Within the Social Security an Medicare Trustees’ report that was recently released were many telltale hints regarding how much will Medicare cost in 2020. For one, Medicare Part A hospital insurance trust fund is projected to be depleted in just six years unless Congress addresses the hot button issue.
The Medicare Part A shocker was something that pretty much stole all of the headlines regarding the release, though this report also exposed that the basic Medicare Part B premium, which assists seniors in paying for doctors’ fees and outpatient services, is expected to increase by $8.80 to a whopping $144.30 a month in 2020.
It’s also likely for more Medicare benefit users to pay high-income surcharges, more commonly known as IRMAA, next year. In 2018, 3.7 million high-income Medicare recipients (those with a gross income above $85,000) paid IRMAA surcharges.
Medicare taxes are based on the last available tax return. So 2019 premiums are based on 2017 returns, and 2020 Medicare surcharges will be based on the 2018 federal tax returns.
Initially, five income tiers decided premium increases for Medicare. Though it’s important to note that these tiers, imposed in 2011, were not indexed for inflation. However, that will change starting in 2020, which means more retirees may be subject to IRMAA surcharges in 2020.
As it stands, Medicare recipients spend an average of $135.50 per month for Part B premiums, but IRMAA surcharges vary from $189.60 to $460.80 a month. These high-income beneficiaries also have to pay an additional monthly cost for their drug plan ranging from $12.40 to $77.40 a month on top of their monthly Part D premiums, which were about $32 in 2019. It seems like it’s more important than ever to have the right Medigap plans for your needs!
In 2019, a new sixth tier for extremely high-income retirees eligible for Medicare with individual incomes exceeding $500,000 and married couples with joint revenue surpassing $750,000 was put in place. The report showed that these new thresholds would not be indexed for inflation until 2028.
According to the yearly Retirement Income Strategies and Expectations survey released by Franklin Templeton, Health issues are the No. 1 retirement-related concern for adults over 65 (36%). What’s worse is that financing those health insurance costs throughout those golden years is the top expense concern amongst American adults, regardless of age (41%). Investing in Medicare Supplement Plans that are right for you, can relieve some of this stress.
“In order to address the top retirement concerns so many Americans are facing, it’s imperative to incorporate health-care expense planning as part of a holistic retirement savings strategy,” said Kevin Murphy, head of strategic accounts for Franklin Templeton’s defined-contribution division.
“Health savings accounts are a great example of one of the most efficient vehicles to save for medical expenses in retirement that can complement a long-term retirement saving strategy.”
How much will Medicare cost in 2020? Only time will tell. But the future is looking a little bit more expensive. Do you think these changes will affect your Medicare in 2020?
One of our licensed insurance professionals would be happy to discuss how you can receive proper out-of-pocket costs and Medicare Advantage plans that may be right for you. Give us a call at 1-888-487-0789.