It’s an unfortunate fact of life that as we age, we’re prone to more illnesses and infirmities. Sadly, the costs associated with the necessary care can be exorbitant, at a time when few of us have the resources to spare for extra expenses.
This is especially concerning considering that healthcare costs in the US are among the highest in the world and getting more expensive every year. In fact, healthcare costs escalate by around 3.5% annually, compared to the 2.1% CPI for other goods and services.
So, it’s huge relief to know that when you turn 65, and you’re an American citizen resident in the country, Medicare will take care of (most of) your medical bills.
It all comes at a price though. These are the Medicare costs for 2021.
Terminology Related to Medicare Costs For 2021
Some of the things you can expect to pay for when you enrol in Medicare can seem a little confusing at first. Here’s a breakdown of the main terminology used in describing Medicare payments.
The monthly premium is the amount you pay to make use of Medicare benefits every month.
A deductible is an amount you pay out of pocket for medical treatment before your covered benefits kick in. Often, different deductibles apply for various medical services. For example, if your deductible is $2,000, you pay for your treatment until you reach that threshold. Your insurer pays the rest according to certain criteria.
The benefit period is the time frame against which insurers measure deductibles and other associated costs. The usual benefit period for health insurance is one calendar year or a certain number of days after you enter hospital treatment.
Coinsurance refers to the percentage of a particular healthcare benefit that you pay for out of pocket once you’ve surpassed your deductible. So, if your treatment costs $2,200 for the year, you’ll pay $2,000 plus a percentage of the extra $200.
Health insurers give you a little leeway when it comes to extended hospital stays. These are Lifetime Reserve Days. So, if you have a 60 day limit on hospital care for the year and you spend 70 days in the hospital, the extra days get deducted from your lifetime reserve days.
These extra days aren’t renewed every year along with your annual limits.
Medicare has certain ‘Parts’ associated with different coverage. These are:
- Part A covers costs associated with in-hospital stays and some other long-term care
- Part B takes care of outpatient care and some day-to-day medical expenses
- Part C or Medicare Advantage
- Part D for prescription medicines
Now that you’ve got a better understanding of some of the common terms associated with Medicare, let’s take a deep dive into Medicare costs in 2021 and what your premiums pay for.
Hospital Insurance – Medicare Part A Costs
Most people get free access to Part A Medicare since they’ve contributed to Medicare taxes throughout their working life. There are exceptions though.
So, what does medicare cost if you don’t qualify for free coverage?
If you contributed to Medicare taxes for fewer than thirty quarters, or not at all, you’ll pay $471 per month for Part A in 2021. If you’ve paid Medicare taxes for 30-39 quarters, the premium’s $239 per month for Part A in 2021.
When you don’t sign up for Medicare as soon as you’re eligible, you could pay a late penalty fee for twice the number of years that you delayed signing up.
This is what you get for paying your Part A premiums every month:
Home Health Care
Home health care is cheaper and more convenient than hospital care. In many cases, it’s just as effective as the care offered by hospitals or Skilled Nursing care facilities. Home Health care services include things like:
- Wound care
- Monitoring of unstable health or serious illness
- Injections
- Nutrition or intravenous therapy
- Patient and caregiver education
Medicare doesn’t cover any of the costs associated with home health care services. They will pay 20% of an approved amount for DME (Durable Medical Equipment).
Hospice Care
Hospice care is compassionate care for people suffering from life-limiting illnesses like cancer. It’s aimed at ensuring these patients can live as comfortably and as fully as possible. There are four levels of hospice care, namely:
- Routine Home Care
- Continuous Home Care
- General Inpatient Care
- Respite Care
Medicare doesn’t pay for hospice care, but it does pay for prescription medicines for pain relief and symptom control subject to a co-payment of $5 for each drug covered by Part A of Medicare.
Hospital Inpatient Stays
With Medicare, you only pay a deductible of $1,484 per benefit period plus coinsurance according to the length of your stay.
For the first sixty days, your coinsurance is zero. If you stay in the hospital for 61 to 90 days, you’ll pay $371 per day for your stay plus the deductible. For stays of over 91 days, the coinsurance is $742 per each lifetime reserve day.
Once you’ve used up your lifetime reserve days, you’re responsible for the entire bill.
If you want any extras, like private-day nursing, a phone, or television in your room, you pay for it. Medicare doesn’t pay for a private hospital room unless it’s deemed medically necessary.
Mental Health Inpatient Stays
Medicare applies the same payment structure for mental health inpatient stays as it does for hospital inpatient stays. That means your deductible is $1,484 for each benefit period, plus $0 for up to 60 days treatment, $371 per day for a 61 to a 90-day stay, and $742 for stays exceeding 90 days.
You also pay 20% of Medicare rates for any extra doctor visits during a stay in a mental health facility.
You only get 60 lifetime reserve days for mental health facility stays and you pay all costs once you’ve exhausted these extra days. For in-hospital or psychiatric hospital mental treatment, multiple benefit periods apply and the lifetime limit is 190 days.
Medicare Part A mental health coverage includes treatment for addiction, depression, and anxiety as long as it takes place in a hospital or psychiatric hospital.
