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Medicare Announces 2021 Part A and Part B Costs

The Medicare program recently announced the 2021 costs for Medicare Part A and Part B.  These costs take effect on January 1, 2021.  

Medicare Part A 

Medicare Part A covers inpatient hospital care, care in a skilled nursing facility (up to 100 days), some home health care, and hospice services.  The costs next year will be:  

  • Premium: Most people get Part A for free because they, their spouse, or- in some cases- their parent have paid Medicare taxes while working.  However, for those who must buy Part A, the monthly premium in 2021 can be as much as $471. 

  • Hospital Stay: The inpatient deductible is $1,484 per benefit period.  If someone is in the hospital for longer than 60 days, their cost-sharing will be $371/day for days 61-90 and $742/day for days 91-150. 

  • Skilled Nursing Facility Stay: Medicare can cover up to 100 days in a skilled nursing facility when someone meets the criteria for Medicare to pay for this care.  There is no cost for care for the first 20 days.  For days 21-100, the beneficiary will have a daily co-pay of $185.50.
     

Medicare Part B 

Medicare Part B covers outpatient care such as doctor visits, outpatient hospital services, diagnostic tests, ambulance services, durable medical equipment, mental health services, and more.  The costs next year will be: 

  • Premium: Everyone on Medicare is subject to a monthly Part B premium.  In 2021, the standard premium will be $148.50/month (up from $144.60 in 2020). Most people will pay this premium amount next year.  

  • A small percentage of Medicare beneficiaries will pay a slightly lower amount because of Medicare's hold-harmless provision.  This rule protects people who have their Part B premium deducted from their monthly Social Security check from a Part B premium increase that would exceed their Social Security benefits increase.  Because of this rule, these beneficiaries will not receive a lower net Social Security benefit in 2021 than they received in 2020.  Although the cost-of-living adjustment (COLA) for Social Security benefits for 2021 is small (only 1.3%), the COLA is expected to cover the Part B premium increase for most beneficiaries.   

  • People with higher incomes pay a higher premium. 

  • As a reminder, people with limited incomes and resources can qualify for Medicaid to pay their Part B premium through the Medicare Savings Programs or “Medicare Buy-In”.  
  • Other Part B Costs in 2021: The annual deductible will be $203.  That is the amount Medicare beneficiaries must pay for services before their Part B coverage kicks in.  After that, Original Medicare covers 80% of the cost of outpatient physical and mental health services and the beneficiary pays the remaining 20%. 
     

Medicare beneficiaries are responsible for paying the monthly Part A (if any) and Part B premiums regardless of how they get their Medicare – whether through Original Medicare or a Medicare Advantage plan.  Individuals with Original Medicare (who use the red, white, and blue card when getting care) and no additional insurance are subject to the Part A and B deductibles and co-insurance amounts described above.  Those in a Medicare Advantage plan pay the deductibles, co-insurance, and co-pays set by their plan.  Dual eligibles with Medicare and Medicaid insurance use their Medicaid coverage to pay their Part A and B deductibles, co-insurance, and co-pays and should only be charged the small Medicaid co-pay that applies to the service they get. 

More information about Medicare Part A and B costs in 2021 can be found here.