Q: What are the changes to Medicare benefits for 2020?

A: There are several changes for Medicare enrollees in 2020:

Part B premiums

The standard premium for Medicare Part B is $135.50/month for 2019, but it’s projected to increase to $144.30/month in 2020 (this won’t be finalized until the fall of 2020, and as discussed below, higher premiums apply to enrollees with high incomes).

The Social Security cost of living adjustment (COLA) is expected to be about 1.6 percent for 2020, which will increase the average retiree’s total benefit by about $23/month. That’s more than enough to cover the roughly $9 increase in premiums for Part B, which means that the premium increase is likely to apply to nearly all Part B enrollees.

[If a Social Security recipient’s COLA isn’t enough to cover the full premium increase for Part B, that person’s Part B premium can only increase by the amount of the COLA, as Part B premiums are withheld from Social Security checks, and the net check can’t decline from one year to the next.]

Part B deductible

The Part B deductible was $183 in 2017 and it remained at that level in 2018. For 2019, however, it increased to $185. And for 2020, it’s projected to increase to $197, although the exact amount won’t be finalized until the fall of 2019.

Some enrollees have supplemental coverage that pays their Part B deductible. This includes Medicaid, employer-sponsored plans, and Medigap plans C and F.  Medigap plans that cover the Part B deductible can only be sold to newly-eligible enrollees through 2019 — after that, people can keep Plans C and F if they already have them, newly-eligible Medicare beneficiaries will no longer be able to buy Medigap plans that cover the Part B deductible. (The impending ban on the sale of Medigap plans that cover the Part B deductible was part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), in an effort to curb utilization by ensuring that enrollees would incur some out-of-pocket costs during the year.)

Many Medicare Advantage plans have low copays and deductibles that don’t necessarily increase in lockstep with the Part B deductible, so their benefits designs have had different fluctuations over the last few years. (Medicare Advantage enrollees pay the Part B premium, but their Medicare Advantage plan wraps Part A, Part B, and various supplemental coverage together into one plan, with out-of-pocket costs that are different from Original Medicare).

Part A premiums, deductible, and coinsurance

Medicare Part A covers hospitalization costs. For most enrollees, there’s no premium for Part A. But people who don’t have 40 quarters of work history (or a spouse with 40 quarters of work history) must pay premiums for Part A coverage.

Those premiums have trended upwards over time, although they’re lower in 2019 than they were in 2010. They’re projected to increase in 2020, however: The premium for people with 30+ (but less than 40) quarters of work history is projected to be $253/month in 2020, up from $240/month in 2019. And for people with fewer than 30 quarters of work history, the premium for Part A is projected to be $460/month in 2020, up from $437/month in 2019 (these numbers are from the Medicare Trustees’ 2019 report, the exact amounts will be published by CMS in the fall of 2019).

Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans), and it generally increases each year. In 2019 it is $1,364, but it’s projected to increase to $1,420 in 2020. The increase in the Part A deductible will apply to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.

The Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the enrollee needs additional inpatient coverage during that same benefit period, there’s a daily coinsurance charge. In 2019, it’s $341 per day for the 61st through 90th day of inpatient care, and that’s projected to increase to $355 in 2020. The coinsurance for lifetime reserve days is $682 per day in 2019, and that’s projected to increase to $710 in 2020.

For care received in skilled nursing facilities, the first 20 days are covered with the Part A deductible that was paid for the inpatient hospital stay that preceded the stay in the skilled nursing facility (Medicare only covers skilled nursing facility care if the patient had an inpatient hospital stay of at least three days before being transferred to a skilled nursing facility). But there’s a coinsurance that applies to days 21 through 100 in a skilled nursing facility. In 2019, it’s $170.50 per day, and that’s projected to increase to $177.50 per day in 2020.

[All of these projections are on page 188 of the 2019 Medicare Trustees’ Report; CMS will confirm the official amounts in the fall of 2019.]

Medigap Plans C and F will not be available to newly-eligible enrollees

As a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Medigap plans C and F (including the high-deductible Plan F) will no longer be available for purchase by people who become newly-eligible for Medicare on or after January 1, 2020. People who become Medicare-eligible prior to 2020 can keep Plan C or F if they already have it, or apply for those plans at a later date (medical underwriting applies in most states if you’re switching from one Medigap plan to another after your initial enrollment window ends).

Medigap Plans C and F cover the Part B deductible ($185 in 2019; projected to be $197 in 2020) in full, whereas other Medigap plans require enrollees to pay the Part B deductible themselves. The idea behind the change is to discourage overutilization of services by ensuring that enrollees have to pay at least something when they receive outpatient care, as opposed to having all costs covered by a combination of Medicare Part B and a Medigap plan.

Because the high-deductible Plan F is being discontinued for newly-eligible enrollees, there will be a new high-deductible Plan G available instead.

Upgraded Medicare plan finder tool

CMS announced in August 2019 that the Medicare Plan Finder tool had been upgraded for the first time in a decade. Both the old and new plan finder tool are available through the end of September 2019; after that, only the new tool will be available. The new tool includes a wide range of improvements and automation, and keeps up with the increasing tech-savviness of new Medicare enrollees.

