty will be $231.36 ($144.60 x 60% + $144.60).

How Much are Medicare Part C (Medicare Advantage) Costs Increasing?

Medicare Advantage plans are purchased through private health insurance providers, so any increase in costs in 2020 will vary from plan to plan. It is best to check with your provider for updates to your Medicare Advantage premium rates. 

Kaiser Family Foundation reports the average costs for Medicare Advantage in 2020 have decreased to $36 per month. 

Medicare Part C Premiums

How Much Are Medicare Part D Costs Increasing?

Unlike Medicare Part A and B, Medicare Part D plans are run by private insurance companies. This means the insurance companies themselves decide the monthly premiums and certain insurers might choose to increase their rates more than others.

However, the federal government does set strict guidelines on how much you can be charged.

Medicare Part D premiums 2020

Although Medicare Part D premiums vary from plan to plan, there is standardization in how much insurers can charge if your annual income is above a certain amount. 

If your income is over a certain amount, you may need to pay an income-related monthly adjustment amount (IRMAA) on top of your plan’s premium. In 2020, the amounts have been slightly lowered and are as follows:

Your 2018 Yearly Income2020 Monthly Premium
File individual tax returnFile joint tax returnFile married & separate tax return
$87,000 or less$174,000 or less$87,000 or lessYour premium
Above $87,000 up to $109,000Above $174,000 up to $218,000n/a$12.20 + your premium
Above $109,000 up to $136,000Above $218,000 up to $272,000n/a$31.50 + your premium
Above $136,000 up to $163,000Above $272,000 up to $326,000n/a$50.70 + your premium
Above $163,000 up to $500,000Above $326,000 up to $750,000Above $87,000 up to $413,000$70.00 + your premium
$500,000 or above$750,000 or above$413,000 or above$76.40 + your premium

Part D Deductible 2020

In 2020, the maximum deductible a private insurance company can set for a beneficiary is $435. This is the figure Medicare Part D enrollees must spend in out-of-pocket costs before their drug coverage starts. This maximum deductible has risen to $435 from $415 last year.

Part D Late Enrollment Penalty 2020

The late enrollment penalty is a figure added to your Medicare Part D monthly premium if you go without Part D coverage or Medicare Advantage for 63 or more continuous days. 

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage. For each month you go without Medicare Part D coverage, 1% of the “national base beneficiary premium” ($32.74 in 2020) is rounded to the nearest $.10 and added to your monthly premium.

For example, if you went 25 months without Medicare Part D coverage, you would incur a 25% penalty on $32.74, which is $8.19. This figure is rounded up to $8.20 and added to the Part D premium through 2020. 

Are Medicare Premiums Tax Deductible?

Your monthly Part A and Part B premium are tax-deductible. If premiums are deducted from your Social Security check, the payments will be able to be deducted from tax.

Additionally, medical services not covered by Medicare (vision care, nursing home care, and dental treatment), added insurance supplements, and out-of-pocket costs are also allowed deductions. Even expenses for hospital travel and medically necessary equipment in the house are allowed to be deducted from tax.

However, there is one catch.

A taxpayer is allowed to deduct medical expenses (premium included) only if the costs exceed 7.5% of adjusted gross income (AGI). Expenses incurred within 7.5% of AGI are not eligible for a tax deduction.

As an example, if your AGI is $40,000 and you have $5,000 in medical expenses, you can include $2,000 of medical expenses in your itemized deductions. 7.5% of $40,000 is $3,000, meaning the $2,000 of medical expense costs exceeding this threshold are tax-deductible.

If you are considering applying for Medicare, talk to an expert today. A licensed insurance agent can explain the enrollment process and help to ensure you get the most out of Medicare. Call our team of licensed insurance agents today at 1-844-236-0228!

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