2020 Medicare Changes
On November 8, 2019, the Centers for Medicare & Medicaid Services (CMS) released the 2020 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs.
Medicare Part B Premiums/Deductibles
Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.
Each year the Medicare premiums, deductibles, and copayment rates are adjusted according to the Social Security Act. For 2020, the Medicare Part B monthly premiums and the annual deductible are higher than the 2019 amounts. The standard monthly premium for Medicare Part B enrollees will be $144.60 for 2020, an increase of $9.10 from $135.50 in 2019. The annual deductible for all Medicare Part B beneficiaries is $198 in 2020, an increase of $13 from the annual deductible of $185 in 2019.
The increase in the Part B premiums and deductible is largely due to rising spending on physician-administered drugs. These higher costs have a ripple effect and result in higher Part B premiums and deductible.
Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities pay a monthly premium in order to voluntarily enroll in Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate, which will be $252 in 2020, a $12 increase from 2019. Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $458 a month in 2020, a $21 increase from 2019.
For all of the 2020 changes, including the Income Related Monthly Adjustment Amounts (IRMAA), visit the Medicare website at https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance.
The Q&A for the month:
Question: Client is retiring, will be 62 in February and has a 16 year old son. He’s planning on starting his Social Security retirement benefit in February with a March payment, along with the dependent benefit. He would like to consult with his previous employer. Are his earnings limited in January due to the earnings test, or unlimited because he’s not starting until February?
Answer: If client is 62 in February, unless he was born on the 1st or 2nd, he isn’t eligible until March, first check arriving in April for March. Because his eligibility is so early in the year, he can do things a couple different ways:
1) Stay under the $18,240 for the entire year and we withhold $1 for every $2 over the limit.
2) Make as much as he wants in January and February, but then beginning in March and continuing he has to stay under the monthly limit of $1,520. (Of course, we care about earned income only so if he isn’t working anywhere, it will not be an issue).
The 16 year old is eligible for benefits the same month as dad. Keep in mind that dad is subject to the earnings limits and son is subject to the same earnings limits if he’s working. However, if dad ends up working and earning over the limit, the excess earnings are charged towards both benefits combined.