Just Announced: 2021 Medicare Part A and B Costs

On Nov. 6, 2020, the Centers for Medicare and Medicaid Services (CMS) announced increases to Medicare Part A and Part B costs in 2021. The updated 2021 Medicare costs only apply to Original Medicare: Part A and Part B.

This follows the announcement of Social Security’s cost-of-living adjustment in October. How will you be affected by the Original Medicare rate increases in 2021?

Medicare Part A Costs in 2021

Part A covers inpatient care: hospitalizations, skilled nursing care, hospice, and home health care. The majority of Medicare beneficiaries pay three Medicare Part A expenses: an inpatient hospital deductible, hospitalization coinsurance, and skilled nursing care coinsurance.

When you are hospitalized, you are responsible for paying a deductible during each benefit period. After that, Medicare will pay all your costs for 60 days of hospitalization. Beyond the 60-day mark, if you are still hospitalized or readmitted during the benefit period, you pay a daily coinsurance.

When you receive skilled nursing care, Medicare pays all costs for the first 20 days. After 20 days, you are responsible for paying a daily coinsurance.

Medicare Part A Cost 2020 Rate 2021 Rate
Hospitalization Deductible $1,408 $1,484 (↑ $76)
Hospitalization Coinsurance Days 61-90 $352 $371 (↑ $19)
Hospitalization Coinsurance Days 91+ $704 $742 (↑ $38)
Skilled Nursing Care Days 21-100 $176 $185.50 (↑ $9.50)

Most Medicare beneficiaries do not pay a monthly premium for Part A. As long as you or your spouse has worked and paid into Social Security at least 10 years (40 quarters), Part A is premium free.

However, if you or your spouse has worked or paid into Social Security for less time, you pay a monthly premium for Part A. The Medicare Part A monthly premium is increasing in 2021. If you have contributed to Social Security for 30 quarters or less, your Part A monthly premium will be $471 (up from $458 in 2020). If you have paid into Social Security for 30-39 quarters, your Part A monthly premium will be $259 (compared to $252 in 2020).

Medicare Part B Costs in 2021

Part B generally covers outpatient and preventative care—such as ambulance services, health screenings, and medical equipment. All Medicare beneficiaries pay an annual deductible and a monthly premium for Part B.

In 2021, the Part B deductible is increasing from $198 to $203.

Compared to $144.60 in 2020, the standard Part B premium in 2021 is $148.50.

However, based on your income, you may pay a higher monthly premium for Medicare Part B. The table below details how the income-adjusted Part B monthly premium is increasing in 2021.

Individual Annual Income Married Couple Annual Income Monthly Adjustment Total Part B Monthly Premium
$88,000 – $111,000 $176,000 – $222,000 59.40 207.90
$111,000 – $138,000 $222,000 – $276,000 148.50 297.00
$138,000 – $165,000 $276,000 – $330,000 237.60 386.10
$165,000 – $500,000 $330,000 – $750,000 326.70 475.20
$500,000+ $750,000+ 356.40 504.90

Your monthly premium rates in 2021 are calculated based on your income in 2019. Different rates apply to high-income beneficiaries who are married and live with their spouse but file a separate tax return—read more information about that here.

2021 Medicare Part C and Part D Costs

CMS announced the Medicare Advantage (Part C) and Medicare Part D premium and deductible rates in April 2020. Those rates will not be affected by the updated Part A and Part B costs in 2021.

Questions About Your 2021 Medicare Costs?

Even while the cost of Medicare is increasing, speaking with a trusted Medicare advisor can give you peace of mind. At RetireMEDiQ, our team of advisors is here to help through every step of the process—whether you are budgeting for your 2021 Medicare costs, planning for retirement, or approaching Medicare eligibility.

To speak with an expert about your Medicare options, you can contact our team by calling 1-866-407-5180 or emailing your questions to advice@retiremediq.com.

Already a RetireMEDiQ client? You can reach out to an advisor by calling 1-877-222-1942 or emailing client@retiremediq.com.

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