Medicare 2020: Comparison, premiums, and costs
Medicare costs, including premiums, vary with a person’s circumstances, including income. Premiums for certain parts of Medicare have decreased in 2020, while others have increased.
This article looks at the various Medicare parts, and costs for 2020, including premiums. It also discusses eligibility and enrollment, and ways to reduce costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare is a federal health insurance program that covers healthcare for people in the United States. It has several parts.
- Original Medicare, Part A, comprises of hospital coverage, and Part B covers medical insurance.
- Part C, also known as Medicare Advantage, is an alternative to original Medicare, parts A and B.
- Part D covers prescription drugs.
There are several ways a person can be eligible for Medicare. For example, a person who is aged 65 or older, or is less than 65 and has a disability, is eligible to enroll in the program. Also, a person with end stage renal disease or permanent kidney failure needing dialysis or transplant is also eligible, regardless of their age.
A person must also be a U.S. citizen or permanent legal resident for 5 continuous years and eligible for Social Security benefits, as well as have contributed for a minimum of 10 years.
Medicare premiums can change each year, and across parts A, B, C, and D.
For example, as shown in the chart below, both premiums and deductibles increased for original Medicare parts A and B, from 2019 to 2020.
Part A premiums show a range of premium costs because the amount depends on how many quarters a person worked.
- If a person worked at least 40 quarters and paid Medicare taxes, their Part A premium was zero in 2019 and 2020.
- If a person worked at least 30 quarters and paid Medicare taxes, their premium in 2020 is $252. A person who is married to someone who worked for 30 quarters also qualifies for this premium.
- If a person did not work 30 quarters and did not pay Medicare taxes, their premium in 2020 is $458.
Most people pay the basic premium for Part B. The premium is determined by a person’s modified adjusted gross income (AGI) from the previous two years. For example, the premium for 2020 is based on the modified AGI for 2018.
However, if a person’s income from two years ago is above a certain amount, they will pay the basic premium plus an income-related monthly adjustment amount (IRMAA).
The deductible for Part A is charged for each benefit period, which is the time a person uses inpatient hospital days or skilled nursing facility (SNF) care.
A benefit period starts on the day a person is admitted to an SNF or a hospital and ends after 60 consecutive days of a person no longer being in the facility.
In 2020, a person may have to pay coinsurance for hospital and SNF care.
- In the first 60 days, there is no coinsurance cost.
- From day 61 to day 90 the charge for in-hospital services is $352 each day.
- The charge from day 61 to day 90 in an SNF is $176 each day.
Medicare Part C is also called Medicare Advantage. The policies are offered by private companies and must provide at least the same coverage as Medicare parts A and B.
Advantage plans may also cover prescription drugs, and other benefits such as vision, dental, and hearing care.
Premiums vary among Advantage plans and among the plan providers.
A person pays the Advantage plan premium to the plan provider, and must also pay the Medicare Part B premium.
Medicare Part D provides prescription drug coverage. The policies are offered by private companies that decide which drugs are covered in their plans.
The drug list is called a formulary, and all Part D policies must cover Medicare-allowed drugs, although they may also offer additional drugs.
According to the Centers for Medicare & Medicaid Services (CMS), Medicare spent more than $180 billion on prescription drugs in 2017. However, the Part D average basic premiums continue to decrease, from $34.70 in 2017 to a projected $30 in 2020.
There are several ways a person can reduce Medicare costs, including Medigap, Medicaid, Extra Help, and Medicare savings programs.
Medicare supplement insurance, which is also known as Medigap, is designed to help to fill gaps in Medicare coverage including deductibles, copays, and coinsurance.
There are 10 Medigap plans, each identified by a letter: A, B, C, D, F, G, K, L, M, and N. The plans are standardized across the country, with the exception of Minnesota, Wisconsin, and Massachusetts.
A person can use this online tool to find a Medigap policy.
Medicaid is a means-tested program that can help a person with medical costs and may offer additional benefits. It is a joint federal and state program, and eligibility may differ between states.
A person can check online for the rules in their state.
Extra Help is a federal assistance program that may help a person with Medicare prescription costs, including premiums, coinsurance, and deductibles.
The program reduces annual prescription drug costs for each recipient by approximately $5,000 a year, according to the Social Security Administration (SSA).
A person may automatically qualify for the program, or can also check online to see if they qualify for Extra Help.
Medicare savings programs
There are four Medicare savings programs, designed to help a person with a low income. Each program has different eligibility rules, and also may offer different benefits.
The programs include:
- Qualified Medicare Beneficiary (QMB) program
- Specified Low-Income Medicare Beneficiary (SLMB) program
- Qualifying Individual (QI) program
- Qualified Disabled and Working Individuals (QDWI) program
A person can check with their state to find out about eligibility and benefits.
Medicare costs for 2020 have generally increased, although some parts of the program have seen premium decreases. Monthly premiums vary from zero to more than $450, depending on the plan, a person’s eligibility, and healthcare needs.
Several programs may help a person reduce their Medicare costs.
The information on this website may assist you in making personal decisions about insurance, but it is not intended to provide advice regarding the purchase or use of any insurance or insurance products. Healthline Media does not transact the business of insurance in any manner and is not licensed as an insurance company or producer in any U.S. jurisdiction. Healthline Media does not recommend or endorse any third parties that may transact the business of insurance.