Within the Social Security an Medicare Trustees’ report that was recently released were many telltale hints regarding how much will Medicare cost in 2020. For one, Medicare Part A hospital insurance trust fund is projected to be depleted in just six years unless Congress addresses the hot button issue.
The Medicare Part A shocker was something that pretty much stole all of the headlines regarding the release, though this report also exposed that the basic Medicare Part B premium, which assists seniors in paying for doctors’ fees and outpatient services, is expected to increase by $8.80 to a whopping $144.30 a month in 2020.
It’s also likely for more Medicare benefit users to pay high-income surcharges, more commonly known as IRMAA, next year. In 2018, 3.7 million high-income Medicare recipients (those with a gross income above $85,000) paid IRMAA surcharges.
Medicare taxes are based on the last available tax return. So 2019 premiums are based on 2017 returns, and 2020 Medicare surcharges will be based on the 2018 federal tax returns.
Initially, five income tiers decided premium increases for Medicare. Though it’s important to note that these tiers, imposed in 2011, were not indexed for inflation. However, that will change starting in 2020, which means more retirees may be subject to IRMAA surcharges in 2020.
As it stands, Medicare recipients spend an average of $135.50 per month for Part B premiums, but IRMAA surcharges vary from $189.60 to $460.80 a month. These high-income beneficiaries also have to pay an additional monthly cost for their drug plan ranging from $12.40 to $77.40 a month on top of their monthly Part D premiums, which were about $32 in 2019. It seems like it’s more important than ever to have the right Medigap plans for your needs!
In 2019, a new sixth tier for extremely high-income retirees eligible for Medicare with individual incomes exceeding $500,000 and married couples with joint revenue surpassing $750,000 was put in place. The report showed that these new thresholds would not be indexed for inflation until 2028.
According to the yearly Retirement Income Strategies and Expectations survey released by Franklin Templeton, Health issues are the No. 1 retirement-related concern for adults over 65 (36%). What’s worse is that financing those health insurance costs throughout those golden years is the top expense concern amongst American adults, regardless of age (41%). Investing in Medicare Supplement Plans that are right for you, can relieve some of this stress.
“In order to address the top retirement concerns so many Americans are facing, it’s imperative to incorporate health-care expense planning as part of a holistic retirement savings strategy,” said Kevin Murphy, head of strategic accounts for Franklin Templeton’s defined-contribution division.
“Health savings accounts are a great example of one of the most efficient vehicles to save for medical expenses in retirement that can complement a long-term retirement saving strategy.”
How much will Medicare cost in 2020? Only time will tell. But the future is looking a little bit more expensive. Do you think these changes will affect your Medicare in 2020?
One of our licensed insurance professionals would be happy to discuss how you can receive proper out-of-pocket costs and Medicare Advantage plans that may be right for you. Give us a call at 1-888-487-0789.
Part A covers services like skilled nursing care or inpatient hospitalization. Research Data Assistance Center reported that only 1% of beneficiaries pay any monthly premium under a Medicare Part A health insurance plan. This is because you have 40 quarters or longer of paycheck paid deductibles over the course of your working life. This essentially goes into your Medicare cost pre-paying for future health needs.
The FICA (Federal Income Contributions Act) requires a deduction of your income each month of 1.45%. This amount is matched by your employer for a total amount of 2.9%. If you are self-employed you will have to pay this full amount of 2.9%. You will not have to pay for the Medicare Part A health insurance if you or a spouse had faithfully paid into Medicare for the amount of time required. Cost-sharing will be required for things like hospital deductibles but should be minimal. With a Medicare Supplemental Health Insurance Plan, your medical cost will be lesser.
You can still purchase Medicare Part A even if neither your or you spouse had paid Medicare taxes for the 10 years required. The amount you need to pay can depend on how many years you have contributed to Medicare. People who do purchase this can pay a premium as high as $413 per month as of 2017. However, when you pay taxes for at least 30-39 quarters then you will pay $227 per month.
You pay $1,316 per benefit period with this premium. This is for hospital inpatient and coinsurance. For the first 60 days, you are not charged but rather pay $329 between the second and third month for coinsurance charges, then $658 for every lifetime reserve day that is after the third month. After that, you will have to cover all the costs. You must note that when you’re not eligible for Medicare Part A you still have to sign up the first chance you get. If you don’t’ you can pay up to 10% more in increased premiums. This amount is paid for twice the number of years that you could have signed up for insurance but chose not to.
Part B premiums Medicare costs are covered each month. The amount is automatically deducted from Social Security or if you get Railroad Retirement Board benefit payments. If you don’t have benefit payments you will receive a bill. While most people pay standard amounts, those with Modified Adjusted Gross Incomes above a specific amount may pay an income-related monthly adjustment amount to know as the IRMAA. The most recent IRS information is used by Medicare to determine your IRMAA.
The Part B standard premium amount is $134 per month as of 2017. If you earn more it could be higher. Most people receiving Social Security benefits will end up paying a lesser amount. This is because the premium increased to an amount greater than the cost of living increase for the year. The standard amount for those with Social Security will pay $109. This will only apply to first-time enrollees for 2017. In additionally have a Medicaid plan, your state pays the standard $134.
Medicare Part B deductible amount is $183 for all Medicare beneficiaries. After this, you pay 20% for all Medicare-approved amounts for any healthcare services provided.