Medicare Part B Premiums To Rise 2.7% In 2021, With Premiums For Highest-Income Couples Topping $12,000 A Year

The Centers for Medicare & Medicaid Services has announced Medicare Part B premiums for 2021, and the base premium increases just 2.7% from $144.60 a month to $148.50 a month. That $3.90 monthly increase compares to a big $9.10 monthly increase last year, after a $1.50 monthly increase the year before. Meanwhile high earners are still getting used to income-related surcharges that kicked into higher gear in 2018, and those have been bumped up again too. The wealthiest senior couples will be paying more than $12,000 a year in Medicare Part B premiums. Part B (the base and the surcharge) covers doctors’ and outpatient services.

The annual deductible for all Medicare Part B beneficiaries is $203 in 2021, an increase of just $5 from the annual deductible of $198 in 2020. What kept the increases n the Part B premiums and the deductible in check this year? As part of the short-term budget bill in October, Congress capped the increases. Yet Medicate spending is expected to grow this year as people seek care they may have delayed due to Covid-19, CMS says.

The CMS announcement comes after last month’s Social Security Administration’s COLA announcement: a 1.3% cost of living adjustment for 2021. The average Social Security benefit for a retired worker will rise by $20 a month to $1,543 in 2021, while the average benefit for a retired couple will grow $33 a month to $2,596. The higher Medicare Part B premium cuts into retirees’ monthly Social Security payments. Part B premiums typically are deducted from monthly Social Security checks.

While most of the 60 million Medicare recipients will pay the new $148.50 standard monthly premium, some will pay less because of a “hold harmless” provision that limits certain beneficiaries’ increase in their Part B premium to be no greater than the increase in their Social Security benefits.

CMS says 7% of Medicare recipients will have to pay income-related surcharges. The graduated surcharges for high-income seniors kick in for singles with modified adjusted gross income of more than $88,000 and for couples with a MAGI of more than $176,000. An individual earning more than $88,000, but less than or equal to $111,000, will pay $207.90 in total a month for Part B premiums in 2021, including a $59.40 surcharge. That’s up 2.7% from 2020, when they paid $202.4 total in a month, including a $57 surcharge.

By comparison, the wealthiest retirees—singles with $500,000 of income or more and couples with $750,000 of income or more—will face total premiums of $504.90 a month per person, including a $356.40 surcharge, in 2020. That comes to $12,117.60 a year f0r a couple.

The income-related premium surcharges apply to Part D premiums for drug coverage too.

Here are the official numbers from the CMS release, what you’ll pay per month for 2021, depending on your income, for individuals and couples filing a joint tax return (the 2021 income-related surcharges are based on AGI reported on 2019 tax returns):

CMS announced in July that the average basic premium for Part D, private health plans which cover prescription drugs, is $30.50 for 2021. Medicare open enrollment runs from October 15, 2020 through December 7, 2020 for the 2021 plan year.