At this time of year, the benefit programs for seniors announce their inflation-adjusted parameters for the following year.
We have shared some information about Social Security in a previous post, and we promised a follow up with the Medicare numbers when they become available.
That time is now, so we will look at the 2021 Medicare premium and deductibles here. But before we get there, we are going to start with an explanation of retirement credits.
Eligibility Is Not Guaranteed
Some people think that you automatically qualify for Medicare when you reach the age of 65. In reality, this is not the case. You earn eligibility when you pay self-employment or payroll taxes over the years.
Retirement credits are awarded when you pay these taxes. This year, you get one credit for every $1410 that you earn, and the maximum annual accrual is four credits. Next year, the threshold will go up to $1470.
It should be noted that a married person that has not personally accumulated 40 credits can qualify on their spouse’s work record.
Medicare Part A Deductible and Coinsurance
Part A of the Medicare program is the hospitalization piece. There is no monthly premium for this coverage, but there is a deductible that will cover the first 60 days of inpatient care. The deductible is $1408 during the current calendar year, and in 2021, it will go up to $1484.
Medicare will cover days 61 through 90, but you have to make coinsurance payments. The daily coinsurance right now is $352, and it will be increased to $371 when the new year rolls around.
Beneficiaries also get 60 lifetime reserve days of coverage for stays that exceed 90 days, but the coinsurance rate goes up significantly. This year it is $704 a day, and next year will be $742.
Medicare Part B Premiums and Deductible
The portion of the program that pays for treatments that are provided by doctors and other health care providers is Part B. You have to pay a monthly premium for this coverage, and it is a graduated rate that is based on your taxable income.
For individual filers that claim $88,000 or less, the premium has been $144.60 this year. In our previous post about the Social Security cost-of-living adjustment, we shared a bit of information that applies to the Part B premium.
The Continuing Appropriations Act, 2021 and Other Extensions Act (H.R. 8337) is the spending bill that was passed to fund the government in light of the impact of the novel coronavirus.
A provision contained within this measure capped the 2021 Part B increase at no more than 25 percent of what it would have been if there had been no pandemic. This has resulted in a $3.90 per month increase for 2021, so the premium for most people next year will be $148.50 per month.
You can head over to this page on the Centers for Medicare & Medicaid Services site to see the table that breaks down the premiums for each income bracket.
Attend a Free Webinar!
We conduct webinars on ongoing basis, and they cover many different important estate planning and elder law topics that everyone should understand. You can learn a lot if you join us, and there is no charge, so it is a great way to invest a little bit of your spare time.
To see the dates, head over to our webinar page and follow the simple instructions to register for the session that fits into your schedule.
Need Help Now?
If you have already reached the conclusion that it is time for you to discuss your estate planning goals with a licensed attorney, our doors are open. We maintain a safe office space in light of the pandemic, and we also offer remote video and telephone consultations.
You can send us a message to set the wheels in motion, and we can be reached by phone at 310-337-7696.