By Paul S. McNulty, CFP®
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.
A number of Medicare costs have increased 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 has increased to $198.
Supplement Plan Availability
Medigap supplement Plan F and Plan C is no longer available to those who became 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 in order 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.
Medicare Part D Donut Hole
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, our team at Boston Metro Advisor can help. Schedule a no-obligation consultation by calling (781) 995-0253 or emailing me directly at [email protected] today!
Paul McNulty is the founder of Boston Metro Advisor with over 20 years of experience helping people navigate the ups and downs of the economy toward the financial future they envision. His education consists of a Bachelor of Science in business administration from the University of Rhode Island and the CERTIFIED FINANCIAL PLANNER™ (CFP®) professional designation.
Paul’s experience and education have made him a multi-faceted professional capable of assisting people with virtually all their financial needs. His services include every facet of retirement planning, from 401(k) rollover services and income planning to wealth management and estate planning. Paul has been active in his community over the years as a youth sports coach. When he’s not spending time with his wife, Cindy, and their two children, who are both recent college graduates, Paul enjoys reading, playing golf, and fishing. Learn more about Paul by connecting with him on LinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.