Retirement

2021 Medicare Changes: What'll It Cost You?

JAN 14 | 2021
Older woman in hospital.

Annual Medicare updates can make coverage and cost estimates even more complicated, especially when uncertain market and economic factors cloud the outlook. This year’s changes also include continued assistance for COVID-19-related costs. What’ll it cost you? We explain Medicare changes for 2021.

What's New This Year for Medicare

You'll see increases in premiums, deductibles and co-payments for 2021—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.

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Summary of Major Changes

Part A: Hospital Coverage

You'll see increases in your deductible (up to $­­­­1,484) and coinsurance, and potentially in monthly premiums (up to $471). 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.

Part A Premium: Monthly Costs

Time Worked*

2020 Premium Cost

For 10 or more years

$0

Between 7.5 and 10 years

$259 per month

For fewer than 7.5 years

$471 per month

* If you or your spouse worked and paid into Social Security. Source: Medicare.gov. 


Part A Deductible: Hospital Stay Expenses

Length of Stay

What You Pay

Days 1-60

$1,484 deductible, then nothing

Days 61-90

$371 per day

Days 91-150*

$742 per day

Beyond lifetime reserve days*

All costs

* Medicare will only pay for extra "lifetime reserve days" after day 90 for each benefit period (up to 60 days over your lifetime) one time in your lifetime. Source: Medicare.gov. 

Part A Coinsurance: Skilled Nursing Facility Expenses

Length of Stay

What You Pay

Days 0-20

$0

Days 21-100

$185.50 per day

After 100 days

All costs

Source: Medicare.gov. There is no deductible, but Medicare will only cover up to 100 days if you meet very specific criteria.

Part B: Medical Insurance Under Medicare

The Part B premium increase in 2021 starts at $148.50 for the lowest income groups. This year’s higher Social security benefit amount—a 1.3% COLA increase—may help offset some of these new costs.

Part B deductibles increased to $203.00. After meeting your deductible, you typically pay 20% of the Medicare-approved amount for most doctor services (including while you're a hospital inpatient), outpatient therapy and durable medical equipment.

Also remember, those who were eligible to enroll on Jan. 1, 2020, and later will no longer be able to access Part B coverage through Medigap C and F.

Part B Premiums: Costs Based on Income

Singles

Couples

Part B Premium

$88,000 or less 

$176,000 or less

$148.50

$88,001 - $111,000

$176,001 - $222,000

$207.90

$111,001 - $138,000

$222,001 - $276,000 

$297.00

$138,001 - $165,000

$276,001 - $330,000

$386.10

$165,001 - $499,999

$330,001 - $749,999

$475.20

$500,000 or above

$750,000 or above

$504.90

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 2021 the 2019 tax return would apply).

Premiums also increased this year, depending on your income. The maximum Part D deductible increased to $445, although actual amounts will vary depending on your coverage plan.

Part D Premiums: Costs Based on Income

Singles

Couples

Part D Premium

$87,000 or less

$176,000 or less

Your plan premium

$88,001 - $111,000

$176,001 - $222,000

$12.30

$111,001 - $138,000

$222,001 - $276,000

$31.80

$138,001 - $165,000

$276,001 - $330,000

$51.20

$165,001 - $499,999

$330,001 - $749,999

$70.70

$500,000 or above

$750,000 or above

$77.10

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 2021 the 2019 tax return would apply).

Use the Medicare Plan Finder to Compare

The Medicare Plan Finder tool  includes 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 2021 Medicare & You handbook.

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The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.