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Medicare Changes Coming In 2021

By Darren Wurz

 

A new year always means new changes, and the details can get confusing and overwhelming in no time. I’d love to help you wrap your head around the changes to Medicare costs in 2021, and how they might affect your retirement plans. So let’s dive in.

The Nuts And Bolts

Here are some key points to be aware of for Medicare costs in 2021:

  • The Medicare Part A deductible increased to $1,484 for 2021 (up from $1,408 in 2020).

  • Medicare Part A hospitalization coinsurance increased to $371/day after 60 days (up from $352 in 2020).

  • Medicare Part A coinsurance for skilled nursing facilities increased to $185.50/day after 20 days for 2021 (up from $176 in 2020).

  • Medicare Part B premiums have increased to $148.50 for 2021 (up from $144.60 in 2020).

  • 2021 high-income Medicare Part B premiums range from $207.90/month to $504.90/month based on income. (1)

  • The Medicare Part B deductible increased to $203 for 2021 (up from $198 in 2020).

  • Premium costs for Medicare Part C (Medicare Advantage) are at an estimated average of $21/month, the lowest amount since 2007. (2) 

  • Medicare Advantage is available to patients with end-stage renal disease (ESRD) starting in 2021.

  • New categories of telehealth services will be covered for Medicare Advantage recipients, including primary care, dermatology, psychiatry, cardiology, and other services. (3)

  • The Medicare Part D deductible for 2021 is $445 with an out-of-pocket maximum of $6,550. (4)

  • Some Medicare Part D enrollees will be able to receive insulin coverage with a maximum deductible of $35 for a 30-day supply. (5)

Enrollment Periods And Penalties

If you are approaching your 65th birthday, you need to be aware of a critical decision window called the initial enrollment period (IEP), a 7-month period that includes the month of your 65th birthday, three full months before, and three full months after. (6) If you miss the enrollment period, you risk incurring late enrollment penalties unless you meet the conditions to qualify for a Special Enrollment Period. For Part B, your premium will increase by 10% for every 12-month period that you were eligible and didn’t sign up. (7)

Original Medicare Vs. Medicare Advantage

“Original” Medicare consists of Part A (hospital coverage) and Part B (medical coverage). Medicare Advantage (Part C) includes the components of Parts A and B, but is managed by private companies. Part A does not come with a premium if you paid Medicare taxes for at least 10 years, and you will have to pay the Part B premium regardless of whether you choose Original Medicare or Medicare Advantage. Original Medicare typically does not cover prescription drugs, unless you buy an optional Part D plan, whereas most Medicare Advantage plans do cover prescription drugs. Medicare Advantage plans also place an annual cap on your out-of-pocket expenses, after which your plan will cover your medical expenses for the remainder of the year. (8)

Plan Ahead

Medical expenses and coverage are an important part of the picture, along with Social Security and your overall retirement income strategy. As you plan for retirement, it is important to factor Medicare coverage into the equation and understand how your plan will work together with the other vehicles that you put in place to assist with expenses after you retire. Even if you are a long way from retirement or age 65, it is never too soon to start educating yourself about how Social Security and Medicare work and the role they will play in your retirement picture.

 

The most important takeaway here is to work with the right professionals who can guide you through the potential confusion that comes with evaluating your retirement options and the pathway for building your future. Reach out to schedule a no-obligation consultation, and let’s discuss if we’re the right people for you to depend upon during your journey to a comfortable retirement. Contact us at 859-291-9879 or dpw@wurzfinancialservices.com

About Darren

Darren Wurz is a co-owner and financial planner at Wurz Financial Services, an independent, family-owned and operated financial services firm dedicated to helping its clients transition from their working life to a comfortable retirement with confidence. Darren received his master’s of science degree in financial planning from Golden Gate University and also holds the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation. He operates the Northern Kentucky/Cincinnati office of Wurz Financial Services and is an active member of the Northern Kentucky Bar Association, the Northern Kentucky Chamber of Commerce, and the Covington Business Council. To learn more about Darren, connect with him on LinkedIn.

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(1) https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf

(2) https://www.medicarefaq.com/faqs/medicare-changes-in-2021/

(3) https://www.policymed.com/2020/06/cms-expanded-rules-for-medicare-advantage-telehealth.html

(4) https://www.cms.gov/files/document/2021-announcement.pdf

(5) https://www.medicare.gov/coverage/insulin

(6) https://www.aarpmedicareplans.com/medicare-articles/6-timely-medicare-tips-for-turning-65.html

(7) https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-late-enrollment-penalty

(8) https://www.ehealthmedicare.com/medicare-advantage-articles/what-are-the-pros-and-cons-of-medicare-advantage-vs-original-medicare/

 
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