November 26, 2019

Edited 05/19/20

Medicare Changes for 2020

If you are currently Medicare eligible or will be eligible beginning next year, now is the time to make sure you understand upcoming changes to the program. With the average cost of healthcare in retirement being $280,000 for a couple, it definitely pays to stay ‘Medicare Aware.’

2020 Medicare Updates

Part B Premiums have increased: In 2019 the standard premium for Medicare Part B was $135.50.  That amount is increasing in 2020 to $144.60. This is an increase of $9.10 per month per beneficiary.  

Part B Deductibles are going up: The deductible is going up by $13 per beneficiary to a new amount for 2020 of $198.

Additional Changes to Part B: In an attempt to reduce costs to Medicare, people entering the program on or after January 1, 2020 will not be allowed to pick up Medicare Supplement plans that cover the Medicare Part B deductible. 

This includes Medicare Supplement plans C and F. If you already have these plans you will be able to keep them going forward.  The availability only applies to new enrollees.

Part D: Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $415 in 2019 which increases to $435 in 2020. Some Medicare drug plans don’t have a deductible.

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 those who reach the catastrophic coverage level will also increase slightly for 2020.

Say Goodbye to the Donut Hole

The good news is that the Affordable Care Act has been gradually putting an end to the so-called “donut hole” in Medicare Part D. Until now, enrollees paid their deductible, then 25% of the costs until they reached the “donut hole,” then they were responsible for 100% of the costs until they reached the catastrophic coverage threshold.

As of 2020, there will no longer be a “hole” for brand-name or generic drugs.  Enrollees in standard Part D plans will now pay 25% of the cost after meeting their deductible until they reach the catastrophic coverage threshold. 

Have you heard of IRMAA?

IRMAA is the acronym for the ‘income-related monthly adjustment amount’ and this year, millions of Americans will pay this surcharge for their Medicare coverage based on their income. Many of those will be paying more than they should.  This is because the IRS calculates using earnings that are about 2 years old. 

If you or your spouse have retired, or your income has decreased in the past 2 years, you may avoid the additional charge by filing to update your income with the Social Security Administration.

Medicare premiums now include a surcharge for those with income above a certain level. For 2019, this surcharge kicks in if your income was greater than $85,000 (if you are single) or $170,000 (if you are married and filing joint returns).