We should both accept that 2020 has been an unusual year. If you depend on Medicare for your health benefits, you’ve already seen plenty of improvements, beginning with the disappearance of Plan C and Plan F and the implementation of a high-deductible Plan G.
Additional improvements were made by COVID, including full telemedicine coverage for any Medicare beneficiary. COVID research reported by CMS will be 100 percent covered and a vaccine would be covered with no out-of-pocket costs until it becomes eligible.
Now that 2021 is just around the corner, in the coming year we are starting to see what's next for Medicare. Here are the Medicare updates you need to hear about from new policies to new premiums.
Many individuals earn premium-free Medicare Part A, so you will possibly not be affected by any improvements to the Part A premium in 2021. It is interesting, however, to note that the premium for 2020 ($458) is only $20 lower than it was in 2010. Premiums are always changing, but not always going up.
If you pay a Part A premium, you'll either pay $259 or $471 in 2021.
Deductible from Medicare Part A: In 2021, the Part A deductible would also increase. The deductible from Part A increases by $76 to $1,484, up from $1,408.
Coinsurance for Medicare Part A: Similarly, in 2021, the regular hospital coinsurance Part A is also projected to increase modestly. At present, the copay is $352 for days 61 through 90, but it will rise by $19 to $371 in 2021. A slightly greater increase from $704 to $742 would be made for the coinsurance for lifetime reserve days.
Again some official figures have not been released by CMS yet, but as soon as they are finalized, we will announce them.
Medicare was primed for major premium rises earlier this year because of the unprecedented costs associated with the COVID pandemic. Fortunately, in the 2021 budget, Congress and the administration discussed Medicare's deficit, so such extreme rate rises would not come to pass.
Premium Medicare Part B: What was supposed to be a monthly rise of as much as $50 is now estimated at just $4. The premium for Part B for 2021 will be $148.50, up from $144.60 this year.
Deductible from Medicare Part B: The deduction from Medicare Part B was estimated to be $212 by the Medicare board of trustees. The finalized Part B deductible, however, is $203 for 2021.
Medicare Part D premiums for 2021 are projected to rise by an average of 9 percent in the Kaiser Family Foundation's annual Medicare survey. In 2021, the average stand-alone Part D premium would be $41.
The premiums for the AARP MedicareRx Preferred plan range from $7 a month for the SilverScript SmartRx plan to a peak of $89.
Deductible for Medicare Part D in 2021: From $435 in 2020, the 2021 deductible is projected to rise from $10 to $445. Plans are, however, still able to set their deductible below the limit for CMS.
Given that the number of policies has grown for the fourth year in a row, chances are high that you can find a low or even $0 deductible cost-effective plan. For medications in Tiers 1 and 2, and often Tier 3, even policies with an annual deductible sometimes waive it. When you compare plans, be sure to read the fine print so that you don't skip this advantage if it's offered.
The new Senior Savings Model for insulin is one of the most important Part D changes for 2021. A ground-breaking deal with drug makers to cap insulin copayments at $35 or less at all levels of coverage was announced by the Trump administration in June. And if you have not reached your deductible or you are in the coverage gap, under the new program, you can never pay more than $35 for insulin.
About 1,600 Part D programs will engage in the Senior Savings Model, according to the CMS. You will save hundreds or even thousands per year on prescription medications if you take insulin to treat your diabetes. During the Annual Election Period, you can enroll in a new plan now and the new benefits will come into effect on January 1, 2021.
Also Read: Guide: Medicare Advantage 101
In both benefits and premiums in 2021, there are major increases to Medicare Advantage. For the fourth consecutive year, the number of available plans has risen and is at its highest number ever reported.
There are more than 4,800 Medicare Advantage plans now, a 76 percent improvement over 2017. Out of 33 options provided by eight different insurance providers, the average consumer would be able to select, with some places offering as many as 60 different plans.
Moreover in 2021, the number of Special Needs Plans also grew to almost 1,000, a big leap. This ensures that more individuals have access to additional benefits and low-cost programs to help them control chronic diseases and illnesses.
Social Security beneficiaries are going to get a 1.3% COLA in 2021. That translates to around $20 a month for a person getting an average benefit of $1,500. The COLA would more than cover the $4 rise since the Part B premium jumped to $148.50 as anticipated.
For the first time, insurance providers were allowed to provide enhanced coverage with Medicare Advantage in 2019. In 2019, there were few proposals to provide these new benefits, but the number ticked up marginally in 2020.
There has been a significant rise in the number of plans that provide added benefits in 2021. Over 90 percent of all Medicare Advantage plans now provide fitness, vision, dental, and hearing benefits, and 99 percent provide enhanced telemedicine coverage.
The number of programs providing benefits such as home meal delivery, over-the-counter drugs and devices, and transportation is even more exciting.
Medicare Advantage average premiums fell to $21 in 2021 for the fourth straight year, down from $25 in 2020. Almost 90% of all Medicare Advantage plans have prescription drug coverage for Part D.
The gross out-of-pocket Medicare Advantage will rise to $7,550 in 2021, up dramatically from $6,700 in 2020. The overwhelming majority of insurance providers, however, set their out-of-pocket maximum well below the state cap. In 2020, $4,900 was the average out-of-pocket Medicare Advantage limit.
For Medicare Supplement plans, this year was the year of big changes. The 2015 rules went into effect on January 1, removing all newly qualifying Medicare enrollees from Plan C and Plan F. The implementation of a high-deductible Plan G also occurred this year.
It's quite comforting, after all the developments in 2020, that nothing big is on the horizon for Medicare Supplement plans in 2021. The average Medigap premium is projected to rise from $130 in 2020, but because they are not regulated by the federal government, it's often difficult to estimate premium hikes. You should expect to see average premiums in the range of $145 to $150 if Medigap follows the Medicare Advantage direction and jumps by 9% to 10%.
Note, since the benefits are so varied, there's a wide variety of Medigap premiums. Plan N appears to have the lowest premiums, while the higher ranges are similar to Plan G.
For those with ESRD in 2021, there's good news. In the past, unless an ESRD Special Needs Package was available, people with ESRD were unable to join the Medicare Benefit. Today, however for any Medicare Advantage package provided in their service area, new regulations give assured problem rights to individuals with ESRD.
For individuals who receive Medicare before age 65 because of ESRD, this is a significant shift. Long-standing regulations also allowed Medigap providers to deny coverage outside their Medigap Open Enrollment Period to individuals with ESRD. Even several of the states that adopted legislation requiring insurers to provide Medigap to individuals under the age of 65 have refused to expand the protection to individuals with ESRD.
What this means is that with a Medicare Advantage plan, individuals with ESRD have low-cost opportunities for the first time to manage their health care expenses. You can use the 2020 Annual Election Cycle to browse for a new Medicare Advantage package if that applies to you.
Now is the time to get the information you need to make informed decisions about your Medicare coverage in 2021, with the annual election cycle coming to a close on December 7. Whatever we can, we're here to help. For guidance on how to get the best out of Medicare.
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