Every year Medicare changes and 2020 is no different. Below we will go over all the changes, how they will affect you, and what you need to do!
Medicare Part A changes in 2020
Part A covers hospital services for Medicare beneficiaries. Most people do not have to pay anything for Part A; you or a spouse working for at least 40 quarters will qualify you for premium-free Part A. If you do have to pay for Part A, your rate is going to be increasing. If you have worked at least 30 quarters, you will be paying $252/month for Part A in 2020, an increase of $12. If you have worked less than 30 quarters, you will pay $458/month in 2020, a $21 increase.
The deductible and coinsurance amounts will also be changing for Part A. The Part A inpatient deductible in 2020 will be $1,408, a $44 increase from 2019. This covers the first 60 days of inpatient hospital care. Starting on the 61st day, beneficiaries have a coinsurance amount they must pay everyday until day 90. This amount is increasing by $11 to $352 in 2020. After 90 days, beneficiaries must start using their lifetime reserve days, limited to 60 days for life. The cost per day for this is $704 in 2020, increasing from $682 in 2019. Lastly, Part A also covers some skilled nursing care. The daily coinsurance for days 21-100 will be $176, and increase of $5.50.
We know all this can be confusing. Do note, if you have a Medicare Supplement or Medicare Advantage plan, these changes will probably not affect you since most supplements and advantage plans will cover these Part A charges. If you have any questions about these changes or Part A coverage, contact Cardinal or go to Medicare.gov.
Medicare Part B changes in 2020
Part B, which covers doctor and outpatient services, is going to be the most noticeably changed in 2020. The monthly premium, which almost all Medicare beneficiaries pay, is increasing to $144.60 in 2020 from $135.50 in 2019. Since Social Security is getting a COLA increase of 1.6% in 2020, nearly all Part B beneficiaries are going to be paying $144.60 monthly for Part B.
Part B also has a yearly deductible. If you are on a Medicare Advantage plan or a Medicare Supplement Plan F and Plan C, you do not have to pay this deductible. If you are on any other Supplement plan or just on Original Medicare (Part A + Part B), you do have to pay the deductible. In 2020, the deductible is increasing to $198, a $13 increase.
Medicare Plan F changes in 2020
There has been a lot of talk about the Plan F going away in 2020. While there are changes happening, the Plan F is not completely disappearing. Due to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), newly eligible Medicare beneficiaries from January 1, 2020 cannot sign up for a Supplement plan which covers the Part B deductible. The only Supplement plans that currently fall under MACRA regulations are Plan C, Plan F, and the high-deductible Plan F. This means that for anyone who was eligible for Medicare, usually meaning you were 65, before January 1, 2020 can keep their Plan F or even switch to a Plan F in the future. Anyone who turns 65 on or after January 1, 2020 cannot sign up for or ever get the Plan F.
There will also be an addition of a new plan, the high-deductible Plan G. This plan functions like a Plan G after you pay the deductible, which will be $2,340 in 2020.
Part D Donut Hole changes in 2020
The great news for Medicare beneficiaries is that the donut hole, or the Medicare Part D coverage gap, is being eliminated in 2020! This does not mean you’ll get your prescriptions for free, but the percentage you pay is dramatically reduced. The donut hole is when consumers have to pay higher prices for their drugs due to having hit the initial coverage limit, which is increasing to $4,020 in 2020. It used to be that when you hit the donut hole, you would pay 100% of your drug costs. This percentage has been steadily reduced, but now, in 2020, the price for both brand name and generic drugs will be at 25% max both before and in the donut hole until you reach catastrophic coverage. In 2020, once you have paid $6,350 for your drug costs, you will move into the catastrophic coverage stage and you will pay significantly less for the rest of the year.
Medicare IRMAA changes in 2020
IRMAA, or the Income Related Monthly Adjustment Amount, is a surcharge high income Medicare beneficiaries pay for their Part B and Part D premiums. Currently, less than 5% of Medicare beneficiaries are charged IRMAA. IRMAA is tiered depending on your income and if you are married or single. The amount each tier pays in 2020 is increasing. The chart below breaks it down. The surcharge will be paid in addition to the Part B premium ($144.60 in 2020) and the Part D premium (varies by the plan you choose).
If you are paying IRMAA, there are ways to possibly avoid it in the future, such as reducing your taxable income, QCDs (Qualified Charitable Distributions), and Roth IRA conversions. Since IRMAA is calculated based on your tax return from two years prior, you can also appeal it if you income has changed due to life changing events. You can learn more about that here.
What isn’t changing with Medicare in 2020?
As you can see, while there are some changes occurring with Medicare, there isn’t anything too big. Coverage and benefits are staying the same as they have been for years. This means though that Medicare is still not going to pay for long term care services. It is estimated that 70% of people turning 65 today are going to need some form of long term care in their life. A plan to pay for this is necessary. Do not forget this when budgeting your costs in retirement; it can wipe out all your hard earned savings in a matter of months.
If you have anymore questions about Medicare, please reach out to us. At Cardinal, our focus is education first.