Medicare costs going up in 2021 & the cost of living increase plummets
Medicare costs will be going up in 2021. According to CMS, seniors can expect the following increases:
The standard Medicare Part B premium will increase from $144.60 in 2020 to $148.50 in 2021.
The Medicare Part B annual deductible will increase from $198 in 2020 to $203 in 2021.
The Medicare Part A inpatient hospital deductible will increase from $1,408 in 2020 to $1,484 in 2021.
The Medicare Part A daily coinsurance for days 61 to 90 will increase from $352 in 2020 to $371 in 2021.
The daily coinsurance for lifetime reserve days will increase from $704 in 2020 to $742 in 2021.
The skilled nursing facility coinsurance will increase from $176 in 2020 to $185.50 in 2021.
Most people qualify for premium-free Medicare Part A. According to CMS, about 99% of enrollees pay no premium for Medicare Part A coverage because they have at least 40 quarters of Medicare-covered employment.
Medicare Part B, on the other hand, is not free. In addition to the standard Medicare Part B premium, there are five higher rates based on income bracket. In 2021, the highest premium rate will be $504.90, and this is what individuals who earn $500,000 or more and couples filing joint tax returns who earn $750,000 or more will pay.
Individuals who enroll in Medicare Advantage have to pay the Medicare Part B premium as well as the Medicare Advantage plan premium. However, while Medicare Part B premiums have been increasing, Medicare Advantage plan premiums have been decreasing. CMS says Medicare Advantage premiums will be the lowest they’ve been since 2007.
The Impact on Seniors
While these increases might seem small, they can be significant for retirees living on a fixed income.
Additionally, although seniors will be getting a Social Security retirement benefit raise in 2021, it won’t be much. The Social Security Administration announced that the cost-of-living adjustment (COLA) for 2021 will be 1.3%. The average monthly benefit for all retired workers is $1,523 before the COLA and $1,543 after the COLA, an increase of $20.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA has gone down in recent years, giving seniors smaller increases to keep up with rising costs. The COLA for 2020 was 1.6%, the COLA for 2019 was 2.8%, and the COLA for 2018 was 2.0%.
Also, check out the new Social Security changes for 2021.