Health care already accounts for more than 10% of spending, on average, by households headed by seniors. And 2020 brings more bad news for the pocketbooks of seniors on Original Medicare.
Several premiums and deductibles for folks on the traditional, government-managed Medicare health insurance are increasing for the new year, the federal government recently announced.
What’s more, these increases for 2020 are significantly greater than they were for 2019:
- 2020 Medicare Part B standard monthly premium: $144.60 per month, which is an increase of $9.10 per month from 2019. That’s compared with an increase of only $1.50 per month one year prior.
- 2020 Medicare Part B annual deductible: $198 per year, an increase of $13. That’s compared with an increase of $2 one year prior.
- 2020 Medicare Part A annual inpatient hospital deductible: $1,408 per benefit period, an increase of $44. That’s compared with an increase of $24 one year prior.
More bad news: The higher cost increases for 2020 will effectively negate much of the 1.6% cost-of-living adjustment (COLA) that increases retirees’ monthly Social Security benefit payments in the new year. For the average retiree, the 2020 COLA translates to just an extra $24 a month.
What Medicare Parts A and B cover
Medicare Part A covers the following types of care:
- Inpatient hospital services
- Skilled nursing facility services
- Some home health care services
About 99% of Medicare beneficiaries don’t have to pay a premium for their Part A coverage thanks to how long they worked. That is, they get this break because they had Medicare taxes withheld from their paychecks during their working years.
Medicare Part B covers the following types of care:
- Physician services
- Outpatient hospital services
- Certain home health services
- Durable medical equipment
- Certain other medical and health services not covered by Medicare Part A
Part B premiums are based on income. The standard monthly premium listed above applies to individuals who earn up to $87,000 and married couples who earn up to $174,000 and file a joint federal tax return.
Folks with higher incomes pay higher Part B premiums — which will be anywhere from $202.40 to $491.60 next year, depending on income.
Medicare Advantage premiums projected to fall
Original Medicare and Medicare Advantage are the two main types of Medicare.
Original Medicare is the traditional, fee-for-service Medicare program offered directly by the federal government that includes Medicare Part A and Part B. The costs of Original Medicare generally include the premiums and deductibles above.
Medicare Advantage plans are an alternative to the traditional program offered by private insurance companies (typically including Part A, Part B and Part D, prescription drug coverage). So, the costs of Medicare Advantage plans, including any premiums and deductibles, vary by plan and insurer.
On average, though, Medicare Advantage premiums for 2020 are expected to be 23% lower than they were for 2018, according to the Centers for Medicare & Medicaid Services (CMS), the federal agency that oversees the Medicare program.
In fact, the average 2020 Medicare Advantage premium will be the lowest in the past 13 years, which CMS attributes to the agency’s efforts to drive competition.
Earn more interest on your savings
Are you earning as much interest on your savings as you could be? Grow your savings faster with banks offering rates that are significantly higher than the national average. Find the best rates and start earning more interest on your savings by using the Money Talks News savings account and CD comparison tool.