Your Complete Guide to Medicare Premiums 2020 & 2021

Valencia Higuera Valencia Higuera is a writer from Chesapeake, Virginia. As a personal finance and health junkie, she enjoys all things related to budgeting, saving money, fitness, and healthy living.
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There are several changes on the horizon regarding Medicare premiums in 2020 and 2021, which means that new and already insured beneficiaries must pay careful attention to their options. It is always advised to speak with a licensed insurance agent to ensure you are getting the best quotes and lowest premiums on your Medicare Advantage, Medicare Supplement, and Medicare Part D coverage.

Below is a definitive, convenient guide that tells you everything about Medicare premium 2020 changes and premium increases so that you are better prepared to make the best possible choice for you and your family.

Let’s begin our overview by reviewing open enrollment periods and what types of adjustments you can make to your plan during this time.

When Is the 2020 Medicare Open Enrollment Period?

Open Enrollment runs from Monday, October 15, 2020, through Friday, December 7, 2020. Coverage elected during this period does not go into effect until January 1, 2021.

The purpose of the Open Enrollment Period is to effectively manage and accommodate Medicare insurance request changes outside of the Initial Enrollment Period (IEP) that you were offered as you were approaching your 65th birthday. Circumstances and medical needs change. The Medicare Open Enrollment period can accommodate your requests, if any, in a coordinated manner.

During open enrollment, you can take the following actions:

  • Sign up for Medicare coverage for all parts if you missed your Special, Initial, or General Enrollment Dates.
  • Change your coverage and provider for Medicare Advantage Part C.
  • Switch your plan from Medicare Advantage Part C to Original Medicare Parts A and B.
  • Switch your plan from Original Medicare Parts A and B to Medicare Advantage Part C.
  • Change your existing Medicare Part D prescription drug plan to a different one.
  • Buy a Medicare Part D plan if you did not do so when you were first eligible.

Review Your Medicare Coverage and Premium Increase

Even if you’re satisfied with your current Medicare coverage, Medicare experts advise you to look at the options available for the following year since Medicare Part D prescription and Medicare Advantage plans change every year. There may be additional coverage under a different program you are not aware of. 

For most American citizens aged 65 or older, the goal is to receive the most comprehensive Medicare coverage at the best price possible. Reviewing your Open Enrollment options for Medicare premiums 2020 can help you accomplish this goal.

How Much Are Medicare Premiums 2020?

If you are participating in the Medicare Open Enrollment period to add to or update your existing coverage, you are likely wondering what Medicare premiums 2020 will cost you. Fortunately, you are in the right place!

Understanding how much your monthly premiums are is an essential first step in managing your retirement budget. However, you must also be aware of what each plan covers so that you don’t unexpectedly come across gaps in coverage that you weren’t expecting.

Gaps in coverage are entirely possible since Medicare doesn’t pay 100%of your costs for most services. According to MedicareResources.org, Medicare on average only covers 50% of medical expenses due to premiums, co-insurance costs, deductibles, and discrepancies in approved amounts versus what your doctor charges.

Throughout this section, we will review what Medicare Parts A, B, and C cover as well as what their associated monthly premium costs are for 2020.

Medicare Part A Premiums 2020

Monthly Premium: Free for qualified beneficiaries. Plans start at $250 per month for those who don’t qualify for the free program.

Medicare Part A insurance coverage exists to provide benefits related to hospital visits. Individuals who need inpatient or skilled-nursing care can access benefits that help cover these costs. There is typically a deductible involved, and copayments kick in after a certain number of days in the hospital.

You are not required to pay a monthly premium under this plan since contributions were made during your career. Therefore, Medicare Part A is known as being premium-free. You can draw upon a free Part A plan as long as you are at least 65 years of age or more and meet the minimum working requirements.

If you do not qualify for a free Part A plan, then you pay a monthly premium of $458 per month in 2020 if you voluntarily did not work at all during your lifetime and need to purchase a Part B plan. Individuals who worked but did not meet the minimum contribution thresholds can expect to pay between $250 and $458 per month in 2020, depending upon the income-related monthly adjustment..

Medicare Part B Premiums 2020

Monthly Premium: $144.60 per month (standard premium rate).

Medicare Part B insurance coverage exists to provide benefits related to routine medical care and treatment. Medicare Part B covers doctor’s visits and diagnostic care. While it does include some preventative maintenance services, there are definitely treatments that Medicare Part B will not cover since they are not deemed medically necessary.

Everyone pays a monthly premium for Medicare Part B coverage. The amount is automatically deducted from your social security benefits check payment. If you do not receive public retirement benefits, then you will receive a monthly bill.

The standard monthly premium you can expect to pay for Medicare Part B coverage is $144.60 for 2020. This amount will increase if your annual income exceeds $87,000 on your individual tax return.

Medicare Part D Premiums 2020

Monthly Premium: Varies by Plan, Additional Medicare Charges Apply

Medicare Part D insurance coverage exists to provide you with a prescription drug plan. It’s a Supplemental Insurance  that covers the cost of prescription medications, vaccines, and immunizations. It does not cover medical, vision, or dental.

Since Medicare Part D is offered through private insurers that are Medicare-approved, plan prices will vary. In most cases, you only pay the premium amount that the insurer charges.

However, qualifying income levels are subject to additional charges. Individuals who earn more than $87,000 begin seeing increases start at $12.40 per month plus the cost of the premium in 2020.

Managing Your Healthcare Costs

It’s likely that healthcare costs are a significant consideration when it comes to effectively managing your retirement budget. Therefore, you must be aware of a few budgeting elements that can help you balance your healthcare costs while still remaining flexible financially.

Consider the Big Picture

For example, Medicare costs increase over time in tandem with mounting medical needs. Simply put, you are wise to factor in potential health issues you may face.  Saving as much as you possibly can before retirement is the optimal solution, but that is not always available to individuals since they may already be in retirement.

Look Into Medigap (Medicare Supplement)

An additional idea for managing your health costs lies within another option, Medigap. While you are paying an additional few hundred dollars a month, it might make sense to do so if you are co-insurance, deductibles, and approved amount differences exceed the costs of a Medigap plan. Medigap covers the expenses that Original Medicare does not.

Be an Active Participant

It will take a bit of time to review your options; however, you will at least feel assured knowing that you got the most appropriate Medicare plan for your needs at the best price possible going into the new year. Planning missteps can result in your paying for an annual policy that doesn’t make sense for your situation. Instead, become an active participant in the planning process will ensure that you are satisfied with your coverage. As a first step, consider speaking with a Medicare expert who can assist you in understanding your coverage options and associated costs.

 

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