By Dave Coen
There are many confusing aspects of retirement, like how and when to claim Social Security, figuring out what accounts to withdraw from first, and most definitely which Medicare plan is right for you. It doesn’t help that Medicare likes to change things on us from time to time. So, before you make any Medicare decisions this year, here’s a rundown of the program’s changes in 2020.
What Will I Pay?
A number of Medicare costs are increasing for 2020. While most people get Part A premium-free, those who do pay will now be paying $458. The Part A deductible has also increased to $1,408. Coinsurance rates for Part A have increased as well, and the rates vary depending on the length of inpatient care.
Part B premiums have gone up a little over $9 a month and are now $144.60. This won’t lower your Social Security check, though, because Social Security benefits have received a 1.6% cost-of-living adjustment for 2020 that will offset the increase in premiums. In addition, the deductible for Part B is increasing to $198.
What Are My Supplement Plan Choices?
Medigap supplement Plan F and Plan C will no longer be available to those becoming eligible for Medicare after December 31, 2019. This is because back in 2015, Congress decided that medical care recipients should have some skin in the game to limit unnecessary care and, therefore, costs. Supplement Plans F and C cover the cost of the Part B deductible, so they are no longer allowed.
If you already have a Part F or Part C plan, you are allowed to keep it. Anyone who became eligible for Medicare before January 1, 2020, is exempt from the law change. You can have one of those plans and can also switch freely from one plan to another without risking loss of eligibility. Even if you don’t currently have a Medigap plan, you can still purchase a Part F or Part C plan if you were eligible for Medicare prior to January 1.
Will Prescriptions Put Me In The Red?
Previously, there was a time when you would have to pay 100% of your prescription drug costs despite having Medicare Part D coverage. This was dubbed the “Donut Hole.” The Affordable Care Act has been closing the donut hole, and now in 2020, it is completely closed.
The maximum allowable deductible for Part D coverage has gone up to $435 this year. Once that deductible is reached, you will no longer have to pay 100% of the cost of your generic and brand-name drugs until you reach the new catastrophic coverage threshold of $6,350. Now you will only have to pay 25% before reaching the new coverage threshold.
How The Medicare Changes Will Affect Your Financial Plan
These changes to Medicare for 2020 affect all participants. While some people only face minor changes (increased premiums and deductibles), it could mean major changes for new enrollees who were planning on purchasing Medigap coverage.
Times of change are always a good opportunity to review your current financial plan and make any necessary adaptations. If you don’t already have a financial plan, these changes should serve as a reminder of why you need one! Having a plan in place will give you the confidence that you can retire comfortably and that you are prepared for changes like these and whatever else life may throw your way. If you need a plan or want to review your current one, we can help. Schedule a no-obligation consultation by emailing me at dcoen@sageviewadvisory.com or calling 800-814-8742.
About Dave
Dave Coen is a Financial Advisor with SageView Advisory and the CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn.
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