But some brokers and enrollment assisters have concerns about the new tool and the fact that it’s being rolled out right before open enrollment — this letter from a Medicare broker has more details. In order to have the new system save the medication information you enter (so that you can come back to it later without having to enter it all again), you have to log into your MyMedicare account; this is causing concerns about privacy in situations where a beneficiary needs assistance with the plan comparison and enrollment process, and will make it more difficult for people who are approaching Medicare eligibility to accurately compare their plan options before enrolling in Medicare.

Although the new tool has more capabilities than the old one, it will also take time for people to get used to it if they were already accustomed to the old tool. It’s a good idea to carefully compare your plan options during open enrollment, and Medicare’s plan finder tool is an excellent resource. But beneficiaries will want to allow a little extra time this year to acclimate themselves to the new tool in order to take full advantage of all that it has to offer.Inflation adjustments for the high-income brackets

Medicare beneficiaries with high incomes pay more for Part B and Part D. But what exactly does “high income” mean? Since the income brackets were introduced (in 2007 for Part B, and in 2011 for Part D), the threshold has been set at $85,000 ($170,000 for a married couple). But starting in 2020, the income brackets will be adjusted for inflation. A high-income premium surcharge will apply to Medicare beneficiaries who earn at least $87,000/year as of 2020 ($174,000 for a married couple).

For high-income Part B enrollees (income over $85,000 for a single individual, or $170,000 for a married couple), premiums in 2019 range from $189.60/month to $460.50/month, depending on income. For 2020, these amounts are projected to range from $202/month to $490.50/month, and will apply to people earning at least $87,000 for an individual, or $174,000 for a married couple.

As part of the Medicare payment solution that Congress enacted in 2015 to solve the “doc fix” problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees, and they took effect in 2018, bumping some high-income enrollees into higher premium brackets.

And for 2019, a new income bracket was added on the high end, further increasing Part B premiums for enrollees with very high incomes. Rather than lumping everyone with income above $160,000 ($320,000 for a married couple) into one bracket at the top of the scale, there’s now a new bracket for enrollees with income of $500,000 or more ($750,000 or more for a married couple). People in this category pay $460.50/month for Part B in 2019, and their estimated premium will be $490.50/month in 2020. That top bracket — income of $500,000+ for a single individual or $750,000 for a couple — will remain unchanged in 2020, but the thresholds for each of the other brackets will increase slightly (starting with the lowest bracket increasing from $85,000 to $87,000, and so on; a similar adjustment applies at each level except the highest one).

Medicare Advantage enrollment expected to continue to increase

CMS has not yet announced average Medicare Advantage (Medicare Part C) premiums for 2020, although average premiums have been declining for the last several years. (Note that Medicare Advantage premiums are in addition to Part B premiums; people who enroll in Medicare Advantage pay their Part B premium and whatever the premium is for their Medicare Advantage plan, and the private insurer wraps all of the coverage into one plan.)

For perspective, a Kaiser Family Foundation analysis found that across Medicare Advantage plans with integrated Part D prescription coverage (MA-PDs), the average premium in 2019 is about $29/month, but that includes the fact that more than half of Medicare Advantage enrollees are in plans that have no premium at all. Among people who do pay a premium for their Advantage plan in 2019, the average monthly premium is $65.

About 22 million people have Medicare Advantage plans in 2019; enrollment in these plans has been steadily growing for the last 15 years. The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth. In 2004, just 13 percent of Medicare beneficiaries had Medicare Advantage plans. That had grown to 34 percent by 2019, and the new Medicare Plan Finder tool is designed in a way that could accelerate the growth in Advantage enrollment.

Part D donut hole will be fully closed as of 2020 (enrollees in standard plans will pay 25% of costs)

For stand-alone Part D prescription drug plans, the maximum allowable deductible for standard Part D plans will increase to $435 in 2020, up from $415 in 2019. And the out-of-pocket threshold (where catastrophic coverage begins) will increase significantly, from $5,100 in 2019 to $6,350 in 2020 (the copay amounts for people who reach the catastrophic coverage level will also increase slightly in 2020).

The good news is that the Affordable Care Act has been gradually closing the donut hole in Medicare Part D. As of 2020, there will no longer be a “hole” for brand-name or generic drugs: Enrollees in standard Part D plans will pay 25 percent of the cost (after meeting their deductible) until they reach the catastrophic coverage threshold. Prior to 2010, enrollees paid their deductible, then 25 percent of the costs until they reached the donut hole, then they were responsible for 100 percent of the costs until they reached the catastrophic coverage threshold.

That amount has been gradually declining over the last several years, and the donut hole closed one year early — in 2019, instead of 2020 — for brand-name drugs (so enrollees in standard plans paid 25 percent of the cost of brand-name drugs from the time they met their deductible until they reached the catastrophic coverage threshold). Enrollees pay 37 percent of the cost of generic drugs while in the donut hole in 2019, but that will also drop to 25 percent in 2020.