After small or no increases the past couple of years, Medicare’s Part B premium will rise sharply in 2020. The basic monthly premium will increase $9.10, from $135.50 a month to $144.60.
The Centers for Medicare and Medicaid Services (CMS) announced the premium increase on November 8, 2019. Not everyone will pay the whole increase, however. Due to a “hold harmless” rule around 70 percent of Medicare recipients’ premiums will not increase more than Social Security benefits, and Social Security benefits are increasing only 1.6 percent in 2020. This “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $87,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits.
Meanwhile, the Part B deductible will go from $185 to $198 in 2020, while the Part A deductible will go up by $44, to $1,408. For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will increase from $170.50 to $176. Medicare coverage ends after day 100. CMS attributed the sudden steep rise in Part B premiums and deductibles on the increased costs of physician-administered drugs.
Here are all the new Medicare payment figures:
- Part B premium: $144.60 (was $135.50)
- Part B deductible: $198 (was $185)
- Part A deductible: $1,408 (was $1,364)
- Co-payment for hospital stay days 61-90: $352/day (was $341)
- Co-payment for hospital stay days 91 and beyond: $704/day (was $682)
- Skilled nursing facility co-payment, days 21-100: $176/day (was $170.50)
So-called “Medigap” policies can cover some of these costs.
Premiums for higher-income beneficiaries ($87,000 and above) are as follows:
- Individuals with annual incomes between $87,000 and $109,000 and married couples with annual incomes between $174,000 and $218,000 will pay a monthly premium of $202.40.
- Individuals with annual incomes between $109,000 and $136,000 and married couples with annual incomes between $218,000 and $272,000 will pay a monthly premium of $289.20.
- Individuals with annual incomes between $136,000 and $163,000 and married couples with annual incomes between $272,000 and $326,000 will pay a monthly premium of $376.00.
- Individuals with annual incomes above $163,000 and less than $500,000 and married couples with annual incomes above $326,000 and less than $750,000 will pay a monthly premium of $462.70.
- Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $491.60.
Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $87,000 and less than $413,000 will pay a monthly premium of $462.70. Those with incomes greater than $413,000 will pay a monthly premium of $491.60.
The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premiums. So the income reported on a beneficiary’s 2018 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2020. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If a beneficiary’s MAGI decreased significantly in the past two years, she may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.
Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will decrease by 14 percent in 2020, from an average of $26.87 in 2019 to $23 in 2020.
For Medicare’s press release announcing the new premium and deductible amounts, click here.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.