Medicare premiums are monthly payments you need to maintain in order to retain your policy. These premiums will vary by plan and will usually increase each year.
But there is no need to worry – changes in the next year’s premiums are announced before the end of the year, giving you time to make a decision if these changes make another plan the better option.
Who announces these changes?
Every year, the Center for Medicare & Medicaid Services (CMS) releases information regarding changes in Medicare costs and coverage. This takes place during the fall.
If you have Medicare Advantage, you will get a document that provides full details as to what will change in the upcoming year. This is the Annual Notice of Change (ANOC), and it arrives in your mailbox every September.
How much will my premiums increase?
Historically, premiums never have a drastic increase to the point of being unaffordable. Higher rates aren’t based on flat dollar amounts or percentages. There are multiple factors contributing to how much premiums increase, such as inflation and overall spending on physician-related services.
For example, here are the premium costs for Medicare Part B from 2018 to 2021:
- 2018 – $134
- 2019 – $135.50
- 2020 – $144.60
- 2021 – $148.50
Medicare Part A’s premiums are based on the number of tax quarters you have worked. For those who worked for fewer than 30 tax quarters:
- 2018 – $422
- 2019 – $437
- 2020 – $458
- 2021 – $471
As for Part A premiums for those who worked 30-39 tax quarters:
- 2018 – $232
- 2019 – $240
- 2020 – $252
- 2021 – $259
When comparing 2018 to 2021 alone, the prices look like they took a major spike. But these happened in small increments, not all at once.
Increasing premium costs may not affect you at all if you have a Medicare Supplement plan. While Medicare Supplements have premiums of their own, some will take care of your Part A and B premiums regardless of how much they cost in the current year.
How does this work for Medicare Advantage and Part D?
Since Medicare Advantage and Part D plans come through private insurance, their prices do not increase for everyone in the same way. Even if the average Medicare Advantage and Part D premium costs increased significantly, that may not be the case for you. Your premiums may only increase a dollar, whereas another person on a different plan may pay an additional five dollars per month for his or her plan.
You may not even be affected by this at all. If you’re in a Medicare Advantage Special Needs Program (SNP), your plan may pay other premiums for you while also supplying you with drug coverage, and keeping your low-cost policy coverage to ensure that your plan remains tailored to you at the lowest cost.
What if my Part A plan is premium-free?
Your Medicare Part A premium can remain the same depending on when you joined Medicare and how long you have worked in the US. This is the premium-free version, and you can get it during your Initial Enrollment Period if you have worked at least 40 tax quarters (10 years). Your premium is $0 throughout the time you hold your policy.
Initial Enrollment begins three months before the month of your 65th birthday. It ends three months after that month. Once it passes, you will have to wait until the General Enrollment Period, where you may also have to pay late enrollment fees.
How do late enrollment fees impact changing premiums?
Late enrollment fees should be taken into account here, because while premiums themselves can change, the percentages tacked onto them remain constant.
These penalties work differently depending on the policy you get. Medicare Part A, for example, has an enrollment penalty adding 10% on top of the current premium, and you will pay the added fee for twice the number of years you waited to join after becoming eligible for the first time. For example, if you waited two years, you’ll pay the fee for four years, and if you waited three years, you’ll pay the penalty for six years, and so on.
Medicare Part B and Part D have permanent percentages added onto their respective premiums. For Part B, the percentages accrue in increments of 10% year-by-year (for instance – 20% extra if you waited two years, 30% for three years, etc.). No matter what the premium is, you’ll always pay the same added percentage.
As for Part D, the penalty increases by 1% per month that you have gone without creditable drug coverage. This percentage is multiplied by that year’s premium, and it is rounded to the nearest dime. If you have gone five months without coverage and joined Part D, you’ll pay an extra 5%. In 2021, the standard premium is $33.06. 5% of this comes out to $1.65 – but since this is based on the nearest dime, you will pay $1.70 on top of $33.06, which will make your premiums $34.76. If your Part D premium increases to $35 in the next year for example, you will pay an extra $1.80, because the late enrollment fee is percentage-based and not a set dollar amount.
Learn more about the costs of Medicare with us
Premiums may change, but our dedication to top-notch customer service won’t. Our growing clientele base and A+ Better Business Bureau rating reflect this. At Medicare Peace of Mind, you can rest easy knowing you’ve made the right choice. We are always attentive to your needs, and we know what policy is the best for you in the present moment, as well as a plan that may be more ideal for you in the future in case of any changes down the road. Our knowledge is yours. If you have any other questions regarding premiums or anything Medicare-related, call us today at 970-233-0633.
