Medicare Part A and Medicare Part B premiums, deductibles, and coinsurance amounts for 2021 were recently released by the Centers for Medicare & Medicaid Services [CMS] and you can find the announcement here. We’ve compiled a summary of the most important change below.
Changes to Medicare Part A Premiums and Deductibles
According to the CMS, 99% of Medicare beneficiaries are not required to pay a premium for Part A, because most are covered by working and paying Medicare taxes for 40 quarters during their life, or they are married to someone who has 40 quarters of coverage. Medicare Part A covers your inpatient hospital care, skilled nursing facilities and other home health services.
The deductible for inpatient hospitalizations covered by Part A will see an increase of $76 to $1484 in 2021. This deductible covers the beneficiary’s share of cost for the first 60-days of in-patient hospital care during a benefit period.
For stays that are longer than 60 days, there will be a charge of $371 per day from the 61st day to the 90th day during a benefit period. This is a $19 daily increase from 2020. If you require any of the 60 days allotted for lifetime reserve days, your coinsurance will be $742 per day, which is up $38 from last year’s cost.
If a beneficiary requires inpatient skilled nursing care, they will pay a daily coinsurance of $185.50 for days 21 through 100 of their care during the benefit period. This is an increase of $9.50 from 2021. Here’s a summary of these changes:
| Service | 2020 | 2021 | Change |
| Inpatient Hospital Deductible | $1408 | $1484 | Increased by $76 |
| Day 61-90 Hospital Coinsurance | $352 | $371 | Increased by $19 / day |
| “Lifetime Reserve Day” Coinsurance | $704 | $742 | Increased by $38 / day |
| Skilled Nursing Facility Coinsurance | $176 | $185.50 | Increased by $9.50 / day |
Premium Changes for Those with Fewer Than 40 Quarters of Work
Those enrolled that are of the age 65 and older but do not have the 40 quarters of coverage, in addition to people with certain disabilities, can pay a monthly premium to voluntarily enroll in Medicare Part A. People who have at least 30 quarters of coverage or who married someone with 30 quarters of coverage may buy into Part A at a reduced monthly premium. The monthly premium for those individuals is $259, which is an increase of $7 from 2020.
In some cases, individuals such as those who have exhausted other entitlements or uninsured aged individuals with less than 30 quarters will be required to pay the full premium amount of $471 a month. The full premium increased $13 from last year’s $458 total.
Medicare Part B
As a quick reminder, Medicare Part B covers medical services that Medicare Part A does not, such as outpatient services, physician services, portions of home health services, durable medical equipment, and several other medical and health care services. Each year the premiums are adjusted in accordance with the Social Security Act.
Those enrolled in Medicare Part B will see a slight increase in their premiums and deductibles from what they paid in 2020. The standard premium was $144.60 in 2020 and will raise by $3.90 to a total of $148.50 a month for 2021. The deductible is now set at $203, which is a $5 increase from 2020’s $198 mark. The following table summarizes the changes:
| Cost | 2020 | 2021 | Change |
| Standard Premium | $144.60 | $148.50 | Increase of $3.90 |
| Standard Deductible | $198 | $203 | Increase of $5 |
Income Related Adjustment Amount [IRMAA]
A beneficiary’s Part B premium is based on his or her Modified Adjusted Gross Income [MAGI] as reported on their tax return 2 years ago. MAGI is defined as adjusted gross income (line 7 of IRS form 1040) plus tax-exempt interest (line 2a on form 1040). The adjustments related to income only affect about 7% of those that have Part B. See the table below for Part B premium and related IRMAA that applies to higher-income beneficiaries:
| Individual Tax Return with income: | Joint Tax Return with Income | Income Related Monthly Adjustment | Total Monthly Premium |
| $88,000 and below | $176,000 and below | $0.00 | $148.50 |
| $88,000.01 to $111,000 | $176,000.01 to $222,000 | $59.40 | $207.90 |
| $111,000.01 to $138,000 | $222,000.01 to $276,000 | $148.50 | $297.00 |
| $138,000.01 to $165,000 | $276,000.01 to $330,000 | $237.60 | $386.10 |
| $165,000.01 to $499,999.99 | $330,000.01 to $749,999.99 | $326.70 | $475.20 |
| $500,000 or more | $750,000 or more | $356.40 | $504.90 |
Contact Meld Financial
If you need help planning your retirement or understanding your Medicare options, reach out to the team a Meld Financial. At Meld, we will develop your Financial Fingerprint™, a financial plan which is quick to assemble, easy to understand and simple to modify as your circumstances change.
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