Changes To Medicare Premiums In 2020

Medicare premiums are on the rise. For seniors living on a retirement income, it’s important to know where the increase in cost is coming from. More importantly, it’s essential to learn how you can keep your monthly premiums as low as possible without sacrificing quality healthcare coverage. We will provide a cost breakdown for 2020 and will help you determine how you can save while still ensuring maximum coverage.

Medicare Deductibles 2020

Original Medicare comes in four parts – Part A, B, C, and D.

Part A: Covers hospital stays and expenses. Part A is automatically applied to anyone with Medicare.

Part B: Covers doctor expenses. Part B is optional but highly recommended.

Part C: Covers hospital, doctor, and often prescription drugs. Part C is optional, known as Medicare Advantage, and may help reduce overall healthcare costs.

Part D: Covers prescription drugs. Part D is optional but highly recommended.

Part B, C, and D all have deductibles.

Part A is usually free unless the person applying has worked less than 30 quarters and did not contribute to social security payments.

All premiums are adjusted based on income and change yearly. For 2020, all premiums will increase regardless of your income bracket.

Cost Adjustments

Here is a brief look at changes from 2019 to 2020 Medicare costs.

Part2019 Cost2020 Cost
Part A PremiumUsually free*Usually free*
Part A Deductible$1,364 deductible per benefit period$1,408 deductible per benefit period
Part A Coinsurance per benefit periodDays 1-60: $0 per dayDays 1-60: $0 per day
Days 61-90: $341 per dayDays 61-90: $352 per day
Days 91+: $682 per “lifetime reserve” day up to 60 daysDays 91+: $704 per “lifetime reserve” day up to 60 days
After lifetime reserve: All costsAfter lifetime reserve: All costs
Part B Premium$135.50+$144.60+
Part B Deductible$185$198
Part B Coinsurance per benefit period20% after deductible is met20% after deductible is met
Part C PremiumVaries by planVaries by plan
Part D PremiumVaries by planVaries by plan

 *To qualify for free Part A Medicare coverage, an individual must have worked and contributed payment toward social security benefits for a minimum of 30 quarters or 7.5 years.

Medicare Part B Premiums 2020

Knowing how much you’ll be expected to pay for healthcare premiums is important when living on a fixed income. To determine the cost of your Part B premium you’ll need to check your 2018 tax information, as your income from two years prior determines 2020 premium costs.

If your yearly income for 2018 was:Your 2020 premium will be:
Individual filingMarried filing jointlyMarried filing separately
$87,000 or less$174,000 or less$87,000 or less$144.60
$87,001 to $109,000$174,001 to $218,000N/A$202.40
$109,001 to $136,000$218,001 to $272,000N/A$289.20
$136,001 to $163,000$272,001 to $326,000N/A$376.00
$163,001 to $499,999$326,001 to $649,999$87,001 to $412,999$426.70
$500,000 +$750,000 +$413,000 +$491.60

 

Part D Premium 2020

The same rules apply for your Part D coverage. Premium costs are associated with your 2018 tax return and vary by plan. The change for 2020 is that, depending on your income level, you will cover the cost of your Part D premium in addition to a surcharge. A higher income results in a greater surcharge. Here is a general estimate:

If your yearly income for 2018 was:Your 2020 Premium will be:
Individual filingMarried filing jointlyMarried filing separately
$87,000 or less$174,000 or less$87,000 or lessPlan premium only
$87,001 to $109,000$174,001 to $218,000N/APlan premium + $12.20
$109,001 to $136,000$218,001 to $272,000N/APlan premium + $31.50
$136,001 to $163,000$272,001 to $326,000N/APlan premium + $50.70
$163,001 to $499,999$326,001 to $649,999$87,001 to $412,999Plan premium + $70.00
$500,000 +$750,000 +$413,000 +Plan premium + $76.40

 

Income Changes

If changes in your income have occurred, call the Social Security office and submit proper documentation so you won’t have to pay more than necessary. Applicable changes include:

  • Marriage, divorce, or widowhood.
  • One or both parties stop working or reduce working hours.
  • Loss of income-producing property due to natural disaster or another uncontrolled event.
  • One or both parties experience ceasing, termination, or reorganization of an employer’s pension plan.
  • One or both parties receive a settlement from an employer or former employer due to an employer’s business closing, bankruptcy, or reorganization.

Ways To Save On Medicare Costs

If you’re one of the 7.5 million seniors struggling to afford healthcare necessities like prescription drug coverage, there are savvy ways to save.

Medicare Advantage or Part C

Original Medicare Parts A and B only cover hospital and doctor fees, as seen in the first chart in this article. Unfortunately, this means necessities such as vision, dental, and hearing coverage are not included. If you want a prescription drug plan, you’ll need to purchase a separate plan, either Part D or a Medicare Advantage plan.

With a Medicare Advantage plan, you apply for Part A and B coverage, pay for it together and often receive extras such as vision, dental, and drug coverage. Here’s a snapshot of plan differences between Original Medicare and Medicare Advantage in 2020.

 ORIGINAL MEDICAREMEDICARE ADVANTAGE
   
CoveragePart A and BPart A, B, D + vision, dental, and hearing*
Maximum Out-of-Pocket CostsNo Maximum on OOP costsYearly limit on OOP costs. After OOP limit, members pay nothing.
Doctors and HospitalsAny doctor or hospital that accepts MedicareDoctors and hospitals in your plan’s network. Out-of-network doctors and hospitals may incur higher costs.
PremiumsPart A – No premium

Part B – Around $144.60+/mo.

Part B – Around $144.60+/mo.

+

plans start as low as $0/mo.

DeductiblesPart A – Around $1,408

Part B – Around $198

Deductibles and copays vary
Prescription Drug CoverageMust purchase Part D or standalone drug coverageVaries by plan

*Not all Medicare Advantage plans cover vision, dental, and hearing.

The biggest savings when choosing a Medicare Advantage plan is the included extras such as vision, dental, hearing, and drug coverage. Often, your Medicare Advantage premium will cost less than if you purchased Part A, B, D, and a hearing or vision plan individually.

Choose Medicare Plans 2020

Choosing the right Medicare plan for your health care is an important step to ensure a healthy and fulfilling future. Making a choice doesn’t have to be overwhelming or complicated. Talk with a Medicare advisor to determine which plan and cost are right for you.