The Most Important Changes to Medicare

by Nancy

Medicare has become one of the largest insurance programs in the United States, with nearly an estimated 68 million Americans enrolled in the program as of recent years. Medicare is divided into several separate plans, with Medicare Parts A-D being the most common. It is possible to enroll in multiple plans to receive additional coverage, though some parts are not compatible with one another. There is also some crossover among the plans, which can make it confusing to keep track of what benefits are available. To add to the confusion, the benefits of Medicare frequently change from year to year, and this year is no exception.

Recent years saw some of the largest changes to Medicare since the program was first introduced, including several price changes and even the elimination of several plans. Some of the income thresholds have also changed. Some of the biggest changes to Medicare as of 2020 are covered in detail below.

Medicare Part A Changes

Medicare Part A is the largest portion of Medicare plans, since the majority of applicants are eligible for automatic enrollment and do not have to pay any premiums based as part of their retiree or Social Security benefits. In 2019, only 1 percent of beneficiaries were required to pay premiums out of pocket for Part A. One of the changes to Part A is beneficiaries are only covered if either they or a spouse has 40 quarters of work history.

Seniors who have between 30 and 39 quarters of work history pay a smaller premium each month, but it has increased from previous years. Previously, it was $240 a month, but as of 2020 the premium is $252. It is even more expensive for beneficiaries without work history, costing $458 a month as of 2020.

The deductible and coinsurance coverage also changed as of 2020. The deductible increased to $1,408 as of 2020. With Medicare Part A, beneficiaries may use their deductible to cover the first 60 days of inpatient care. Beneficiaries must pay a coinsurance charge for each day after the 60th. As of 2020, the coinsurance cost jumped to $352 for each day additional day, up until the 90th day.

The rules for Part A deductible are different for inpatient hospital stays preceded by any inpatient care days spent at a nursing facility. Only the first 20 days are covered in these instances. For each additional day the beneficiary spends, the deductible is $176 a day.

Medicare Part B Price Increase

The cost of Medicare premiums has gradually been increasing, as of 2020, it shows another bump in prices for Part B. The premium cost jumped by nearly $10, going from $135.50 a month in 2019 up to $144.60 as of 2020. Part of the price increase comes from an increase in projected Social Security cost of living expenses, showing most beneficiaries received roughly $24 each month.

In addition to the premium increase, the deductible for Medicare Part B also increased. The deductible increased to $198 as of 2020, a sharp increase from the $185 deductible in previous years. Fortunately, many Part B beneficiaries receive additional assistance from supplemental coverage to cover the deductible costs.

It is important to note, Medicare Advantage plan, which is a combination plan containing multiple parts, may not share the price increases, even when the plan contains elements of Part B. the price largely depends on the individual plan, so seniors are strongly encouraged to speak with their plan provider to determine whether their deductibles or premiums have changed.

Changes to Medigap Plans

Medigap plans refer to any Medicare supplement plans sold through a private insurance company. These supplemental plans help seniors pay for costs not normally covered by Medicare. Medigap plans use the same labeling system as traditional Medicare plans, though there are additional parts available through Medigap. As of 2020, new applicants are no longer able to purchase Medigap Plan C or F. Beneficiaries who were enrolled in one of these plans before 2020 can renew these plans.

Because some of the plans are no longer available, the costs and coverage for other Medigap plans are likely to change. Whether there are any changes depends on the private insurance provider. Seniors who are interested in purchasing a Medigap plan this year should look over each of the plans to see whether there were any changes from the previous year. Many private companies have created a new Plan G, which provides many of the benefits previously provided in the now discontinued Plan F.

Changes to the Medicare Plan Finder

In previous years, the government announced it was going to make much needed changes to improve the Medicare Plan Finder, which had not been updated in 10 years. Towards the end of last year, the new plan finder was introduced, but applicants had the choice to stick with the old plan finder as well. As of 2020, the old finder was discontinued. While the new finder is overall an improvement, some enrollment assisters were concerned about the new finder being introduced so close to the open enrollment cycle for 2020. These assisters believe some of the plans provided by the updated finder are using information from previous years, so some beneficiaries may have applied for benefits using outdated information.

As a result, a special enrollment period is available for applicants who applied using the new plan finder. Beneficiaries who received different plans from what the plan provider offered must call their Medicare representatives to apply for a new plan.

High-Income Bracket Changes

Several Medicare benefits are determined by the beneficiary’s income bracket. Both parts B and D use separate payments for high-income beneficiaries. The brackets were largely unchanged after being introduced, but in 2020 the brackets were updated to reflect inflation rates. As of 2020, beneficiaries are considered high-income if they earn at least $87,000 each year, or $174,000 for married couples. How much the premiums increase for the high-income bracket changes depending on how much the beneficiary exceeds the threshold, with the increase being anywhere from $200 to $500. Additionally, a new bracket was introduced for beneficiaries who make over $500,000 a year, or $750,000 for married couples.

Improvements to Part D

Medicare Part D only applies to prescription costs, but it is still a popular plan among seniors. Since it was introduced, there has always been confusion regarding what types of medications were covered under Part D. In the past, select brand-name or generic drugs were not covered under Part D, meaning seniors had to pay out of pocket. Over the years, changes have been made to provide greater coverage through Part D, eliminating loopholes which allowed pharmaceutical companies to exclude medication from Part D coverage. Heading into the new year, the process has been simplified, so beneficiaries now receive the same discount whether the medication is generic or brand-name.

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