Skilled Nursing Facility Stays
Skilled nursing facilities offer services that only highly skilled technical personnel or professionals can deliver. They’re usually advised for patients who need help managing or evaluating their care.
Medicare covers the following skilled nursing services:
- A semi-private room
- Medical social services
- Necessary physical therapy
- Skilled nursing care
- Necessary occupational therapy
- Necessary speech-language pathology services
- Meals
- Medications
- Medical supplies and equipment
- Ambulance transportation if needed
- Dietary counselling
- Swing bed services
Medicare pays all costs exceeding the $1484 deductible for SNF for the first twenty days of treatment. You pay $185.50 per day for treatment between 21 and 100 days, and you pay all the costs from day 101.
For as long as the pandemic continues into 2021, Medicare has several waivers in place regarding its members access to healthcare.
Medical Insurance – Medicare Part B Costs
Everybody pays for Medicare Part B. The 2021 premium is $148.50 per month but this varies according to your annual income.
If you earn above a certain amount annually, you pay the standard premium plus an IRMAA (Income Related Monthly Adjustment Amount).
Most people opt for Part B and Part A Medicare insurance, known as Original Medicare, but you can buy Part B on its own.
If you’re eligible for free Medicare Part A, you can opt-out of Medicare Part B. However, if you choose to buy Part A, you must buy Part B too.
In short, you can’t have Medicare Part A on its own unless you’re eligible for free Medicare.
If you don’t sign up for Part B when you’re first eligible, you’ll have to:
- Pay a late enrollment penalty equal to 10% of the premium for each year that you didn’t opt to enrol in Part B.
- Wait until the General Enrollment Period to sign up
- Wait for coverage until July of the year you join Part B
Your Part B premium depends on the earning your declare on your annual tax return, as well as whether you file your taxes individually, or jointly. The highest premium for Part B is $504.90 per month.
The annual deductible for Medicare Part B is $203. Fater that, you pay 20% of Medicare-approved rates for medical services.
This is what you get for your Part B Medicare costs in 2021:
Outpatient Hospital Services
Medicare outpatient hospital services include doctor’s services both in hospital and in their consulting rooms. Although in-office treatment may cost more than the same services in a hospital do, Medicare caps the copayment for these services at the inpatient deductible amount.
You’ll usually also have to pay the hospital copayment for services you receive in a hospital outpatient setting as long as this amount doesn’t exceed the Part A hospital stay deductible for the relevant service.
This excludes preventive services that don’t have a copayment and the deductible doesn’t apply to preventive services either.
Copayment charges for treatment in a critical access hospital could exceed the Part A hospital stay deductible.
Outpatient Mental Health Services
Every Medicare member gets one free annual depression screening as recommended by their health care provider.
You pay 20% of the Medicare-approved rates for mental health diagnoses and treatment by a medical professional. For treatment provided in a hospital outpatient facility or clinic, you might have to pay additional coinsurance or a copayment.
The Part B deductible applies to outpatient mental health services.
Partial Hospitalization Mental Health Services
These services are an alternative to inpatient psychiatric care and require no overnight stay. They refer to a structured program of psychiatric services offered in an outpatient facility such as a therapist or doctor’s office.
You pay a percentage of the Medicare-approved amount for services provided by qualified mental health specialists as well as coinsurance for each day of partial hospitalization services.
These charges apply to both community clinics and hospital outpatient settings. The Part B deductible applies to these services too.
Other Medical Services
There’s no distinction between home health services for Medicare Part A and B.
Medicare pays 20% of the approved amount for DME. They pay none of the other costs for home health care.
You don’t pay anything for Medicare-approved clinical laboratory services with Medicare Part B. All other services, including most doctor services while in hospital, attract a 20% co-payment.
If you want additional services not covered by Medicare Part A and B, you should consider Medicare Advantage plans instead.
It’s important to take your medical needs as well as the total costs involved in ongoing care vs the cost of your premiums into consideration when deciding on the right health insurance plan for you.
Medicare Advantage – Medicare Part C
Private insurers offer these plans which may include a host of services that aren’t included in Medicare Part A. All Medicare Advantage Plans must cover the same coverage offered by Medicare Part A and B, plus any extras they see fit.
In all cases, your private insurer determines your Medicare Advantage plan cost. Some limited plans are free if you meet certain criteria.
Medicare Prescription Drug Coverage – Part Medicare Costs 2021
Medicare Part D plans all have different basic premiums plus an extra charge according to your earnings. The lowest extra charge is $12.20 per month if you earn above $87,000.
The highest additional charge is $76.40 per month. These plans cover several medications according to different drug formulary lists.
Part D copayments, deductible, and coinsurances also vary according to the plan you choose.
Your Health Comes First
We hope you have a clearer understanding of the relevant Medicare costs for 2021. If we’ve learnt anything this year, it’s been that health insurance is one of the most worthwhile and important things you can spend your hard-earned cash on.
The best way to keep your medical bills low and ensure your peace of mind is to embrace a healthy lifestyle. Keep browsing our blog for more useful health-related tips and advice for healthy living.