Every year, the Annual Enrollment Period (AEP) gives Medicare-eligible citizens a chance to rethink their coverage. If your options include Original Medicare, a Medicare Part C (Medicare Advantage) plan, or a Medicare Part D plan, it helps to know the facts and figures you’ll be expecting. While the costs and coverage for Medicare Advantage and Part D prescription drug plans can vary from plan to plan, the Centers for Medicare & Medicaid Services (CMS) sets the costs of Medicare Parts A and B.
Late last week, CMS released the 2020 costs for Original Medicare. Until these numbers are announced each year, there can be some stress to see how they line up against your annual Social Security cost-of-living adjustment (COLA). Luckily, as projected, the increase many will see will be an affordable increase in premiums, though particularly high earners may need to dip into savings to cover the difference.
Medicare Part A
One of the benefits of Medicare Part A is that you’re more likely to receive it premium-free than not. All it takes to qualify is to pay your Medicare taxes for 40 quarters, or 10 years. Last year, CMS reported that nearly 99 percent of Part A beneficiaries receive Part A premium-free. Once again, CMS confirmed this in their release for 2020, with about 99 percent of beneficiaries receiving Medicare Part A premium-free. That said, if you’re among the one percent of people who don’t receive it premium-free, you will owe a monthly premium. For 2020, this monthly premium is $458, a $21 increase from 2019. If you have paid 30 quarters or more of Medicare tax or are married to someone who’s paid 30 or more quarters, you’ll pay a monthly premium of $252, an increase of $12 from 2019.
There are a few other costs with Part A that were announced as well. In 2020, the Part A inpatient hospital deductible will be $1408, rising $44 from 2019. After the first 60 days of Medicare-covered inpatient care in that benefit period, you’ll pay a daily coinsurance for days 61 to 90 of $352, up from $341 a day in 2019. Once you’ve passed the 90th day, you’ll begin using your lifetime reserve days, which have a daily coinsurance of $704 in 2020. If you require a skilled nursing facility, days 21 to 100 are covered by a $176 daily coinsurance, up $5.50 from $170.50 in 2019.
2020 Part A Cost Breakdown
| Type of Cost | 2019 | 2020 | % |
|---|---|---|---|
| Full Part A Premium | $437 | $458 | 4.81% |
| Partial Part A Premium | $240 | $252 | 5.00% |
| Inpatient Hospital Deductible | $1,364 | $1,408 | 3.23% |
| Daily Coinsurance for Days 61 to 90 | $341 | $352 | 3.23% |
| Daily Coinsurance for Lifetime Reserve Days | $682 | $704 | 3.23% |
| Skilled Nursing Facility Coinsurance | $170.50 | $176 | 3.23% |
Medicare Part B
Beneficiaries of Medicare Part B will be seeing a moderate increase over the costs in 2019. For 2020, the standard monthly premium will increase $9.10, from $135.50 in 2019 to $144.60, unless you’re considered held harmless. Many people subtract their Part B premiums from their monthly Social Security check. To reflect this, the premium increase each year cannot be greater than the COLA. If that happens, you’re generally held harmless and pay a smaller premium for the year.
There are other ways that your Part B premium may vary from others’ payments. For example, your annual household income can affect what you pay for Part B. While the income-related monthly adjustment amounts (IRMAA) affect only about five percent of Part B enrollees, they can greatly change what you’ll pay each month. For example, if you make more than $87,000 individually or more than $174,000 jointly with your spouse, you may see larger Part B premiums. For each income level and their corresponding Part B premium, please refer to the table below.
We’ll also see an increase to the Part B deductible in 2020. This year, the deductible will be $198, $13 up from 2019’s deductible of $185.
2020 Part B Cost Breakdown
| Type of Cost | 2019 | 2020 | % |
|---|---|---|---|
| Standard Part B Premium | $135.50 | $144.60 | 6.72% |
| Part B Deductible | $185 | $198 | 7.03% |
| File Individual Tax Return | File Joint Tax Return | Monthly Adjustment | 2020 Part B Monthly Premium |
|---|---|---|---|
| $87,000 or Less | $174,000 or Less | $0.00 | $144.60 |
| $87,001 to $109,000 | $174,001 to $218,000 | $57.80 | $202.40 |
| $109,001 to $136,000 | $218,001 to $272,000 | $144.60 | $289.20 |
| $136,001 to $163,000 | $272,001 to $326,000 | $231.40 | $376.00 |
| $163,001 to $499,999 | $326,001 to $749,999 | $318.10 | $462.70 |
| $500,000 or More | $750,000 or More | $347.00 | $491.60 |
| File Separate Tax Return from Spouse | Monthly Adjustment | 2020 Part B Monthly Premium |
|---|---|---|
| $87,000 or Less | $0.00 | $144.60 |
| $87,001 to $412,999 | $318.10 | $462.70 |
| $413,000 or More | $347.00 | $491.60 |
How About Medicare Parts C and D?
If you’re interested in a Medicare Advantage or Part D plan, there aren’t firm costs that can be given. This is because both of these parts of the Medicare program are offered by private companies that are approved by CMS. What we can give you is an estimate from CMS based on the averages of costs for 2020.
For Medicare Advantage, the average monthly premium is expected to fall to $23. This is the lowest average monthly premium in thirteen years. Medicare Part D is also predicted to see a lower monthly premium compared to recent years, dropping to $30 per month. This is the lowest average premium since 2013.
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With AEP upon us, Medicare insurance beneficiaries are given the opportunity to ensure that their plans match their needs. It can pay to explore what Medicare insurance plans are available near you, making sure that what you have fits your medical and financial needs better than other options. To compare some of your coverage options, search the Shop & Enroll Plan Finder and see plans in your area. If you need help or find a plan you like, Shop & Enroll can connect you with a local, licensed sales agent who can help you through the enrollment process.
All numbers were drawn directly from the CMS 2020 Medicare Parts A & B Premiums and Deductibles Fact Sheet. Should you have any questions, please refer back to the fact sheet. For reference, prices and costs for 2019 are available here.
