Medicare Out-of-Pocket Costs Rise for 2020 at Higher Levels Than Previous Years
Medicare Costs increase in 2020, and for most people, that doesn’t come as a surprise.
Increases in Part B Costs
Most notable increases are out of pocket costs, that aren’t covered by supplement plans, for Medicare Part B. The new premium is $144.60 per month, up $9.10 per month from last year. The Part B premium is paid by people with standard Medicare, with or without a supplement plan, as well as those who have a Medicare Advantage (Part C) plan. Certain plans for low income or special needs pay the monthly Part B premium. For those who earn more that $87,000 per year, premiums are higher.
Also noteworthy for 2020 is the $13.00 increase in the Part B deductible, from $185.00 to $198.00 per year. It is the largest increase since 2017, when it went to $183.00, up $17.00 from 2016. The 2017 deductible remained the same for 2018 (as well as the $134.00 Part B premium), then modestly increased $2.00 to $185.00 in 2019, and now the $13.00 increase in 2020 to $198.00.
What’s notable is that all supplement plans newly obtained after December 31, 2019, will no longer cover the Part B deductible. The comprehensive Plans F and C pay those deductibles, but will no longer be sold to people starting Medicare on Jan 1, 2020 and beyond. Beneficiaries who have these plans may keep them in 2020 and beyond, but need to realize that in the coming years, the monthly premiums for those plans will increase more exponentially, due to the decreasing number of people participating in them.
Plans G and N, now the most comprehensive plans with the most Medicare coverage, do not cover the annual part B deductible.
Part A Increases
Part A out of pocket expenses have increased as follows:
The Part A deductible, your initial payment for your inpatient hospital stay up to 60 days, will increase $44.00 from $1,364.00 in 2019 to $1,408,00 in 2020. Coinsurance for days 61-90 will be $352,00 per day, days 91 and beyond $704.00 per day (also referred to as your “lifetime reserve days”, of which each person has 60).
These Part A out of pocket costs are mostly covered by supplement plans, with Plan G and Plan N being the plans that cover all these expenses. Medicare Advantage (Part C) have different coverage definitions for hospital stays.
Part D Prescription Drug Plans and the Donut Hole
The biggest news in Part D Prescription Drug Plans (PDPs) for 2020, is that the Coverage Gap, or “Donut Hole” is going away. This can mean different things to different people, but from my experience in the plans I have written for my clients in 2019, some plans maintain the same charge for prescriptions as the initial coverage phase, or the costs may even be lower.
Prescription Drugs costs are broken in down in different phases for 2020:
Deductible – enrollee pays the first $435.00 dollars. Some PDP plans offer lower deductibles.
Initial Coverage – enrollee pays 25% of the costs of their drugs, until they reach out-of-pocket costs of $1,331.25.
Coverage Gap – enrollee pays 25% of costs. Although the start of this phases may be transparent to the enrollee, the drug manufacturers pay 70% of the cost for brand name drugs through a discount. The discounted amount goes towards the enrollee’s out of pocket threshold of $6,350.00.
Catastrophic Coverage – once an enrollee hits their out of pocket threshold, this phase enables them to pay the greater of 5% or $8.95 for brand names / $3.60 for generic drugs.
For more information or to review your Medicare coverage, contact Will Schirmer at email@example.com.
Will Schirmer is a Medicare Specialist and licensed agent who brings clarity to the enrollment process. Will’s past insurance experience also includes home, auto, health, accident, and life insurance – and is now focusing on his passion, which helping people understand Medicare. Will is also part of Agents For Advocacy, a non-profit organization which provides education and support through talks, venue programs, and service support. Contact him at firstname.lastname@example.org