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By Al Chingren - First Quarter 2020
Annual Medicare updates can make coverage and cost estimates even more complicated. This year's changes have the potential to ease some Medicare headaches but also introduce some new challenges—and expenses. Let's start from the top.
One of the most noticeable changes was the elimination of the Part D "donut hole," which was the gap in prescription drug coverage that often resulted in high out-of-pocket costs.
In other cases, you'll see increases in premiums, deductibles and co-payments for 2020—so you may need to budget for additional expenses. Some of the additional costs you'll see are due to an annual Social Security cost-of-living adjustment (COLA) increase. Other costs may increase with the intent of reducing rising costs to the Medicare program.
You'll see increases in your deductible (up to $1,408) and coinsurance, and potentially in monthly premiums (up to $458). Note that you won't pay a premium for Part A if you or your spouse worked and paid into Social Security for at least 10 years.
[Expand to see detailed 2020 Part A premiums, deductibles and copayments.]
* If you or your spouse worked and paid into Social Security. Source: Medicare.gov. Based on 2020 costs.
* Lifetime reserve days. Medicare will only pay for extra "lifetime reserve days" one time in your lifetime. Source: Medicare.gov. Based on 2020 costs.
Source: medicare.gov Based on 2019 costs. There is no deductible, but Medicare will only cover up to 100 days if you meet very specific criteria.
The Part B premium increased in 2020, starting at $144.60 for the lowest income groups. This year’s higher Social security benefit amount—a 1.6% COLA increase—may help offset some of these new costs.
Part B deductibles also changed. In addition to the cost increase to $198 for all beneficiaries, availability is more limited for new enrollees. Those who are eligible to enroll on Jan. 1, 2020, and later will no longer be able to access Part B coverage through Medigap C and F.
[Expand to see 2020 Part B premiums.]
Source: Centers for Medicare & Medicaid Services. Income based on Modified Adjusted Gross Income (MAGI), which includes tax-exempt interest income. MAGI is based on income reported on the tax return from two years prior (e.g., for 2020 the 2018 tax return would apply).
Premiums also increased this year, depending on your income. The maximum Part D deductible increased to $435, although actual amounts will vary depending on your coverage plan.
[Expand to see 2020 Part D premiums.]
The Affordable Care Act closed the Part D prescription drug coverage gap. Beneficiaries that experienced the donut hole phase between initial coverage and catastrophic coverage will now be responsible for paying 25% of costs up to the point where catastrophic coverage begins. But the change still may not lower your expenses.
For example, after the deductible, beneficiaries are responsible for paying 25% of total costs up to $4,020 in total annual costs. Up to $6,350 in costs, you’ll pay 25% of the total cost for generic drugs and 25% of the total cost for brand name drugs.
* Based on 2019 Centers for Medicare & Medicaid Services (CMS) figures. The Affordable Care Act (ACA) closes the "donut hole" gradually over several years. Beginning in 2020, beneficiaries will be responsible for 25% of costs instead of the higher percentages reflected in the past donut hole.
The Medicare Plan Finder tool is new this year. It has more comparison options and capabilities than the previous tool. Also available are resources to help you find out what's covered, estimate costs of medical procedures, access your own Medicare information and compare quality of Medicare-participating providers.
Learn more at medicare.gov or in the 2020 Medicare & You handbook.
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