Medicare Premiums, Deductibles Will Increase Slightly in 2021

Medicare premiums and deductibles for Part A and Part B will increase modestly in 2021, the Centers for Medicare and Medicaid Services (CMS) announced Friday. Standard monthly premiums for Part B will cost $3.90 more, rising to $148.50 in 2021, up from $144.60 in 2020.

Annual Part B deductibles will rise $5 next year to $203, up from this year's $198.

Medicare Part B covers doctor visits and other outpatient services, such as lab tests and diagnostic screenings. Premiums for some Medicare enrollees will be higher than the standard because these monthly payments are based on income. Part B beneficiaries with annual incomes greater than $88,000 will pay more ($207.90 for individuals with incomes between $88,000 and $111,000, for example).

The $3.90 monthly Part B premium increase is less than had been expected earlier this year, when analyses by CMS actuaries indicated that the 2021 Part B premium could increase by as much as $50 a month for some beneficiaries.

Such a large Part B premium increase was projected because of the increased emergency Medicare spending resulting from the COVID-19 pandemic. In addition to the health care costs to treat the coronavirus, the federal government also paid doctors and other Part B providers to offset the money they lost because many Medicare enrollees are postponing some routine and preventive care during the crisis.

To offset this emergency spending and avoid a large premium increase, a clause championed by AARP in the latest budget law added money to Medicare to help offset that spending. House Speaker Nancy Pelosi had estimated that the Part B premium would increase by $4 a month, which it will.

For Medicare Part A, which covers hospitalization and some nursing home and home health care services, the inpatient deductible that patients will pay for each hospital admission will increase by $76 in 2021 to $1,484, up from $1,408 this year. Almost all Medicare beneficiaries (99 percent) pay no Part A premium.

Open enrollment for Medicare began Oct. 15 and continues through Dec. 7. This is the one period during the year when beneficiaries can review their coverage and decide whether to make changes. Medicare experts say such an assessment is especially important during the COVID-19 crisis.