Changes to Medicare for the new year
January 1, 2021
As you may have known or suspected, Medicare is the largest medical insurance program in the U.S. As of October 2020, there are more than 62.9 million people enrolled in Medicare nationwide, according to the Medicare Enrollment Dashboard. Medicare program costs are evaluated each year and the premiums, deductibles and co-pays are adjusted. Here are some of the changes in Medicare for 2021.
Medicare Part A hospital coverage
The vast majority of Medicare beneficiaries do not pay a monthly premium for Part A. They satisfied that obligation during their working years by paying FICA taxes and accruing 40 credits with the Social Security Administration. Those who have not accumulated those credits or quarters can purchase their Part A benefit.
In 2021, those who have accrued 30 to 39 credits will pay $263 each month for Part A, an increase of $9 from 2020. Those who have fewer than 30 credits accumulated will pay $478 each month. The cost in 2020 was $458. The Part A deductible for 2021 is $1,484 per benefit period. This deductible can occur more than once per year as it is based on benefit periods. A benefit period begins when one is admitted into the hospital as an in-patient and stays intact throughout the stay and remains in place for 60 days after discharge. If a person is re-admitted during the post-discharge 60-day period, he is still in the same benefit period and no new deductible will be charged. However, if 60 days elapse and then there is a readmission, it opens a new benefit period and a new deductible is charged. Many Medicare enrollees purchase supplemental coverage, also known as Medigap plans, that pay this deductible.
The Part A co-pays for 2021 are: for hospital day 61 through day 90, beneficiaries will pay $371. The lifetime reserve, days 91 through 150, will cost $742 per day. All Medigap plans offer coverage for these costs. The Part A, Skilled Nursing Facility co-pay will be $185 per day. This is also covered by many of the Medigap plans.
Part B services and products
Moving on to Part B, the premium for 2021 will be $148.50, a gain of $3.90 per month. This amount was actually limited by a federal spending bill passed in October to prevent a higher premium. The projected premium for 2021 was expected to be four times that amount. The Part B deductible for this year will be $203. After this annual deductible has been met, Medicare will pay 80% of the Part B medically necessary services and products and beneficiaries will be responsible for the remaining 20% unless they have some form of supplemental coverage, whether through a Medigap plan or retiree coverage.
Part D prescription drugs
Prescription drug coverage under Medicare has also seen numerous changes for 2021. In Alaska, this year, there are 25 plans available, an increase of one more plan than 2020. The lowest plan premium for a Part D plan dropped significantly from $13.20 to $7.30 per month. However, the annual deductible cap raised from $415 in 2020 to $445 in 2021. Not all plans charge the maximum deductible, but you may pay a higher premium to obtain a lower deductible.
Although the “donut hole” or coverage gap has essentially ended, once you and your plan have together paid out $4,130 in expenditures, you will begin to pay a flat 25% of the cost of your medications, whether generic or brand name. This may be more or less than the co-pay you were paying during the previous coverage level. This will continue until you meet the threshold for entering the catastrophic phase of coverage. In 2021 this amount will be $6,550. This means that if your total out of pocket costs exceed $6,550, you enter the catastrophic phase, where you will pay only $3.60 for generic medications and $8.95 for brand name medications or 5% of the cost of each of your medications, whichever amount is greater. Medicare and your Part D plan pay the other 95% for the rest of the year.
In addition to changes in costs, there are new and updated services covered by Medicare about which you may not have heard. Beginning in 2020, Medicare Part B began to cover acupuncture for treatment of lower back pain. Medicare will pay for up to 12 treatments delivered within a 90-day window. Make sure you receive the service from a provider that accepts Medicare. After you have met the annual Part B deductible, Medicare will pay 80% and you will be responsible for 20% unless you have a secondary coverage.
In response to COVID-19, Medicare has expanded many services. For example, no order from your treating physician is required for COVID-19 testing, and there is no required cost sharing for the testing or an associated visit. Additionally, Medicare covers a variety of inpatient and outpatient services related to COVID-19. The Centers for Medicare and Medicaid services (CMS) is waiving the requirement for a three-day prior hospitalization for coverage at a skilled nursing facility for those who need to be moved in the event of an emergency or disaster.
CMS has issued regulations that require no-cost sharing Medicare coverage of COVID 19 vaccines when they become available.
Medicare has greatly expanded telehealth benefits during COVID-19 in order to allow beneficiaries to remain safely in their homes for medical visits during the pandemic. These services are not limited to COVID-19 related appointments. Regular office visits, mental health visits, preventive health services are included. These visits are covered under Part B, so the $203 deductible and 20 percent co-insurance would apply.
If you have questions about the costs or services provided by Medicare in 2021, please contact the Alaska Medicare Information Office at 1-800-478-6065 (toll-free in Alaska).
Nila Morgan is a Certified Medicare Counselor who works at the Anchorage Senior Activity Center.