Medicare undergoes changes each year. As healthcare costs rise, premiums and deductibles for Medicare increase (or sometimes decrease) to make up these costs. Significant changes have been made to Medicare premiums, deductibles, and coinsurance across various plans. The COVID-19 pandemic has also impacted Medicare coverage for 2021.
Medicare Part A Changes
Medicare Part A is a monthly premium that pays for hospitalization, nursing home care, hospice care, and some home healthcare. According to the Medicare site, most people don’t pay the Part A premium because they prepaid for their coverage through their working years.
If you do pay the premium, however, the costs have increased for 2021 to $259 per month. That’s up $7 per month from 2020. If you worked less than 30 quarters in your lifetime, you’ll pay $471 per month, which is up $13 per month from 2020.
Deductible and Coinsurance
The deductible for each benefit period in 2021 has increased to $1,484. That’s $76 more than in 2020. Coinsurance costs have also increased based on the care needed and how long it is required.
Medicare Part B Changes
Medicare Part B is a monthly premium that covers doctor’s fees, outpatient services, medical equipment, some home health services, and some medications. There is an increase of less than $4 per month for 2021, but the federal government limited the increase in October 2020.
The monthly premiums will increase to $148.50 for individuals who make less than $88,000 per year or couples who make less than $176,000 per year. The annual deductible also increased to $203, up $5 from 2020.
Medicare Part C (Medicare Advantage) Changes
Medicare Part C, also known as Medicare Advantage, bundles elements of Medicare Part A and Part B and includes additional services.
Costs for Medicare Advantage are set by private companies and can vary widely by state and area.
Since Medicare Advantage costs are set by private plan carriers, there are not many changes to expect in 2021. One significant change affects people who have end stage renal disease, or ESRD. Some Medicare Advantage plans now offer coverage to those with ESRD.
Medicare Part D Changes
Medicare Part D is the prescription drug coverage plan. Like Medicare Advantage, Part D plan costs vary by provider. Premiums are adjusted based on your income.
A significant change to Medicare Part D for 2021 is the closing of the “donut hole” and changes to deductibles and coverage. Prior to 2021, the plan covered a certain dollar amount of your drug costs, or only covered generic prescriptions. After this coverage ran out, you were responsible for a percent of your plan’s cost for prescription medications.
Now in 2021, the Part D deductible is $445, but it can vary depending on your plan. You’ll pay 25% of the cost of your prescription medication until you reach the out-of-pocket maximum, which is now set at $6,550. After you’ve reached that maximum, you may pay a copay of up to $3.70 for generic medication, up to $9.20 for brand name medications, or a 5% coinsurance fee.
Changes to Medigap
Medigap insurance plans help you cover copays, deductibles, and coinsurance related to Parts A and Parts B. Medigap plans are offered by private companies, so costs vary by your area, as well as your age.
Because of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA Medigap Plans C and F were no longer available to people new to Medicare on or after January 1, 2020. If you were already covered by one of these plans prior to that date, you could keep your plan.
Instead of the high-deductible Plan F, Medicare Plan G is available for people who want a high-deductible plan in 2021. Under Plan G, Medicare covers its share of costs. You pay out-of-pocket until you’ve reached a $2,370 deductible, and then Plan G will cover the remainder.
The spread of the COVID-19 pandemic beginning in March 2020 led to some unplanned Medicare changes in 2020.
These changes have continued into 2021. Medicare covers the costs of:
- The COVID-19 vaccine
- Lab tests for COVID-19
- FDA-authorized antibody or “serology” tests
- Monoclonal antibody treatments
- All medically necessary hospitalizations
- Telehealth services
Medicare has also waived or relaxed prior authorization requirements for Medicare Advantage, skilled nursing facility care, and Medicare certification for home health services.
Enroll for Medicare When Eligible
Remember, when you’re first eligible for Medicare, you have a 7-month Initial Enrollment Period to sign up for Part A and/or Part B. Though the General Enrollment Period between January 1 and March 31 each year has ended for 2021, you may be able to sign up at a different time if you qualify for a Special Enrollment Period.
If you are not yet eligible but are considering your options for Medicare you should speak to your financial planner and a Medicare expert to discuss changes to your retirement and healthcare expenses, and which plans you should consider once you’re enrolled.