Table of Contents:

  1. Medicare Part A
  2. Medicare Part B
  3. Medicare Advantage
  4. Medicare Part D
  5. Medigap


How are Medicare plans and costs changing in 2021?

Medicare Part A

Part A Premiums

Most Medicare Part A beneficiaries did not pay a premium in 2020. That will remain unchanged in 2021. Coverage is still free for the following groups:

  • Individuals turning 65 who have paid (or whose spouse has paid) Medicare taxes for at least ten years.
  • Americans under 65 who have received Social Security disability benefits or Railroad Retirement benefits for at least two years.
  • Americans with ESRD who are receiving dialysis treatment and have paid (or whose spouse/parent has paid) Medicare taxes for at least ten years.
  • Americans with ALS who are receiving Social Security disability payments and have paid (or whose spouse/parent has paid) Medicare taxes for at least ten years.

Beneficiaries who pay for Part A will pay a higher premium than they did in 2020:

  • $259/month for individuals who have paid (or whose spouse/parent has paid) Medicare taxes for 7.5 or more years, up from $252/month last year.
  • $471/month for individuals who have paid (or whose spouse/parent has paid) Medicare taxes for fewer than 7.5 years, up from $458/month last year.

Part A premiums are trending upwards, but they’re actually lower than they were a decade ago.

Part A Deductibles

Medicare Part A has a different kind of deductible than other Medicare plans. Typically, Medicare beneficiaries pay their deductibles on an annual basis. Part A beneficiaries, however, pay a deductible every benefit period. A benefit period begins the day a beneficiary is admitted to a hospital or a skilled nursing facility and ends once they have gone 60 days without treatment. There is no limit to the number of benefit periods a person can accrue.

The Part A deductible has gone up for all beneficiaries:

  • In 2020, Part A beneficiaries paid $1,408/benefit period.
  • In 2021, Part A beneficiaries will pay $1,484/benefit period.

Part A Coinsurance

Medicare Part A deductibles cover 60 days of inpatient care each benefit period. Beneficiaries who require additional inpatient care within a benefit period face a daily coinsurance fee:

  • Beneficiaries will pay $371/day for days 61-90 of inpatient care. This is an increase from $352/day last year.
  • After day 90, beneficiaries must use their lifetime reserve days and pay a $742/day coinsurance fee. This is an increase from $704/day last year.
  • Beneficiaries will pay a $185.50/day coinsurance for days 21-100 of inpatient care in a skilled nursing facility. That is an increase from $176/day last year.

Medicare Part B

Part B costs are increasing across the board in 2020.

Part B Premium

All Medicare Part B beneficiaries pay a standard monthly premium for coverage. High-income beneficiaries pay a higher premium based on the income-related monthly adjustment amount (IRMAA) scale. While premiums have increased, so has yearly income necessary to qualify as “high-income.”

  • In 2021, Individuals with an income below $88,000/year or joint-filing married couples with combined incomes below $176,000/year will pay the standard monthly premium of $148.50/month. In 2020, individuals earning below $87,000/year and joint-filing married couples earning below $174,000/year paid a standard premium of $144.60/month.
  • In 2021, individuals who earn more than $88,000/year or joint-filing married couples who earn more than a combined $176,000/year will pay between $207.90/month and $504.90/month. In 2020, individuals earning more than $87,000/year and joint-filing married couples earning more than a combined $174,000/year paid between $202.40/month and $491.60/month.

Part B Deductible

The Medicare Part B deductible has increased for all beneficiaries. According to the Centers for Medicare and Medicaid Services, this increase is “largely due to rising spending on physician-administered drugs.”

  • In 2021, the Medicare Part B annual deductible is $203. This is an increase from $198 in 2020.

Some Medicare beneficiaries have supplemental insurance that covers their Part B deductible. These include Medigap plans C and F, which are no longer available to newly-eligible beneficiaries.

Medicare Advantage

Medicare Advantage (Part C) plans are an alternative to Parts A and B that often include prescription drug coverage. Premiums have dropped and enrollment has increased consistently over the last several years.

Medicare Advantage Premiums

In addition to their Part B premiums, Medicare Advantage beneficiaries pay an additional monthly premium for their Part C coverage. While costs vary greatly, the average monthly premium for a Medicare Advantage plan is $21/month in 2021. This is down from $23/month last year.

Out-of-Pocket Expenses

Unlike Parts A and B, Medicare Advantage plans place a cap on out-of-pocket expenses. This cap has remained static at $6,700/year since 2011.

Medicare Part D

Part D Premiums

Since Part D plans are provided by private insurance companies, premiums vary significantly from plan to plan. In 2021, the average premium for Part D coverage is $41/month. This is a decrease from $42.05/month last year.

High-income enrollees pay an IRMAA in addition to their standard premium. Both the definition of high-income and the IRMAA amounts have changed since last year.

  • In 2020, individuals earning more than $87,000/year and joint-filling married couples earning more than $174,000/year paid between $12.20/month and $76.40/month in additional fees.
  • In 2021, individuals who earn more than $88,000/year and joint-filling couples earning more than $176,000/year will pay between $12.30/month and $77.10/month in additional premiums.

Part D Deductible

Part D’s annual deductible is the amount a beneficiary must spend before their coverage begins. Medicare sets a limit on the deductible a provider can set.

  • In 2020, the maximum Part D deductible was $435.
  • In 2021, the maximum Part D deductible is $445.

Catastrophic Coverage and Coverage Gaps

Most Part D plans have a “coverage gap.” The term refers to a temporary limit on what the plan will cover once the beneficiary has spent a certain amount. Once beneficiaries have spent enough to reach the “catastrophic coverage” threshold, they’ll pay much less for prescriptions.

  • In 2020, beneficiaries entered the coverage gap after spending $4,020 on eligible drugs and will reach the catastrophic coverage threshold after spending $6,350. After this point, they paid $3.60 for generic drugs and $8.95 for name-brand drugs or 5% of the total cost (whichever was greater).
  • In 2021, beneficiaries will enter the coverage gap after spending $4,130 on eligible drugs and reach the catastrophic coverage threshold after spending $6,550. After this point, they will pay either 5% the cost of their medications or $3.70 for generics and $9.25 for brand-name drugs (whichever is greater).

Medigap

Medigap Plans C and F

As of January 1, 2020, Medigap Plans C and F are no longer available to new Medicare beneficiaries. If you are registering for Medicare for the first time, you will not be able to enroll in these plans. They are not being discontinued entirely, however. Anyone who was enrolled in these plans prior to 2020 can remain enrolled.

Medigap Plan G

Because the high-deductible Plan F is no longer available, Medicare beneficiaries have the option to enroll in a new high-deductible Plan G. The Part B deductible will count toward this plan’s deductible.

 

Information adapted from the Centers for Medicare & Medicaid Services

Additional data and cost information adapted from Kaiser Family Foundation

Medicare Advantage 2021 Spotlight: First Look, 2020. Kaiser Family Foundation.

Medicare Part D: A First Look at Medicare Prescription Drug Plans in 2021, 2020. Kaiser Family Foundation.