The Medicare program recently announced the 2021 costs for Medicare Part A and Part B. These costs take effect on January 1, 2021.
Medicare Part A
Medicare Part A covers inpatient hospital care, care in a skilled nursing facility (up to 100 days), some home health care, and hospice services. The costs next year will be:
Premium: Most people get Part A for free because they, their spouse, or- in some cases- their parent have paid Medicare taxes while working. However, for those who must buy Part A, the monthly premium in 2021 can be as much as $471.
Hospital Stay: The inpatient deductible is $1,484 per benefit period. If someone is in the hospital for longer than 60 days, their cost-sharing will be $371/day for days 61-90 and $742/day for days 91-150.
Skilled Nursing Facility Stay: Medicare can cover up to 100 days in a skilled nursing facility when someone meets the criteria for Medicare to pay for this care. There is no cost for care for the first 20 days. For days 21-100, the beneficiary will have a daily co-pay of $185.50.
Medicare Part B
Medicare Part B covers outpatient care such as doctor visits, outpatient hospital services, diagnostic tests, ambulance services, durable medical equipment, mental health services, and more. The costs next year will be:
Premium: Everyone on Medicare is subject to a monthly Part B premium. In 2021, the standard premium will be $148.50/month (up from $144.60 in 2020). Most people will pay this premium amount next year.
A small percentage of Medicare beneficiaries will pay a slightly lower amount because of Medicare's hold-harmless provision. This rule protects people who have their Part B premium deducted from their monthly Social Security check from a Part B premium increase that would exceed their Social Security benefits increase. Because of this rule, these beneficiaries will not receive a lower net Social Security benefit in 2021 than they received in 2020. Although the cost-of-living adjustment (COLA) for Social Security benefits for 2021 is small (only 1.3%), the COLA is expected to cover the Part B premium increase for most beneficiaries.
People with higher incomes pay a higher premium.
- As a reminder, people with limited incomes and resources can qualify for Medicaid to pay their Part B premium through the Medicare Savings Programs or “Medicare Buy-In”.
- Other Part B Costs in 2021: The annual deductible will be $203. That is the amount Medicare beneficiaries must pay for services before their Part B coverage kicks in. After that, Original Medicare covers 80% of the cost of outpatient physical and mental health services and the beneficiary pays the remaining 20%.
Medicare beneficiaries are responsible for paying the monthly Part A (if any) and Part B premiums regardless of how they get their Medicare – whether through Original Medicare or a Medicare Advantage plan. Individuals with Original Medicare (who use the red, white, and blue card when getting care) and no additional insurance are subject to the Part A and B deductibles and co-insurance amounts described above. Those in a Medicare Advantage plan pay the deductibles, co-insurance, and co-pays set by their plan. Dual eligibles with Medicare and Medicaid insurance use their Medicaid coverage to pay their Part A and B deductibles, co-insurance, and co-pays and should only be charged the small Medicaid co-pay that applies to the service they get.
More information about Medicare Part A and B costs in 2021 can be found here.