Q: What are the changes to Medicare benefits for 2020? A: There are several changes for Medicare enrollees in 2020:
Part B premiums The standard premium for Medicare Part B increased to $144.60/month in 2020 (up from $135.50/month in 2019). The Social Security cost of living adjustment (COLA) was 1.6 percent for 2020, which increased the average retiree’s total benefit by about $24/month. That’s more than enough to cover the roughly $9 increase in premiums for Part, so the full premium increase applies to nearly all Part B enrollees.
[If a Social Security recipient’s COLA isn’t enough to cover the full premium increase for Part B, that person’s Part B premium can only increase by the amount of the COLA. That’s because Part B premiums are withheld from Social Security checks, and net checks can’t decline from one year to the next.]
Part B deductible The Part B deductible is $198 in 2020 (up from $185 in 2019, and $183 in 2017 and 2018).
Some enrollees have supplemental coverage that pays their Part B deductible. This includes Medicaid, employer-sponsored plans, and Medigap plans C and F. But Medigap plans C and F can no longer be sold to newly-eligible enrollees as of 2020 (people can keep them if they already have them, and people who were already eligible for Medicare prior to 2020 can continue to purchase them). The ban on the sale of Medigap plans that cover the Part B deductible was part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). It’s an effort to curb utilization by ensuring that enrollees incur some out-of-pocket costs when they receive medical care.
Many Medicare Advantage plans have low copays and deductibles that don’t necessarily increase in lockstep with the Part B deductible, so their benefits designs have had different fluctuations over the last few years. [Medicare Advantage enrollees pay the Part B premium plus the Advantage plan premium if the plan has a separate premium. Medicare Advantage plans wrap Part A, Part B, usually Part D, and various supplemental coverage together into one plan, with out-of-pocket costs that are different from Original Medicare.]
Part A premiums, deductible, and coinsurance Medicare Part A covers hospitalization costs. Part A has out-of-pocket costs when enrollees need hospital care, although most enrollees do not pay a premium for Part A. But you’ll have to pay a premium for Part A if you don’t have 40 quarters of work history (or a spouse with 40 quarters of work history).
Part A premiums in 2020 Roughly 1 percent of Medicare Part A enrollees pay premiums; the rest get it for free based on their work history or a spouse’s work history. Part A premiums have trended upwards over time and they increased again for 2020 — although they are actually lower in 2020 than they were in 2010.
The Part A premium for people with 30+ (but less than 40) quarters of work history is $252/month in 2020, up from $240/month in 2019. And for people with fewer than 30 quarters of work history, the premium for Part A is $458/month in 2020, up from $437/month in 2019.
Part A deductible in 2020 Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans). The deductible generally increases each year. In 2019 it was $1,364, but it increased to $1,408 in 2020. The deductible increase applies to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.
Part A coinsurance in 2020 The Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the enrollee needs additional inpatient coverage during that same benefit period, there’s a daily coinsurance charge. In 2020, it’s $352 per day for the 61st through 90th day of inpatient care. The coinsurance for lifetime reserve days is $704 per day in 2020.
For care received in skilled nursing facilities, the first 20 days are covered with the Part A deductible that was paid for the inpatient hospital stay that preceded the stay in the skilled nursing facility. [Medicare only covers skilled nursing facility care if the patient had an inpatient hospital stay of at least three days before being transferred to a skilled nursing facility.] But there’s a coinsurance that applies to days 21 through 100 in a skilled nursing facility. In 2020, it’s $176 per day.
Medigap Plans C and F are no longer available to newly eligible enrollees As a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Medigap plans C and F (including the high-deductible Plan F) are no longer available for purchase by people who become newly-eligible for Medicare on or after January 1, 2020. People who became Medicare-eligible prior to 2020 can keep Plan C or F if they already have it, or apply for those plans at a later date. [Medical underwriting applies in most states if you’re switching from one Medigap plan to another after your initial enrollment window ends.]
Medigap Plans C and F cover the Part B deductible ($198 in 2020) in full. But other Medigap plans require enrollees to pay the Part B deductible themselves. The idea behind the change is to discourage overutilization of services by ensuring that enrollees have to pay at least something when they receive outpatient care, as opposed to having all costs covered by a combination of Medicare Part B and a Medigap plan.
Because the high-deductible Plan F has been discontinued for newly-eligible enrollees, there is a new high-deductible Plan G available instead.
Upgraded Medicare plan finder tool (and a special enrollment period if the tool provided inaccurate or misleading information)
CMS announced in August 2019 that the Medicare Plan Finder tool had been upgraded for the first time in a decade. Both the old and new plan finder tool were available through the end of September 2019. Since then, only the new tool is available, so enrollees used it when shopping for 2020 coverage during the open enrollment period in the fall of 2019. The new tool includes a wide range of improvements and automation, reflecting increasing tech-savviness of new Medicare enrollees.
