Medicare premiums are set to rise a modest amount next year, but still cut into any Social Security gains. The basic monthly premium will increase $3.90, from $144.60 a month to $148.50.
The Centers for Medicare and Medicaid Services (CMS) announced the premium and other Medicare cost increases on November 6, 2020. The hike could have been much worse due to rising costs during the coronavirus pandemic, but the bipartisan budget bill passed in October capped the increase. While the majority of beneficiaries will pay the added amount, a "hold harmless" rule prevents Medicare recipients' premiums from increasing more than Social Security benefits, which are going up only 1.3 percent in 2021. This “hold harmless” provision does not apply to Medicare beneficiaries who are enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $88,000 a year, and "dual eligibles" who get both Medicare and Medicaid benefits.
Meanwhile, the Part B deductible will rise from $198 to $203 in 2021, while the Part A deductible will go up by $76, to $1,484. For beneficiaries receiving skilled care in a nursing home, Medicare's coinsurance for days 21-100 will increase from $176 to $185.50. Medicare coverage ends after day 100.
2021 Medicare payment figures:
• Part B premium: $148.50 (was $144.60)
• Part B deductible: $203 (was $198)
• Part A deductible: $1,484 (was $1,408)
• Co-payment for hospital stay days 61-90: $371/day (was $352)
• Co-payment for hospital stay days 91 and beyond: $742/day (was $704)
• Skilled nursing facility co-payment, days 21-100: $185.50/day (was $176)
So-called "Medigap" policies can cover some of these costs. For more information about Medigap, read our post "Medigap: Plugging Most Holes in Medicare Coverage."
Medicare Premiums for Higher-Income Beneficiaries
Premiums for higher-income beneficiaries ($88,000 and above) are as follows:
- Individuals with annual incomes between $88,000 and $111,000 and married couples with annual incomes between $176,000 and $222,000 will pay a monthly premium of $207.90.
- Individuals with annual incomes between $111,000 and $138,000 and married couples with annual incomes between $222,000 and $276,000 will pay a monthly premium of $297.
- Individuals with annual incomes between $138,000 and $165,000 and married couples with annual incomes between $276,000 and $330,000 will pay a monthly premium of $386.10.
- Individuals with annual incomes above $165,000 and less than $500,000 and married couples with annual incomes above $330,000 and less than $750,000 will pay a monthly premium of $475.20.
- Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $504.90.
Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $88,000 and less than $412,000 will pay a monthly premium of $475.20. Those with incomes greater than $412,000 will pay a monthly premium of $504.90.
How Does the SSA Determine Medicare Part B's Premium?
The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premium. So the income reported on a beneficiary's 2019 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2021. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary's MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.
Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will decrease by 11 percent in 2021, from an average of $23.63 in 2020 to $21 in 2021.
Read more in Medicare’s press release announcing the new premium, co-payment and deductible amounts.
Medicaid Planning & Long Term Planning Attorney in Avon Lake, Ohio
Not every attorney is a Medicaid planning and long term care planning expert. The laws regarding taxes, choices that affect Medicaid qualifications and long term care planning change to some degree every year. At Joseph L. Motta Co., we pride ourselves in keeping up with changes to components of all long term care planning - including Medicare costs and Medicaid qualifications which is why we're you're best local elder law and estate planning attorney. From our local office in Avon Lake, OH, we help our review all estate planning documents and long term care planning strategies for Medicaid planning. Please call our office at 440-930-2826 to schedule a free consultation .
Medicare and Medicaid Related Articles:
How to Choose a Medicare Advantage Plan, Are Medicare and Medicaid Plans Able to Transfer Between States if You Move?, Medigap: Plugging Most Holes in Medicare Coverage, and What is the CSRA? Preserve Additional Assets with Medicaid Planning.
Many people fail to realize that neither their health insurance nor Medicare will cover long-term care. As a result, many middle-class seniors fail to plan for long-term care and can spend their entire life savings before becoming impoverished and turning to Medicaid. Medicaid is a joint program of the federal and state governments that will pay the long-term care costs of those who have little or no assets. The rules governing Medicaid in Ohio are extremely complex and have undergone substantial changes in the last few years which is why we create a Medicaid Guide each year with some basic Medicaid eligibility updates. If you have questions about Medicaid eligibility, income, savings, assets and more, please contact the offices of Joseph L. Motta for a free consultation.