Medicare cost in 2020 will be on the rise. These changes, while not significantly higher, outpace the Social Security cost-of-living adjustment and will effect many seniors who are on a fixed income. The Centers for Medicare and Medicaid services (CMS), officially released news on November 8, 2019 of the new Medicare cost 2020 changes. Medicare Part A and Medicare Part B cost will be increasing, as will certain components of Medicare Part D. Medicare Advantage plans will see average cost being lowered, and additional benefits added.
So how much will Medicare cost in 2020?
Medicare Part A Premiums and Deductibles | Medicare Increase 2020
Most people in America do not pay a premium for Medicare Part A since they have worked and paid taxes into Medicare over their lives. Other Medicare Part A cost include deductibles and some coinsurance on certain services. For seniors in America who do not have a Medicare supplement or Medicare advantage plan, these Part A cost can add up.
The Medicare Part A deductible 2020 will be $1,408, which is a $44 increase from the 2019 Part A deductible of $1,364. Several other Part A related cost are also increasing. The daily coinsurance four days 61 through 90 in the hospital are going from $341 in 2019 up to $352 in 2020. The daily coinsurance for lifetime reserve days in the hospital is also rising from $682 in 2019 up to $704 in 2020. The skilled nursing facility coinsurance under Medicare Part A was $170.50 in 2019 and will rise to $176 in 2020.
For people who have not worked 40 quarters during their lifetime, but have worked at least a minimum of 30 quarters, their Medicare Part A premium will be $252 per month, which is a $12 increase from 2019. For those who have worked less than 30 quarters, the full premium for Medicare Part A will be $458 a month in 2020 which is an increase of $21.
Keep in mind most Americans have Medicare supplements or Medicare advantage that cover many of these coinsurance and co-pay out-of-pocket cost. Also, most Americans will NOT pay a premium for their Part A, or a Medicare deductible in 2020 for Part A (who have supplemental coverage) .
2020 Medicare Part B Premiums and Deductibles
Unfortunately, for a second year in a row we are seeing the Medicare Part B premium and deductible increase. The standard Medicare Part B premium 2020 will be $144.60, which is an increase of $9.10 from the $135.50 Part B premium in 2019. The Medicare Part B deductible 2020 for beneficiaries is rising to $198, which is a $13 increase from the annual deductible of $185 in 2019.
For individuals who earn over a certain amount the 2020 medicare premiums are actually even more expensive. IRMAA stands for income related monthly adjustment amount, and effects roughly 7% of Americans regarding their Medicare Part B premium.
The table below shows what the IRMAA premiums are for 2020. Beneficiaries who file an individual tax return above $87,000, or a joint tax return over $174,000 are subject to a higher 2020 Part B premium. These individuals however are charged the same 2020 Medicare Part B deductible, as those who are at the standard income rate.
Medicare Part D Prescription Drug Changes for 2020
One good thing in 2020 regarding Medicare part D will be the full closure of the donut hole.
Well sort of….
In 2020 technically there still will be a Medicare Part D donut hole, however both generic and name brand medications will cost beneficiaries (who reach the donut hole) a 25% coinsurance versus a previous higher coinsurance. At one point years ago beneficiaries had to pay 100% of the drug cost while in the Part D donut hole, so this is an improvement.
The standard Part D deductible will increase to $435 in 2020, which is up from the standard deductible of $415 in 2019. Unfortunately one of the largest increases seen regarding Medicare Part D is the catastrophic coverage threshold. In 2020 there will be a large jump from $5,100 in 2019 up to $6,350 in 2020.
In the event a person pays $6,350 in out-of-pocket cost, they would enter into the other side of the donut known as catastrophic coverage. Here, prescription drug cost for beneficiaries drop significantly for the remainder of the year. Many seniors who hit the donut, typically do so at the end of the year, and never hit this phase.
As for the Medicare Part D late enrollment penalty, we do not yet know what that will be in 2020. There should be more information released at the first of the year by CMS regarding what it will be.
Medicare Supplement Changes for 2020
First dollar coverage plans have been eliminated in 2020 for those who become eligible for Medicare after January 1st 2020. Those plans include Medicare Supplement Plan C, Medicare Supplement High Deductible Plan F, and the very popular Medicare Supplement Plan F. This is no surprise as the Medicare access and chip re-authorization act of 2015 stated this would take place in 2020.
Those Medicare individuals who are already on one of the three plans mentioned will be allowed to keep their plan and potentially shop for other like plans as well. These beneficiaries will not be effected by the 2020 Medicare Supplement changes.
Medicare Supplement Plan G and Medicare Supplement Plan N will be the two most popular plans in 2020. Depending on what state you reside in, there are several companies that have vary competitive rates for Plan G and Plan N. AARP Medicare Supplement Plans and Aetna Medicare Supplement Plans are looking competitive in 2020.
2020 Medicare Advantage Plans
In addition to dental, fitness, vision, and hearing benefits, many Medicare Advantage plans in 2020 will be offering limited personal supports and services. These benefits will not substitute for Long-Term Care, however they will make it easier for many seniors, who have chronic or severe conditions, to stay in their own homes. According to CMS, “on average, Medicare Advantage premiums in 2020 are expected to decline 23 percent from 2018.” CMS projects that around 24 million people will enroll into Medicare Advantage plans in 2020. So far, about a third of Medicare beneficiaries are in Medicare Advantage plans already. There are currently around 3,200 Medicare Advantage plans across the United States. Medicare Advantage Special Needs Plans (SNPs) are on the rise across the US as well. The will be an expected 855 SNPs available in 2020.
Social Security cost of living adjustment for 2020
Will Social Security Benefits go up in 2020?
Over 68 million Americans will see an increase of 1.6% of their Social Security and supplemental security income in 2020. While this is a positive thing, many seniors are frustrated and upset at the fact that their Medicare premiums and deductibles continue to rise eating up this cost-of-living adjustment.
What’s your take on the matter? Should the Social Security adjustment be higher than the increases in Medicare cost each year? Leave us your comment below and tell us your thoughts.