Medicare Changes in 2021 That May Affect You

Key Takeaways:

• Medicare Part A premiums increased to $471 per month unless you qualify for premium-free.

• Medicare Part B premiums increased to $148.50.

• Medicare Part D maximum deductible increased to $445.

• The Part D coverage gap, or donut hole, is closed.

• Medicare Supplement Plans F and C are no longer available to newly eligible members.

There are a variety of changes taking place for Medicare beneficiaries in 2020, and if you're a senior who relies on Medicare for your healthcare coverage, that might make you a bit apprehensive.

Will your plan cost you more money? Will your deductible go up? Will you be able to afford your medications? All of these are perfectly reasonable concerns you may have. Let's get right to it so you'll know exactly what to expect as the year goes on.

In 2020, Medicare members can expect that Medicare Part A premiums will increase to $471 per month if you don't qualify for premium-free coverage, Medicare Part B premiums will increase to $148.50, Part B deductibles will increase to $203 per year, and Medicare Part D will close the coverage gap known as the "donut hole."

How Much Will Medicare Part A Cost?

You are not required to pay for Medicare Part A if you (or your spouse) have worked for 10 years paying payroll taxes. Most Medicare recipients meet this qualifying work criteria and will not need to pay for Medicare Part A.

Medicare Part A Monthly Premiums

*Rates current for the year 2021 from Medicare.gov

If your (or your spouse's) work record does not qualify you for free benefits, you still have access to full Medicare benefits but you must pay to participate in the program.

In 2021, this maximum amount you could be required to pay for a Part A premium increased to $471 per month.

The deductible for hospital insurance increased slightly as well from $1,364 to $1,408.

How Much Will Medicare Part B Cost?

Unlike Medicare Part A, you are required to pay a monthly premium for Medicare Part B. Most people will pay the standard monthly premium amount, but your premium could be higher if you earn more than $87,000 annually as an individual or $174,000 as a household.

In 2020, the standard monthly premium amount increased slightly from $144.60 to $148.50.

Your Medicare Part B deductible for 2020 is $203. This is an increase from $185 the previous year. After you meet your deductible for the year, you will be responsible for 20% of the Medicare-approved cost of covered services.

What are the Medicare Advantage Plan Changes?

Medicare Advantage plans are an alternative way of receiving your Medicare benefits. These plans are offered by private insurance companies and take the place of Original Medicare (Medicare Parts A and B).

Premiums for Medical Advantage plans have tended to decrease for the last several years. In 2021, the average monthly premium for Advantage plans is $33.57, which is due in addition to your Part B premium.

What are the Medicare Part D Changes?

Just like Medicare Part B, you must pay a monthly premium for Medicare Part D plans, and the cost varies based on income.

Your plan premium will be a set monthly amount depending on which Part D plan you choose, then higher income households will pay more on top of that according to their income bracket.

Standalone Part D plans have a maximum deductible, and this rate rose from $435 to $445 in 2021.

Perhaps the best news of all 2020 changes to Medicare is that the "donut hole" has officially been closed. Prior to this year, once you hit a certain threshold of medication costs, there was a coverage gap (or donut hole) where the member was responsible for more of the medication costs and the insurer responsible for less until the costs reached a catastrophic threshold. Only then would the plan would again pick up a greater percentage of cost.

The donut hole was a significant problem for many consumers, but starting in 2012, the Affordable Care Act took measures to slowly close the donut hole.

As of 2020, members now only have to pay 25% of the cost of both brand and generic drugs once they meet their deductible and until they meet the catastrophic threshold. However, the catastrophic threshold amount was increased in 2021 to $6,550, up from $6,350 in 2020.

What are the Medicare Supplement Plan changes?

Medicare Supplement Plan F is the most popular plan chosen by enrollees. It is also the most comprehensive plan with fewer out-of-pocket costs, which is likely why it is so desirable.

However, Plan F is no longer available to new Medicare enrollees as of January 1, 2020.

If you were enrolled in Medicare before January 1, 2020, you may still choose Plan F. If you were not enrolled in Medicare prior to that date, Plan F is not available to you. This is due to a change in law that no longer allows supplement plans to cover the Part B deductible.

Plan C, which also covers the Part B deductible, is similarly unavailable for those not enrolled prior to January 2021.

While the majority of changes to Medicare in 2021 include an increase in monthly premiums and yearly deductibles, the changes from year to year are relatively slight. However, for those on a fixed income the increases can add up quickly.

With a better understanding of the Medicare changes taking place in 2020, you'll be able to plan your budget and medical care accordingly.

Courtney Schmidt is a medical communications professional and clinical pharmacist with pediatric and adult hospital experience.