2020 Medicare Premium Increase
2020 Medicare Premium Increase
November 15, 2019
The Centers for Medicare and Medicaid Services have recently announced their new pricing for calendar year 2020. The base price for Medicare Part B will increase from $135.50 per month in 2019 to $144.60 per month in 2020. In addition, the annual deductible for Medicare Part B (the deductible you pay if you have a “Plan G” Medicare Supplement) will increase from $185 per year in 2019 to $198 per year in 2020.
As you are probably aware, Medicare Parts B & D are both means-tested, so higher-income Medicare beneficiaries pay a surcharge known as IRMAA (“Income-Related Monthly Adjustment Amounts”) based on income reported on your federal income tax return two years prior. For this purpose, “income” is defined as adjusted gross income (“AGI”) plus federally tax-exempt income (such as interest earned on tax-free municipal bonds).
There are six income tiers that determine your surcharge, and starting in 2020, these tiers will be annually indexed to inflation. In 2019 you are subject to IRMAA surcharges if your income is greater than $85,000 (single) or $170,000 (married). These amounts will increase in 2020 to $87,000 and $174,000, respectively. Based on your income in 2018, your Part B premium will range from $144.60 to $491.60 per person per month. Note that these numbers do not include the cost of a Medicare supplement itself or the monthly premium or the related IRMAA surcharges for Part D. You can view the table that shows the 2020 IRMAA income brackets and monthly premiums (based on income reported on 2018 federal tax returns) here.
As many of our clients have their Medicare premium automatically deducted from their Social Security benefits, you may actually notice a net decrease in your Social Security benefits in 2020. Social Security benefits are increasing by just 1.6% in 2020. However, the 6.7% increase in Medicare Part B along with the separate increase in IRMAA surcharges may outweigh the modest raise you will get from Social Security.
At Strategic Wealth Partners, we recognize the impact of health care and its associated costs and feel it is important to keep you up-to-date in this fast-changing environment. This is a complex area and we are happy to help you understand what it means for you.
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