Medicare Has Four Parts Categorized by Letter Designations.
Medicare Part A is your hospital insurance and helps cover medical expenses while you are staying in a hospital setting. Your exposure with Medicare Part A includes deductibles, coinsurance and co-pay expenses that can become pretty significant if you do not have supplemental coverage to Medicare. You will automatically be entitled to, and enrolled in, Part A at age 65 if you worked 40 quarters in the United States. You can also qualify for coverage through a spouse that worked 40 quarters.
Medicare Part B is coverage for outpatient medical services. You are exposed to a deductible, coinsurance, co-pays and excess charges if you don’t have a supplement for Medicare. This coverage is elective but most Medicare recipients take it. You will pay a monthly premium for Medicare Part B that will be based on your income level.
Medicare Part C is a privatized plan that is also known as Medicare Advantage. You can choose to take this plan offered by private health insurers instead of Original Medicare. Although there are some benefits to this plan in that it is required to cover you as well as or better than Original Medicare, you will typically find that fewer doctors and hospitals accept this type of policy. Additionally, there isn’t a reliable way to supplement coverage for the out-of-pocket expenses in this plan. You will still have to pay your Medicare Part B premiums to own this type of policy and may pay anywhere from $0 additional to over $100/month for this type of plan. If you have a Medicare Advantage Plan, you will not be able to buy a Medicare Supplemental Insurance plan as Medicare Supplements are not intended to cover the gaps in Medicare Advantage plans.
Medicare Part D was introduced in 2006 as a component of the Medicare Modernization Act of 2003. It provides coverage for prescription drug costs and is elective coverage. If you don’t take it when you are initially eligible and decide to enroll later, you can face some fairly stiff penalties. These plans have minimal standardization when it comes to important things like premiums, co-pays, coinsurance, deductibles and which drugs they’ll cover (known as formularies). Some may also be more restrictive than others in requiring step-therapy or limiting the amount you can order each month. The best way to determine which drug plan to enroll in is to call your local SHIIP representative or by contacting NC SHIIP (Seniors' Health Insurance Information Program) at (800) 443-9354 or visit the Medicare website at www.medicare.gov and use the Prescription Drug Plan Finder Tool.
2020 Medicare Part A & Part B Premiums & Deductibles
Medicare Part B Premiums/Deductibles
Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.
The standard monthly premium for Medicare Part B enrollees will be $144.60 for 2020, an increase of $9.10 from $135.50 in 2019. While most Medicare recipients will pay the new $144.60 standard monthly premium, some will pay less because of a “hold harmless” provision that limits certain beneficiaries’ increase in their Part B premium to be no greater than the increase in their Social Security benefits.
The annual deductible for all Medicare Part B beneficiaries is $198 in 2020, an increase of $13 from the annual deductible $185 in 2019. What’s to blame for the bigger increases this year? Rising spending on physician-administered drugs, according to CMS.
The CMS announcement comes after last month’s Social Security Administration’s COLA announcement: a 1.6% cost of living adjustment for 2020. The average Social Security benefit for a retired worker will rise by $24 a month to $1,503 in 2020. The higher Medicare Part B premium cuts into retirees’ monthly Social Security payments. Part B premiums typically are deducted from monthly Social Security checks.
This year CMS says 7% of Medicare recipients, up from 5% this year, will have to pay income-related surcharges. The graduated surcharges for high-income seniors kick in for singles with a modified adjusted gross income of more than $87,000 and for couples with a MAGI of more than $174,000. An individual earning more than $87,000, but less than or equal to $109,000, will pay $202.40 in total a month for Part B premiums in 2020.
By comparison, the wealthiest retirees—singles with $500,000 of income or more and couples with $750,000 of income or more—will face total premiums of $491.60 a month per person, including a $347 surcharge, in 2020. (That comes to $11,798.40 a year for a couple.) The 2019 numbers are here.
The income-related premium surcharges apply to Part D premiums for drug coverage too.
Medicare Part A Premiums and Deductibles
The Medicare Part A inpatient hospital deductible that beneficiaries will pay when admitted to the hospital will be $1,408 in 2020, an increase of $44 from $1,364 in 2019. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2020, beneficiaries must pay a coinsurance amount of $352 per day for the 61st through 90th day of a hospitalization ($341 in 2019) in a benefit period and $704 per day for lifetime reserve days ($682 in 2019). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $176.00 in 2020 ($170.50 in 2019).
Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities pay a monthly premium in order to voluntarily enroll in Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate, which will be $252 in 2020, a $12 increase from 2019. Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $458 a month in 2020, a $21 increase from 2019.