In a recent post, we shared information about the Social Security cost-of-living increase and some other updated parameters for that program. We stated that we would pass along the new Medicare numbers when they became available, and that time is upon us.
Four Part Program
Medicare is broken up into four distinct parts, and they correspond to the first four letters of the alphabet. Part A is the hospitalization coverage, and Part B pays 80 percent of costs associated with covered treatments that are provided by doctors and other health care professionals.
You can utilize Part C to bundle together all the coverage and use your benefit to purchase private insurance that will typically fill some of the Medicare gaps. Part D is the prescription drug portion of the program.
Part A Deductible and Coinsurance Increases
You do not have to pay a monthly premium for Medicare Part A, but there is an annual deductible. It has been $1408 this year, and it will rise to $1484 when the new year rolls around.
This is all you have to pay for the first 60 days of hospitalization, but coinsurance payments are required for days 61 through 90. The daily coinsurance for these days will be $371 next year, which is a $19 day increase over the coinsurance this year.
Beneficiaries get 60 lifetime reserve days that cover hospital stays that exceed 90 days in duration, but the daily coinsurance is considerably higher. It is $704 in 2020, and it will rise to $742 today in 2021.
Part B Premiums and Deductible
You do have to pay a monthly premium for Part B Medicare coverage, and the exact amount will depend upon your income tax filing status. For individual filers that claim $88,000 a year or less, the premium is $144.60 during the current calendar year, and it will go up by $3.90 next year.
You can visit this page on the Centers for Medicare and Medicaid Services site to see the premiums for all the different ascending brackets.
The Continuing Appropriations Act, 2021 and Other Extensions Act (H.R. 8337) was enacted to fund the government in light of the economic impact of the pandemic. A provision contained within it limited the Part B increase to no more than 25 percent of what it would have been under normal circumstances. This is why the increase is so modest this year.
Part B premiums are automatically deducted from the Social Security direct deposits of beneficiaries. In an ordinary year with no extenuating circumstances, they would be “held harmless” if the Part B increase exceeds the Social Security cost-of-living adjustment. This means that the Social Security benefit cannot be reduced.
In addition to the premiums, there is a modest annual deductible for this coverage. It is going to rise from $198 to $203.
Part C and Part D
There are thousands of different Medicare Advantage Plans that fall under part C, and the premiums for this coverage have actually been going down over recent years. Since there are so many different options, we cannot give you all the numbers, but the average has been $25 in 2020.
The same dynamic exists with the Part D plans, because there are about 1600 of them. You can visit the find a 2021 Medicare plan page on the Medicare.gov website to obtain all the details.
Access Your Free Estate Planning Worksheet
We have many resources that you can tap into on this website, and one of them is our estate planning worksheet. This tool has been carefully prepared to give you a more thorough understanding of the process, and it is being offered free of charge.
You should definitely take advantage of this opportunity, and you can head over to our worksheet page to get your copy.
Need Help Now?
We are here to help if you are ready to work with a licensed attorney to develop a custom crafted estate plan. You can schedule a consultation appointment right now if you give us a call at (585) 546-1734, and we have a contact form on this site you can use to send us a message.
- How Estate Planning for a Family May Trap the Unwary Practitioner - August 31, 2022
- State Income Taxation of Social Security Benefits - August 24, 2022
- Understanding Tax Apportionment Clauses - August 17, 2022
