Learning Center > Medicare in 2021: Costs, Premiums, & Deductibles

Medicare in 2021: Costs, Premiums, & Deductibles

The transition from 2020 to 2021 offers many opportunities for people on Medicare. Whether you use Original Medicare, Medicare Advantage, or Medicare Supplement Insurance, you’ll find plenty of changes on the horizon.

In this guide to 2021 changes to Medicare, we’ll review what happened during 2020, and dive into the Medicare changes and opportunities for 2021.

Review of 2020 Medicare Changes

To say that a lot happened in 2020 is a cosmic understatement. The big disruptor, of course, was COVID-19. The pandemic led to some sizable changes in the Medicare program.

Some of the highlights from 2020 include:

  • Medicare Supplement (Medigap) Plans C, F, and High Deductible F (HDF) were no longer available to newly-eligible beneficiaries as of 1/1/2020.
  • For the second year in a row, the infamous “Donut Hole” was closed for Part D drug plans.
  • Medicare expanded access to telehealth/virtual doctor appointment services.
  • Many insurance companies, including the major Medicare Advantage plan sponsors, reduced or waived copayments for COVID-19-related care.

Other than the COVID-19-related changes, the loss of Medigap Plans C, F, and HDF was probably the biggest change to Medicare for 2020. Those plans became unavailable for beneficiaries who first became eligible after 12/31/2019.

This leaves Plan G as the most comprehensive Medigap plan available to all new Medicare beneficiaries. This plan will cover 100% of your Medicare deductibles, copayments, and coinsurance except for the Part B deductible. You’re responsible for the first $198 in Part B expenses for 2020.

2021 Medicare Costs

2021 Medicare Part A Costs

Most people don’t pay a Part A premium because they paid Medicare taxes while working. So if you don’t get premium-free Part A, you pay up to $471 each month.

Hospital Stays

In 2021, you pay:

  • $1,484 deductible per benefit period.
  • $0 for the first 60 days of each benefit period.
  • $371 per day for days 61–90 of each benefit period.
  • $742 per “lifetime reserve day” after day 90 of each benefit period (up to a maximum of 60 days over your lifetime).

Skilled Nursing Facility Stays

In 2021, you pay:

  • $0 for the first 20 days of each benefit period.
  • $185.50 per day for days 21–100 of each benefit period.
  • All costs for each day after day 100 of the benefit period.

Medicare Part B Costs

Most people will pay the Part B premium of $148.50 for 2021, but Social Security can share your exact Part B premium amount.

You can also refer to the 2021 Medicare Costs guide from Medicare.gov for a complete breakdown of Medicare Part B premiums.

Medicare Advantage Plan Changes For 2021

Many of the most exciting and notable 2021 changes to Medicare encompass Medicare Advantage plans. These plans, which are also known as Part C plans, are a private insurance alternative to Original Medicare.

Medicare Advantage And ESRD

The single biggest piece of news about Medicare Advantage for 2021 relates to those with End Stage Renal Disease (ESRD), also known as kidney failure.

Beginning 1/1/21, Medicare beneficiaries with ESRD will be able to get coverage through Medicare Advantage plans.

Prior to 2021, Medicare Advantage plans were generally able to exclude people with ESRD. This left ESRD patients in a tough spot, since under Original Medicare Part B, they paid 20% of the cost of dialysis. And this can get expensive very quickly since there was no out-of-pocket cap on their expenses under Original Medicare.

Everyone with ESRD will now be able to get Medicare Advantage coverage. This may not reduce the amounts ESRD patients pay early in the year, since many Medicare Advantage plans charge a 20% coinsurance for dialysis as well.

However, the great news for ESRD patients is that every Medicare Advantage plan has an annual out-of-pocket maximum. So once ESRD patients hit their annual spending caps, they’re not required to pay for any more medical expenses the rest of the year.

Medicare Advantage And Hospice Benefits

Another 2021 change to Medicare Advantage is a small test program for delivering hospice benefits.

Historically, hospice coverage was provided by Original Medicare, even if you were in a Medicare Advantage plan. Starting in 2021, 53 Medicare Advantage plans across the country will provide hospice and palliative care. This is a very small number of plans, so it won’t affect most people at this point. However, if the test program works, you may see more Medicare Advantage plans offering this benefit in the future.

Extra Benefits Through Medicare Advantage Plans

Medicare Advantage is the subject of other big 2021 changes to Medicare. Beginning in 2021, additional benefits will be available.

Extra benefits are benefits offered by Medicare Advantage plans that are not covered by Original Medicare. Examples may include:

  • Dental coverage
  • Vision and hearing coverage
  • Chiropractic care

For 2021, new Medicare benefits will be available. Many of them are designed to help you get care at home, and lend some support to caregivers.

