Medicare Premiums for 2021 have been announced, STWS advisor Jennifer Meyer, CFP, explains what this means for feds.
This time of year can be especially stressful for federal retirees as they await the announcement of the COLA (cost of living adjustments) to their pensions and social security; along with the increases in the cost for Medicare premiums. Several weeks ago, the COLA adjustment was announced at 1.3% for 2021 and last week, the Centers for Medicare and Medicaid Services (CMS) announced the increase to Medicare premiums.
As expected, Medicare Premiums will be increasing in 2021. The 2.7% increase in the Medicare Part B premium is slightly higher than double the 1.3% 2021 COLA increase for social security and federal retiree pensions. The Medicare B premium for the majority of Americans will increase $3.90 per month from $144.60 in 2020 to $148.50 in 2021. (source: Medicare.gov)
Medicare Part B premiums are tiered so that those with higher incomes will pay more in premium than those in the lower-income brackets. The following chart illustrates the new premium scale at all income levels.
2021 Medicare Part B Premiums
If your yearly income in 2019 (for what you pay in 2021) was...
File individual tax return
File joint tax return
File married & separate tax return
...then you pay each month (in 2021)
$88,000 or less
$176,000 or less
$88,000 or less
above $88,000 up to $111,000
above $176,000 up to $222,000
above $111,000 up to $138,000
above $222,000 up to $276,000
above $138,000 up to $165,000
above $276,000 up to $330,000
above $165,000 and less than
above $330,000 and less than $750,000
above $88,000 and less than
$500,000 or above
$750,000 and above
$412,000 and above
Medicare A which covers inpatient hospital and skilled nursing care does not have a premium for the overwhelming majority of Americans as it is funded with the payroll taxes that one pays throughout their working career. However, Medicare A does have an annual deductible. For 2021, that deductible will be $1484, an increase of $76 from $1408 in 2020. In addition, the coinsurance that Medicare Part A beneficiaries will pay is also increasing from $352 in 2020 to $371 in 2021. (source: Medicare.gov)
The takeaway for federal retirees and for those planning to retire remains the same, the cost of your healthcare continues to rise at a faster rate than the annual adjustment on your pensions and social security. It is critical to plan ahead for this as you plan for and live in retirement.
The advisors at Serving Those Who Serve are available to help with your planning. Please do not hesitate to reach out if there are additional questions.
**Written by Jennifer Meyer, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.**
2021 Medicare Premiums