But some brokers and enrollment assisters have concerns about the new tool and the fact that it was rolled out right before open enrollment. In order to have the new system save the medication information you enter (so you can come back to it later without having to enter it all again), you have to log into your MyMedicare account. This is causing concerns about privacy in situations where a beneficiary needs assistance with the plan comparison and enrollment process. And it makes it more difficult for people who are approaching Medicare eligibility to accurately compare their plan options before enrolling in Medicare.
More concerning, however, is the fact that the plan finder tool appeared to be providing inaccurate information in some cases, or presenting the information in a way that wasn’t clear. On Medicare’s web page about special enrollment periods, the agency has added a grey box with the following information:
If you believe you made the wrong plan choice because of inaccurate or misleading information, including using Plan Finder, call 1-800-MEDICARE and explain your situation. Call center representatives can help you throughout the year with options for making changes.
So there is a special enrollment period available for people who realize that the coverage they’re enrolled in for 2020 is not what they were expecting based on plan finder tool data they used during the fall open enrollment window.
Inflation adjustments for the high-income brackets Medicare beneficiaries with high incomes pay more for Part B and Part D. But what exactly does “high income” mean? Since the income brackets were introduced (in 2007 for Part B, and in 2011 for Part D), the threshold has been set at $85,000 ($170,000 for a married couple). But starting in 2020, the income brackets are being adjusted for inflation. A high-income premium surcharge applies to Medicare beneficiaries who earn at least $87,000/year as of 2020 ($174,000 for a married couple).
For high-income Part B enrollees (income over $87,000 for a single individual, or $174,000 for a married couple), premiums in 2020 range from $202.40/month to $491.60/month, depending on income.
As part of the Medicare payment solution that Congress enacted in 2015 to solve the “doc fix” problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees. These new brackets took effect in 2018, bumping some high-income enrollees into higher premium brackets.
And starting in 2019, a new income bracket was added on the high end, further increasing Part B premiums for enrollees with very high incomes. Rather than lumping everyone with income above $160,000 ($320,000 for a married couple) into one bracket at the top of the scale, there’s now a new bracket for enrollees with an income of $500,000 or more ($750,000 or more for a married couple). People in this category pay $491.60/month for Part B in 2020. The income level for that top bracket — income of $500,000+ for a single individual or $750,000 for a couple — remained unchanged in 2020. But the thresholds for each of the other brackets increased slightly (starting with the lowest bracket increasing from $85,000 to $87,000, and so on; a similar adjustment applied at each level except the highest one).
Medicare Advantage enrollment expected to continue to increase According to CMS, the average Medicare Advantage (Medicare Part C) premiums for 2020 is $23/month. Average Advantage premiums have been declining for the last several years, and the average premium for 2020 is the lowest its been since 2007.
For perspective, a Kaiser Family Foundation analysis found that across Medicare Advantage plans with integrated Part D prescription coverage (MA-PDs), the average premium in 2020 is about $36/month.
[Note that Medicare Advantage premiums are in addition to Part B premiums. People who enroll in Medicare Advantage pay their Part B premium and whatever the premium is for their Medicare Advantage plan, and the private insurer wraps all of the coverage into one plan.]
About 22 million people had Medicare Advantage plans in 2019. Enrollment in these plans has been steadily growing for the last 15 years. The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth. In 2004, just 13 percent of Medicare beneficiaries had Medicare Advantage plans. That had grown to 34 percent by 2019, and the new Medicare Plan Finder tool is designed in a way that could accelerate the growth in Advantage enrollment.
Part D donut hole fully closed as of 2020 (enrollees in standard plans pay 25% of costs) For stand-alone Part D prescription drug plans, the maximum allowable deductible for standard Part D plans is $435 in 2020, up from $415 in 2019. And the out-of-pocket threshold (where catastrophic coverage begins) increased significantly, from $5,100 in 2019 to $6,350 in 2020. The copay amounts for people who reach the catastrophic coverage level also increased slightly in 2020.
The good news is that the Affordable Care Act has been gradually closing the donut hole in Medicare Part D. As of 2020, there is no longer a “hole” for brand-name or generic drugs: Enrollees in standard Part D plans pay 25 percent of the cost (after meeting their deductible) until they reach the catastrophic coverage threshold. Prior to 2010, enrollees paid their deductible, then 25 percent of the costs until they reached the donut hole, then they were responsible for 100 percent of the costs until they reached the catastrophic coverage threshold.
That amount has been gradually declining over the last several years, and the donut hole closed one year early — in 2019, instead of 2020 — for brand-name drugs. [So enrollees in standard plans paid 25 percent of the cost of brand-name drugs from the time they met their deductible until they reached the catastrophic coverage threshold.] Enrollees also pay 25 percent of the cost of generic drugs while in the donut hole in 2020, down from 37 percent in 2019.
The donut hole is still relevant, however, in terms of how drug costs are counted towards reaching the catastrophic coverage threshold, and in terms of who covers the costs of the drugs (ie, the drug manufacturer or the enrollee’s Part D plan). Here’s more about how that all works.