The 2020 Medicare Board of Trustees (MBT) report has been released and though there seems to be a lot of good news in it, there is one curveball and it happens to be due to the Coronavirus.
The MBT, which must generate a report each per order of the Social Security Act has disclosed that:
“The projections and analysis in this report do not reflect the potential effects of the COVID-19 pandemic on the Medicare program. Given the uncertainty associated with these impacts, the Trustees believe that it is not possible to adjust the estimates accurately at this time”.
Prior to Covid-19 the MBT is projecting that between 2021 to 2029:
Part A Deductible will inflate by 3.15% annually. In 2021 the Part A Deductible is projected to be $1,452 per incident, by 2029 the Deductible is projected to be $1,858 per incident.
This is a 10% decrease from the 2019 MBT projections.
Note: The Part A Deductible is covered by most Supplemental Plans (Medigap). Medicare beneficiaries who choose this coverage may see an increase each year in their Medicare Supplemental Plans equal to or greater than this rate.
Part B premium will inflate by 5.50% annually. In 2021 the Part B premium is projected to be $153.30 a month, a 6.01% increase from 2020 and is projected to increase to $234.10 a month by 2029.
This is a decrease of 7.02% from the 2019 MBT projections.
Part B Deductible will inflate by 5.81% annually. In 2021 the Part B premium is expected to $212.00 for the year, a 7.07% increase from 2020 and projected to be $329.00 per year in 2029.
This is the equal to the same projections as the 2019 MBT report.
The National Base Premium for prescription drug plans (Part D), which is what private insurance companies use as a base to set the premiums for coverage, is only expected to inflate by 4.04% annually.
The Part D Deductible is projected to increase by only 4.87% on average for the next 8 years.
This is a decrease from last year’s projection of 5.55%.
Supplemental Insurance (Medigap Plans):
Medigap plans are private insurance plans. The actuaries use the forecasts from the Medicare Board of Trustees to determine their premiums. With the deductibles for Part A inflating at 3.15% it is not unreasonable to predict Medigap premiums will increase by 3% to 6% annually for at least the next 8 years.
Medicare Advantage Plans:
The Medicare Trustees’ Report does not address these plans as they are an alternative to Original Medicare. Premiums and out of pocket costs associated with these plans are determined by the private insurance companies that administer them.
Income Related Monthly Adjustment Amount (IRMAA):
The income brackets that determine how much income a retiree can have before receiving a surcharge on Medicare Part B and Part D premiums has remained constant and is projected to do so through 2029.
The inflation rates, prior to the impact of Covid-19 are projected to increase at the identical rates of both the Medicare Part B and D premiums (5.50% for Part B and 4.04% for Part D).
The forwarding looking data included in the Medicare Board of Trustees Report is only a projection. Within any given year the Centers for Medicare/Medicaid Services (CMS) can adjust premiums, deductibles, and even the IRMAA brackets accordingly.
The projections by the Medicare Board of Trustees in the 2020 report “do not reflect the potential effects of the COVID-19 pandemic on the Medicare program” as the Trustees “believe that it is not possible to adjust the estimates accurately at this time”.
The good news from the report is that on average the projected costs associated with Medicare were projected to decrease from last year’s projections, but with the Coronavirus creating new normal within our society anything is now possible.
The bad news may be obvious. With Medicare reimbursing more today than ever before to healthcare providers not only can costs increase, but those IRMAA brackets could be lowered.
The reason: according to the report the Health Insurance Trust Fund (Medicare Part A) is still projected to be depleted in 2026.
A more accurate projection of future Medicare rates will most likely be released by the start of Medicare’s “Open Enrollment” which starts in October of this year.