Every year the Centers for Medicare and Medicaid Services (CMS) announce changes to the Medicare system including changes to premiums, coverage, deductibles, and coinsurance amounts.
For 2021 CMS has announced that standard premiums for Medicare Part B (medical) which almost everyone on Medicare pays, will go up $3.90 per month. This is much less than the $50 per month increase CMS projected after unprecedented Medicare spending on the COVID-19 pandemic. Fortunately, Congress intervened to offset the projected raise making 2021 premiums $148.50 instead of almost $200.
Why are there changes to Medicare?
Healthcare costs rise more each year, and to make up these costs, premiums and deductibles for Medicare increase.
Medicare now has nearly 60 million members, and it’s up to the Centers for Medicare & Medicaid (CMS), a division of the U.S. Department of Health and Human Services, to keep the needs of enrollees and the cost of the program in check as laid out in the Social Security Act.
What are the Medicare Part A changes for 2021?
Medicare Part A is the part of Medicare that pays for hospitalization, nursing home, and some home healthcare costs.
Premium
Most people do not pay a premium for Medicare Part A because they prepaid for their coverage throughout their working years.
For those who do pay, premium costs have gone up for 2021. People who worked for 30 to 39 quarters in their lifetime will pay $259 per month, up $7 per month from 2020. People who worked less than 30 quarters in their lifetime will pay $471 per month, up $13 per month from 2020.
Deductible
Medicare Part A also has a deductible that increases each year. This deductible covers an individual benefit period, which lasts 60 days from the first day of hospital or care facility admission.
The deductible for each benefit period in 2021 is $1,484 — $76 more than in 2020.
Coinsurance
When care is required longer than 60 days, a coinsurance cost applies.
For hospitalization, this means Medicare Part A will charge participants a coinsurance of $371 per day for days 61 through 90 — up from $352 in 2020. Beyond 90 days, you must pay a rate of $742 per day for lifetime reserve days — up from $704 in 2020.
For admissions to skilled nursing facilities, the daily coinsurance for days 21 through 100 is $185.50 per day for 2021 — up from $176 in 2020.
A new benefit period begins once you have been out of hospital or nursing home care for 60 consecutive days. At that point, deductible and coinsurance rates are reset.
What are the Medicare Part B changes for 2021?
Medicare Part B covers physician fees, outpatient services, some home health services, medical equipment, and some medications.
The increase in premiums and deductibles is lower in 2021 than they were in 2020. These increases are primarily the result of increased costs for medications administered by physicians, according to CMS.
Premium
Most people with Medicare Part B pay a premium for this plan, and the base cost in 2021 is $148.50 per month for individuals who make less than $88,000 per year or couples who make less than $176,000 per year. Premium costs increase incrementally based on income.
Deductible
The deductible are also charged under Part B, and increased $5 from 2020 to a total of $203 per year for 2021.
What are the Medicare Part C (Medicare Advantage) changes for 2021?
Medicare Part C costs are variable and are set by the private plan carrier you choose.
Medicare Part C, or Medicare Advantage, combines the elements of Medicare Part A and Part B, plus additional services not covered under those two plans.
Since costs for these plans are set by private companies, not much changed this year at the federal level. However, there was one major change that goes into affect this year for people who have end stage renal disease (ESRD).
Due to a law passed by Congress, people with ESRD are eligible to enroll in a broader range of Medicare Advantage plans in 2021. Before this law, most companies selling Medicare Advantage plans would not let you enroll or would limit you to a Chronic Condition SNP (C-SNP) if you had a diagnosis of ESRD.
What are the Medicare Part D changes for 2021?
Medicare Part D is known as the prescription drug plan for Medicare.
Like Medicare Part C. Part D plan costs vary by provider, and premium costs are adjusted based on your income.
One big change in 2020 was the closing of the “donut hole.” The donut hole was a gap in the plan’s prescription drug coverage that occurred once the plan had paid out a certain amount for prescription medications for the year.
In 2021, there is a Part D deductible of $445, but this may vary depending on the plan you choose. You will pay 25 percent of the cost for your medications until you’ve reached the annual out-of-pocket maximum, which is $6,550 for 2021.
After you’ve paid $6,550 out of pocket, you have entered the catastrophic benefit period, and you may pay a copay of up to $3.70 for generic medications and up to $9.20 for brand-name drugs or a 5 percent coinsurance fee.
What are the Medicare supplement (Medigap) changes in 2021?
Medicare supplement, or Medigap, plans are Medicare plans that help you pay for a portion of your Medicare costs. These supplements can help offset the costs of premiums and deductibles for your Medicare coverage.
Plans are sold by private companies, so rates vary. Medicare offers an online tool to find and compare available plans in your area and their costs.
Starting on January 1, 2020, new Medicare enrollees were not allowed to sign up for Medigap Plan C or Plan F. These supplement plans covered all of the Medicare Part B premium costs for those enrolled.
The goal of this change was to try encourage more judicious use of healthcare services covered under these plans by forcing enrollees to pay more out-of-pocket for them, as outline in MACRA.
These plans did not disappear completely, and people who had enrolled in either plan and who were eligible for Medicare before January 1, 2020, can continue using these plans. However, no new enrollees can sign up for Part C or F because the 2015 law called MACRA outlawed Medigap policies that paid Medicare Part B deductibles.
However, there is Medicare Plan G for people who want a high-deductible plan. In 2021, under Plan G, Medicare covers its share of costs, and then you pay out-of-pocket until you have reached a $2,370 deductible. At that point, Plan G will pay for the remainder of costs.
