Medicare Part B Costs in 2020

Part B is what covers the bulk of your healthcare expenses. Understand how much you will pay out of pocket and budget for the year ahead.

The annual deductible for Part B is $198 in 2020, a $13 increase from 2019. You are required to pay the full deductible amount before Medicare will start paying towards your health expenses.

You pay monthly premiums for Medicare. If you do not pay your premiums in a timely manner, your coverage will be taken away. You are given a 90-day grace period to make payments before your Part B coverage is canceled.

In 2018, Part B premium rates stayed at 2017 rates across five income brackets. What changed were the income brackets themselves. Many people were surprised to find out they were paying considerably more for the same income. Price hikes predominantly affected people in the top three income brackets. In 2019, not only did the premium rates increase across all income brackets but the brackets changed again. Instead of five income brackets, there were six. The change in brackets affected those at the highest income level only. In 2020, the income categories were adjusted for inflation and premium rates increased by 7% for the majority of Medicare beneficiaries categories.

* Note that income brackets are based on your last completed income tax return. For 2020, please refer to your 2018 filing.

* Although the premium rates are set by marital status, these values represent how much each individual will pay for Medicare Part B each month.

You cannot be expected to pay more for Medicare if there is not also a proportionate rise in Social Security benefits. The holds harmless provision of the Social Security Act protects recipients from paying higher Medicare Part B premiums if those premiums will cause their Social Security benefits to be lower than they were the year before. Simply put, increases in Part B premiums cannot exceed the annual cost of living adjustment (COLA) for Social Security.

In those cases, the Medicare Part B premium will be decreased to maintain the same Social Security benefit amount. However, keep in mind that the holds harmless provision does not apply to Medicare Part D. If the Medicare Part D IRMAA increases, a beneficiary may still see a decrease in their overall Social Security benefits.

Not everyone is eligible for the holds harms provision. Only people in the lowest income category who have already been on Medicare Part B and have had their premiums directly deducted from their Social Security checks for at least two months in the past year are considered. Beneficiaries new to Medicare and people on Medicaid will be subjected to the current premium rate.

The Social Security COLA for 2020 is 1.6 percent. This is estimated to be an additional $24 per month for the average recipient but the amount could be less. With a $9.10 increase in monthly premiums for 2020, it is unlikely that many people will have their premiums reduced this year.

For those who are dual eligible, Medicaid will pay their Medicare premiums. They will be charged the higher Part B premium rates.

You can elect to have Original Medicare (Parts A and B) or a Medicare Advantage plan (Part C). Medicare Advantage plans are offered by private insurance companies and will cover everything that Original Medicare offers and more.

Even if you decide on a Medicare Advantage plan and pay premiums to the insurance company, you still have to pay Part B premiums to the government. You must take that added cost into consideration.

The Part B coinsurance remains unchanged. Medicare pays 80 percent and you pay 20 percent with the exception of preventive screening tests. As long as your doctor accepts assignment, your preventive screening tests will be free.

The majority of your healthcare will be paid for by Medicare Part B. Likewise, the majority of your out of pocket expenses will relate to Medicare Part B. Knowing what you are expected to pay for deductibles, premiums, and coinsurance in 2020 will help you to budget appropriately.