The new extra Medicare benefits in 2021 available through some Medicare Advantage plans include:

  • Caregiver support
  • Adult day health services
  • In-home support services
  • Therapeutic massage
  • Acupuncture (for chronic low back pain only – this is also now covered under Original Medicare)

But these extra benefits are not required or guaranteed. Instead, they are optionally provided by Medicare Advantage plans, and they can be changed or discontinued from year to year.

Still, the availability of adult day health services and caregiver support will be beneficial for many of those on Medicare who struggle to care for themselves.

For 2021, Medicare Advantage plan premiums are lower on average than in the past. In fact, the average Medicare Advantage plan premium is expected to be 11% lower in 2021 than in 2020.

For 2021, the average Medicare Advantage plan premium will be $21 per month. On the other hand, the annual out-of-pocket maximum for in-network services is rising to $7,550. This is the highest it can be. Many plans will continue to offer lower out-of-pocket maximums.

2021 Changes To Medicare Drug Plans

The other big news in 2021 changes to Medicare is the Part D Senior Savings Model. This model program, which is essentially a five-year test, will cap the price of a 30-day supply of many insulins at $35.

Under this new program for 2021, beneficiaries will have access to about 1,700 MAPDs (Medicare Advantage plans with Part D drug benefits) and stand alone Prescription Drug Plans that cap the cost of insulin.

Another great detail about this program is that the cost for insulin won’t change, even if you enter the coverage gap during the year. You’ll still pay the same capped copayment. In addition, you won’t have to meet a deductible to get the $35 copay price. While not every plan has chosen to participate, CMS expects there to be at least one plan in all 50 states, the District of Columbia, and Puerto Rico.

Given the effect of diabetes on the kidneys, patients with ESRD are in position to grab some great new benefits for 2021 and beyond.

How To Prepare For 2021 Changes To Medicare

For starters, you should make note that we expect a slight increase in Original Medicare costs, for 2021. Though we still don’t know what they’ll be, we expect there to be some increase in the Part B premium, even with the caps that will limit the total rise in costs. You can expect the same thing with deductibles.

As with a normal Medicare Open Enrollment Period, also called the Medicare Annual Election Period (AEP), you should review your current coverage to see if switching plans for 2021 makes sense.

New plans are available each year, so Medicare beneficiaries have until December 7 of each year to make a change to their plans for the following year.

When comparing plans during the Medicare Open Enrollment Period, be sure to look at:

  • The monthly premium (if any)
  • Annual deductibles (if any)
  • Cost structure, like copays and coinsurance amounts for Medicare Advantage and Prescription Drug Plans
  • Out-of-pocket maximum amounts for Medicare Advantage plans
  • Networks of doctors and medical facilities for Medicare Advantage plans

Tip: It’s important to not just jump into a new plan because it has one appealing feature. You want to make sure that your doctors accept any new plan and that your current medications will be covered.

If you use insulin, you may want to consider one of the standalone Prescription Drug Plans or MAPD plans participating in the Senior Savings Model program, if available. It’s estimated that those on insulin could save more than $400 per year on average.

Besides savings on insulin through the Senior Savings Model program, ESRD patients who don’t currently have Medicare Advantage plan coverage should consider it for 2021.

Moving to Medicare Advantage could help ESRD patients in 2 different ways:

  • Moving from Original Medicare to Medicare Advantage
  • Moving from Medicare Supplement Insurance to Medicare Advantage

In the first case, you can take advantage of the out-of-pocket spending cap that a Medicare Advantage plan can offer. The out-of-pocket cap could be a real benefit for ESRD patients since it’s not only dialysis treatments that could count against the Medicare out-of-pocket maximum (OOPM). All spending on Medicare-approved services and procedures count towards the OOPM, so an ESRD patient might “max out” their spending during 2021 and get substantial relief the rest of the year.

On the other hand, if you have ESRD and are currently covered by a Medigap (Medicare Supplement) plan, you might be able to save money on your monthly premium by switching to Medicare Advantage.

And you might save money or come close to breaking even by switching from Medigap to Medicare Advantage, depending on the premiums and out-of-pocket maximums for plans in your area. Just be sure you run the numbers before making this move.

Note: It can be difficult to get Medicare Supplement insurance coverage back after you move away from it. You might have to go through medical underwriting, which means you may be declined coverage as an ESRD patient with a pre-existing condition, unless you qualify for a guaranteed issue period.

Due to the complexities of Medigap coverage, it’s a great idea to talk to a licensed insurance agent to see if switching to Medicare Advantage is a good idea.

Get Help With Medicare

If you still have questions about 2021 changes to Medicare and how they impact you, call 800-620-4519 to get help from one of our licensed insurance agents.

Or you can try our free Medicare plan comparison tool to find Medicare plans in your area. There is no obligation to enroll in a plan.

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 a donut with a bite as a visual metaphor for the Medicare Donut Hole

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