The Centers for Medicare & Medicaid Services (CMS) recently released the 2021 costs of Medicare Parts A and B, also known as Original Medicare. Each year, this announcement is made around the time of the Annual Enrollment Period (AEP) so that Medicare insurance beneficiaries or prospective enrollees can gather a sense of what options fits their needs best. This could be Original Medicare, Medicare Advantage, a Medicare Part D drug plan, or a Medicare Supplement. Depending on your needs, you can combine these Medicare insurance coverage options (except Medicare Advantage, which stands alone), so understanding the costs associated with each is essential.
CMS had already released its general predictions for 2021 costs of Medicare Advantage and Part D plans in September. Now, we know more about the options to choose from this AEP, Medicare Part B costs in relation to the Social Security Cost-of-Living Adjustment (COLA), and more.
Medicare Part A
Unlike other parts of the Medicare program, most people will receive Medicare Part A coverage premium-free. In fact, nearly every Medicare insurance beneficiary receives coverage without needing to pay a monthly Part A premium, and you can too, if you or your spouse pays the Medicare tax for 40 quarters or 10 years. If you haven’t accrued the necessary amount of paid quarters to receive Part A premium-free, you’ll need to pay a monthly premium, either a full premium or partial premium depending on how many quarters you paid. In 2021, the full premium will cost $471, which is an increase of $13 from the $458 premium of 2020. If you or your spouse has paid into the Medicare program for 30 quarters or more, without reaching 40 quarters, you’ll pay the partial premium. In 2021, this partial premium will be $259 each month, a $7 increase from last year’s $252.
Of course, there are other costs associated with Medicare Part A, too, which tend to be deductibles and coinsurances for different inpatient care facilities. For example, the 2021 inpatient hospital deductible is set at $1,484, which is $76 more than in 2020. The daily coinsurance for days 61 to 90 in inpatient care will increase from $352 to $371 each day. After the 90th day of care, you begin using your lifetime reserve days, which will cost $742 in 2021. Finally, if you require skilled nursing facility care, you’ll pay a daily coinsurance of $185.50 for days 21 to 100 of coverage.
2021 Part A Cost Breakdown
| Type of Cost | 2020 | 2021 | % |
|---|---|---|---|
| Full Part A Premium | $458 | $471 | 2.84% |
| Partial Part A Premium | $252 | $259 | 2.78% |
| Inpatient Hospital Deductible | $1,408 | $1,484 | 5.40% |
| Daily Coinsurance for Days 61 to 90 | $352 | $371 | 5.40% |
| Daily Coinsurance for Lifetime Reserve Days | $704 | $742 | 5.40% |
| Skilled Nursing Facility Coinsurance | $176 | $185.50 | 5.40% |
Medicare Part B
Compared to Medicare Part A, there is a greater variety of costs to Part B coverage that are updated each year. For example, Medicare Part B has a monthly premium, which is $148.50 in 2021 unless you are held harmless. If you pay your premium directly out of your Social Security check each month, the increase in Part B premiums cannot be greater than your COLA. If this would be the case for you, you’d be considered held harmless and pay a smaller monthly premium.
This isn’t the only way your Part B premium may differ from others’ Part B premiums. Depending on your income, you may also pay more than the standard premium. This is called the Income-Related Monthly Adjustment Amount (IRMAA). Most seniors will see little to no difference based on their income, since individuals need to make over $88,000 annually and couples have to make over $176,000 annually to receive the IRMAA, both amounts which are significantly above the median annual income for seniors.
There is also an adjustment to the Medicare Part B deductible in 2021. This year, there will be a small increase of $5 to 2020’s deductible of $198 to $203.
2021 Part B Cost Breakdown
| Type of Cost | 2020 | 2021 | % |
|---|---|---|---|
| Standard Part B Premium | $144.60 | $148.50 | 2.70% |
| Part B Deductible | $198 | $203 | 2.53% |
| File Individual Tax Return | File Joint Tax Return | Monthly Adjustment | 2020 Part B Monthly Premium |
|---|---|---|---|
| $88,000 or Less | $176,000 or Less | $0.00 | $148.50 |
| $88,001 to $111,000 | $176,001 to $222,000 | $59.40 | $207.90 |
| $111,001 to $138,000 | $222,001 to $276,000 | $148.50 | $297.00 |
| $138,001 to $165,000 | $276,001 to $330,000 | $237.60 | $386.10 |
| $165,001 to $499,999 | $330,001 to $749,999 | $326.70 | $475.20 |
| $500,000 or More | $750,000 or More | $356.40 | $504.90 |
| File Separate Tax Return from Spouse | Monthly Adjustment | 2021 Part B Monthly Premium |
|---|---|---|
| $88,000 or Less | $0.00 | $148.50 |
| $88,001 to $411,999 | $326.70 | $475.20 |
| $412,000 or More | $356.40 | $504.90 |
What About Medicare Part C and D?
If you’re curious about the costs of Medicare Part C, also known as Medicare Advantage, or Part D, prescription drug plans (PDPs), there isn’t a set cost for each. The specific costs depend on each plan since they are offered by private insurance companies, though approved by the federal government. We do have the estimates for the average of Part C and D costs in 2021, though the costs will likely differ among plans. You can compare the costs of different plans instantly with Shop & Enroll’s free plan finder tool. This tool will help you view the prices and benefit differences of plans near you, so you can select the right one to fit your needs.
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Prospective Medicare insurance beneficiaries have many options to choose from each AEP. The first big decision many make is choosing between Original Medicare or Medicare Advantage. Now that you know the costs of Original Medicare in 2021, you can make an informed decision on your coverage for the year. Whatever you end up selecting, we hope it fits your needs as best as possible. If you want help with your Medicare insurance coverage search, check out Shop & Enroll, where we have a team of professionals to help you, as well as trusted licensed insurance agents to guide you through the process.
All Medicare numbers were drawn directly from the CMS 2021 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 2020 are available here.
