As elder law attorneys, we keep a finger on the pulse of government benefits for seniors, and Medicare is one of them. In this post, we are going to share some recently released information about the relatively modest out-of-pocket cost increases seniors will face in 2021.
Four Distinct Parts
Medicare is broken up into four distinct parts.
Part A is the hospitalization component. There is not a monthly premium if you have earned eligibility through your payroll tax contributions.
To provide a brief explanation of the eligibility requirement, you must have accumulated at least 40 retirement credits while working and paying taxes. You earn a maximum of four credits per year, and in 2020, you earn one credit for every $1410 you earn. This qualification figure will increase to $1470 next year.
A married person can obtain eligibility through a spouse’s work record, if necessary.
Part B covers medical treatments provided by doctors and other health care providers, and the beneficiary must pay 20 percent of covered expenses.
Part C allows you to buy into a Medicare Advantage Plan that bundles all the other parts.
Medicare Part D is the prescription drug component.
Part A Deductible and Coinsurance Increases
There is no monthly premium for Part A if you have earned the necessary 40 retirement credits. However, there is an annual deductible of $1408 this year, which will rise to $1484 in 2021.
The deductible covers the first 60 days of inpatient care, but you have to pay coinsurance for days 61 through 90. The daily coinsurance in 2020 is $352, and it will increase by $19 a day when 2021 rolls around.
Beneficiaries get 60 lifetime reserve days to cover stays longer than 90 days, but the coinsurance requirements are quite a bit higher. For 2021 it will be $742 a day, a $38 per day increase from 2020.
Medicare Part B Premiums and Deductible
You must pay a monthly premium and deductible for Part B. The increases for 2021 were impacted by the Continuing Appropriations Act, 2021 and Other Extensions Act (H.R. 8337).
This spending measure was put into place as a response to the economic impact of the novel coronavirus pandemic. It capped the 2021 inflation increase at 25 percent of what it would have been if COVID-19 had not reared its ugly head to change our lives.
The standard 2021 premium will be $148.50, a $3.90 increase. We use the qualifier “standard” because this is the monthly premium for individuals who claim income of $88,000 or less on their tax returns.
Filers in higher income brackets pay more, with several different thresholds. You can visit the Centers for Medicare and Medicaid Services website to see the entire table.
The deductible for 2020 is $198, and that is increasing by a five dollar bill in 2021.
Beneficiaries are “held harmless” if the Medicare Part B increase exceeds the Social Security cost-of-living increase in a given year. This means that they would not be penalized by a reduced Social Security benefit.
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