2020 Medicare Costs at a Glance

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Medicare costs change annually. Most of the time you’ll see increases year over year. Medicare costs are essential to understand BEFORE coverage begins. You don’t want sticker shock after a hospital visit or doctor’s appointment. Many people are under the impression that Medicare is free at age 65 AND covers everything in full; however, this isn’t the case. There are many types of cost-sharing that beneficiaries are responsible for, including 20% of outpatient costs, in addition to deductibles & premiums.

Below we’ll go over all cost-sharing including premiums, deductibles, coinsurances, and copayments for all Medicare parts to give you a rough estimate on what you can expect to pay out of pocket in 2020. We’ll also touch on income-related adjustments.

How Much Does Medicare Cost in 2020?

Medicare covers 80% of the medicare-approved amount on Part A and Part B services after meeting the deductible; you must pay 20%.

In 2020, the Part B premium increased to $144.60 & the deductible increased to $198. You can expect higher premiums if you make over $87,000 for single filers and $174,000 for joint filers.

Most people don’t pay anything for inpatient coverage that falls under Part A. Medicare costs for Part C & Part D are unique to each individual beneficiary.

How Much Does Medicare Part A Cost?

Part A consists of premium, deductible, coinsurance, and copayment costs.

Premium

Part A is usually Premium-Free for those that work and pay into Medicare a minimum of ten years or forty quarters; or, if a spouse qualifies. Most beneficiaries are eligible for free Part A.

Those that don’t qualify could pay up to $458 a month. Some people may be close to qualifying; for example, if you contribute taxes for 30 quarters, you’re premium would be $252 a month.

Inpatient Deductible

The Part A deductible is a beast that many aren’t expecting. For 2020, staying in the hospital could cost $1,408 in deductible costs alone.

Unfortunately, this isn’t an annual deductible; instead, it’s a “per benefit” deductible.

So, let’s say Matt goes to the hospital in January and pays the deductible. Well, 60 days later, when he’s an inpatient again, he’s going to pay the deductible AGAIN.

Copayments

Copayments for Part A apply when you stay for more than 60 days in a hospital during a single benefit period or 20 days in a Skilled Nursing Facility.

For example, days 6 through 90 cost $352 per day in 2020 for each benefit period. Then, days 91 and further cost $702 each day.

In an SNF, days 21 through 100 cost $176 each day for each benefit period. Then, after day 101, you pay ALL the costs.

A Medigap plan could cover the cost of the SNF coinsurance and Hospital costs up to an additional year after Medicare.

How Much Does Medicare Part B Cost?

You must be eligible for and enrolling in Part A to obtain Part B. Costs to consider include premium, deductible, and coinsurance. Further, delaying enrollment in Part B could result in a late penalty unless you have “creditable coverage.

“So, if Matt has group coverage through a large employer, he may be able to delay enrollment without fear of penalization. However, you must speak with the benefits administrator to understand if your coverage is creditable.

If Matt delays enrollment and has small employer coverage, he may end up paying %10 more for every year he goes without Part B.

He may need to wait until the General Enrollment Period to sign up, causing further delay and an increase in penalties.

Many people buy Medigap to help cover the costs of care because, without extra coverage, Medicare can be expensive.

Premium

The Part B premium usually comes out of your social security check. For 2020, the standard monthly premium for Part B is $144.60.

Deductible

The Medicare Part B deductible is $198. Those with a low-income may qualify for extra-help, which could assist with the deductibles and coinsurances.

You must meet the deductible before Medicare covers unless the service is preventive. Part B includes all outpatient services.

What are the Medicare Income Limits for 2020?

Although premiums for Part B are Income-Related Monthly Adjustment Amounts based on the two previous years; so, in 2020, your income from 2018 will determine the monthly premium. The standard Part B premium can cost more to those with a higher income.

You can file an IRMAA-appeal if you have a change, such as lower-income from retirement or loss of a spouse.

There was a Social Security COLA increase, forcing those under the “hold harmless” provision paying less to pay the full amount.

How Much Does Medicare Advantage Cost?

Many Medicare Advantage plans across the nation have a $0 premium or a low monthly cost in general. While this coverage can seem appealing to many Americans, there are disadvantages to Medicare Advantage plans.

Saving on Premium is great until you get sick and need real coverage.

If Matt has a Medicare Advantage plan while he’s in the hospital, he’ll pay something like $450 each day for days 1 through 6. Further, if he took an ambulance to the hospital, his cost could be an additional $300 for the ride.

Then, when Matt leaves the hospital, he’ll need to pay $65 copayments to see a specialist. Well, when Matt goes to order his Home Oxygen for a Medicare Durable Medical Equipment supplier, his costs are likely to be 20% even with advantage coverage.

These plans only need to cover as good as Medicare. Although, they at least have a Maximum Out Of Pocket (MOOP), which is more protection than only Medicare.

Let’s say the MOOP is $6,000, and Matt’s hospital costs were $50,000. Well, Matt would pay $6,000 out of pocket; then, the plan covers the rest in full.

While this is much better than Medicare’s not out of pocket maximum, Medigap coverage would’ve been cheaper. The average cost of Plan G for a 65-year-old is about $130, multiply that by 12 monthly payments, and the price is $1,560 for the year.

Even when you pay the Part B deductible yourself, the cost is still WAY less than the $6,000 MOOP.

A low premium doesn’t always equate to HUGE savings.

Deductible

There are Medicare Advantage plans that don’t have a deductible for medical or prescription costs; although, many have a Part D deductible that applies.

If the advantage plan you have requires a medical deductible, only care that’s in-network will apply towards that deductible.

Prescription Drug Plan Costs for 2020

Just like Part B, Part D charges high-income earners more for coverage. So, if you’re single making over $87,000 or Married making over $174,000, expect a premium increase.

Also, if you delay Part D, a late enrollment penalty will apply. The Part D penalty is 1% of the national average drug plan premium for every month you go without coverage.

The national base beneficiary premium is $32.74; then, the maximum deductible for any Part D policy is $435. Each plan covers a portion of the cost of your drugs; you’ll pay any applicable copayments or coinsurances.

The tier determines cost, usually higher specialty tier drugs cost the most. During the donut hole, you’ll pay more than usual for your medications; although, not everyone falls into the coverage gap.

We have a great chart that goes over Part D costs year over year.

FAQ’s

What will Medicare cost in 2021?
Medicare won’t announce Part A, B, or C rates until sometime in September. But, Part D costs will increase in 2021.
How much is taken out of your Social Security check for Medicare?
Generally, the amount taken out is equivalent to your Part B Medicare premium. Those with higher incomes may have more taken out of their check than those with lower incomes.
How much does Medicare cost per month?
The answer to this question is going to be different for everyone. Some people that qualify for free Part A and Medicaid could pay a very small amount each month. But, someone that didn’t pay into Medicare will pay $458 for Part A each month, on top of Part B costs which are greater for those with a higher income.

In addition to the standard Part A and B costs, you’ll want to consider supplemental and Part D costs. For a better idea of what you’ll pay each month, give us a call.

How to Find Out More About Medicare Costs in 2020

It’s important to stay on top of Medicare costs each year so you can prepare for your healthcare costs. Give us a call to learn more about costs and all your coverage options.

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