Medicare has many parts and plans you can piece together to customize your coverage in 2021. You’ll start with Original Medicare Parts A and B and then have the option to enroll in additional plans. The Medicare plans you enroll in depend on your specific needs.
Before you can determine which Medicare plan is right for you, you should know these important facts for Medicare coverage in 2021.
Original Medicare coverage in 2021
Medicare Parts A and B were established in 1965 to be your inpatient and outpatient medical coverage. Although Medicare’s coverage has adapted throughout the years, the general concept remains true.
Original Medicare Parts A and B cover your medically necessary in- and outpatient care, but the coverage comes with some cost-sharing. You’ll be responsible for deductibles, copays, and coinsurance. In 2021, Medicare Part A has a deductible of $1,484, and it covers the first 60 days of your inpatient hospital stay and the first 20 days in a skilled nursing facility (SNF).
The Part A deductible is per benefit period, so if you have more than one hospital stay at least 60 days apart from each other, you may pay the Part A deductible multiple times in one year. Medicare Part A has a daily copay for hospital stays exceeding 60 days, and SNF stays exceeding 20 days. These are your Part A daily copays in 2021:
- Days 61 – 90 in the hospital: $371 per day
- Days 91 – 150 in the hospital: $704 per day
- Days 21 – 100 in an SNF: $185.50 per day
*You are responsible for 100% of the costs for days 91 and beyond in a hospital if you maxed out your 60 lifetime reserve days.
The deductible for Part B is annual and $203 in 2021. After you have paid up to $203 out-of-pocket for Part B-approved services, Medicare Part B will cover 80% of your approved Part B services for the remainder of the year. Your deductible resets on January 1st.
Medicare Advantage vs. Medigap plans
Once you’re enrolled in Part A and Part B, you’ll have the option of enrolling in a Medicare Advantage or Medigap plan. These types of plans vary greatly, so you should compare them thoroughly to decide which type is most cost-effective for you. Both of these plans are sold by private insurance carriers. Premiums vary by plan, but generally, Medicare Advantage plans have less expensive premiums than Medigap plans.
According to the Kaiser Family Foundation (KFF), in 2021, there are 3,550 Medicare Advantage plans. However, the average beneficiary only has about 33 available options as they vary by zip code.
There are about eight Medigap plan options for most Medicare beneficiaries aging into Medicare in 2021, plus one high deductible option. There are fewer Medigap plan options as these are standardized by Medicare rather than created by the insurance carriers that sell them.
Medicare Advantage plans take over your Part A and Part B care and usually include ancillary benefits such as routine dental, vision, and hearing, as well as a Part D plan. When you’re enrolled in a Medicare Advantage plan, you are no longer responsible for the cost-sharing amounts mentioned above; instead, you’re responsible for the cost-sharing expenses set by your plan.
Medigap plans work as secondary coverage to Original Medicare. When enrolled in a Medigap plan, your plan will cover specific Part A and Part B cost-sharing expenses for Medicare-approved services as stated by your plan. For example, all Medigap Plan Gs cover all Part A and Part B cost-sharing expenses minus the Part B annual deductible.
Medicare Part D coverage in 2021
Medicare Part D plans are also sold by insurance carriers and provide you with the bulk of your prescription drug coverage. The average beneficiary has about 30 Part D plans to choose from in 2021. Each plan varies by costs and by formulary (list of drugs the plan covers).
The average Part D premium is $41 in 2021. However, you may find Part D plans with premiums as low as $7. Just because a Part D plan has an expensive premium doesn’t necessarily mean it will cover your drugs better than a cheap premium plan. You should compare all the Part D plan options in your area by the prescriptions you take.
If you have diabetes and administer your insulin yourself, you’ll want to find a 2021 Medicare Part D Senior Savings Model plan. These plans cap your monthly insulin prescription at $35 in 2021.
If you have a Medicare Advantage plan, you likely won’t need a standalone Part D plan because Part D plans are generally included in Medicare Advantage plans. However, you will need a standalone Part D plan if you have a Medigap plan.
How to find the most cost-effective Medicare coverage in 2021
While Medicare administers Part A and Part B, you’ll get your Medicare Advantage, Part D, and Medigap plans through private insurance carriers. To ensure you enroll in the most cost-effective plans, you should contact a Medicare broker who represents several carriers. A broker will be able to compare multiple plans from various carriers to find you the plan that is likely going to be the best fit for you in 2021.