As elder law attorneys, we pay close attention to the government programs that senior citizens rely on. Medicare is certainly one of them, and there are adjustments to the out-of-pocket costs each year to account for the cost of living.
The new numbers for 2021 have been released, and we will look at them here.
Part A Deductible and Coinsurance
The Medicare program is broken up into four parts that are distinguished by the first four letters of the alphabet. Part A is the portion of the program that pays for inpatient hospitalization.
You qualify for Medicare and Social Security by accumulating retirement credits when you are paying self-employment or payroll taxes. In 2020, you earned one credit for every $1410 you earned, and the figure for 2021 is $1470.
The maximum annual accrual is four credits. When you have a total of 40 credits, you will qualify for these programs when you reach the eligibility age. If you are married and you have not met this requirement, you would be eligible if your spouse has at least 40 credits.
If you have the 40 credits, you do not have to pay a premium for Part A coverage, but all beneficiaries have to pay a deductible that will cover the first 60 days. It was $1408 in 2020, and in 2021, it has gone up to $1484.
You are responsible for coinsurance for days at 61 through 90, and in 2021, it will be $371 a day. This is a $19 per day increase over the 2020 figure.
Beneficiaries are allotted 60 lifetime reserve days for hospital stays that are longer than 90 days, but the coinsurance is higher. In 2020, it was $704 a day, and this year it will be $742 a day.
Part B Premiums and Deductible
Part B is the portion of the program that pays for treatments that are provided by physicians and other types of health care professionals. The premium was $144.60 during 2020, and has increased to $148.50 for 2021.
This is the standard premium for people that claim $88,000 or less on their taxes. Premiums go up for individuals that report higher incomes, and you can visit the Centers for Medicare & Medicaid Services website to see the premiums for all of the income levels.
The very modest $3.90 increase came about due to a provision contained within the Continuing Appropriations Act, 2021 and Other Extensions Act (H.R. 8337). This spending measure was passed in light of the economic impact of the novel coronavirus. It mandated a 75 percent reduction in the Part B increase that would have been installed under ordinary circumstances.
While we are on the subject of the Part B increase, we should touch upon the “held harmless” provision.
This premium is automatically deducted from the Social Security check of beneficiaries. If the Part B increase exceeds the Social Security cost-of-living adjustment in any given year, the beneficiary is held harmless. Their monthly direct deposit would not be reduced.
In addition to the monthly premiums, there is an annual deductible. The figure is $198 in 2021, and it will be five dollars higher in 2022.
Part C and Part D
Medicare Part C can be used to buy insurance from a private company that bundles all of the respective parts, and the coverage fills some of the gaps. There are over 3000 different plans to choose from, so we cannot provide specific information about the premiums and other details.
However, generally speaking, the premiums for Medicare Advantage Plans have been getting less expensive over the last couple of years.
Part D is the prescription drug component, and this is another type of coverage that you purchase from private insurers that have relationships with Medicare. You have to pay a premium, and there are copayments and deductibles.
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