Medicare, the government program for seniors that is the basis for the “Medicare for All” political rallying cry, has some news of its own to announce for 2020. Several Medicare changes take effect this year, with some applying to all recipients and others only to those on a Medicare Advantage (MA) plan.

Key Takeaways

  • Medicare Part A premiums increased to $458, but many people qualify for premium-free coverage.
  • Medicare Part B premiums increased to $144.60, with a $198 deductible.
  • Supplement Plan F and Plan C are no longer available if you became eligible on or after Jan. 1, 2020.
  • The Medicare Part D "donut hole" has been closed.
  • The CARES Act of 2020 expanded Medicare's ability to cover treatment and services for people affected by COVID-19.

Medigap

When you enroll for Medicare, you must choose between Original Medicare (Parts A and B) and a Medicare Advantage Plan. Original Medicare covers a lot of costs, but not all. So, most people who opt for Original Medicare also get a Medigap plan.

Medigap is Medicare Supplement Insurance, and it's sold by private companies. It helps fill the gaps in Original Medicare coverage by paying the remaining costs for copayments, coinsurance, and deductibles. Some Medigap plans also cover medical care when you travel outside the U.S.

As of Jan. 1, 2020, Medigap plans sold to new people with Medicare can't cover the Part B deductible. Due to this, Plans C and F are no longer available to people new to Medicare starting Jan. 1, 2020. You can keep your plan if you were already covered by one of these plans prior to Jan. 1, 2020.

As of Jan. 1, 2020, Medigap plans sold to new people with Medicare can't cover the Part B deductible.

Medigap Plan G High-Deductible

New for 2020 is a Medigap Plan G High-Deductible option (not available in all states). With this plan, you pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount—$2,340 for 2020—before the plan pays anything.

Once you reach your deductible, the plan covers any costs for Medicare-approved services. Because of potentially high out-of-pocket costs, the premiums are typically much lower than for the standard Plan G option.

Medicare Advantage Plans

Medicare Advantage Plans (Part C) are a type of Medicare offered by private companies that contract with Medicare to provide all your Part A and Part benefits.  Most of these plans also offer some attractive extras such as dental, vision, and hearing, and you can buy a Medicare D plan if you want prescription drug coverage.

Medicare Advantage plans typically provide more benefits with lower premiums. The downside is that MA plans require you to choose “in network” providers. If you go outside the plan’s network or geographical area, you may pay more or not have coverage at all. Many Part D drug plans also have a network with similar restrictions. The table below outlines basic coverage provided by each type of Medicare plan.

Plan Type Hospital Medical Drugs Extras Network
Original Medicare (Parts A & B) Yes (A) Yes (B) Limited No No
Medigap Supplemental Yes (A) Yes (B) No Limited No
Prescription Drug (Part D) No No Yes No Yes
Medicare Advantage (Part C) Yes Yes Yes Yes Yes

2020 Premiums and Deductibles

Most of the premiums, deductibles, and coinsurance amounts for the different Medicare Parts have changed. The new amounts for 2020 are:

  2020 Medicare Costs
Part A Premium Free for most people. If you buy Part A, it costs $252 to $458, depending on how many months of Medicare taxes you've paid
Part A Deductible and Coinsurance $1,408 deductible for each benefit period
Days 1-60: $0 coinsurance for each benefit period
Days 61-90: $352 coinsurance per day of each benefit period 
Days 91 and beyond: $704 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to a lifetime maximum of 60 days)
Beyond lifetime reserve days: All costs
 
Part B Premium $144.60 or higher, depending on your income
Part B Deductible and Coinsurance $198. After you meet your deductible, you pay 20% of the Medicare-approved amount for covered services
Part C Premium The monthly premium varies by plan
Part D Premium  The monthly premium varies by plan

The CARES Act of 2020

In addition to new premium, deductible, and coinsurance amounts, the COVID-19 pandemic led to some unplanned Medicare changes for 2020.

On March 27, 2020, President Trump signed into law a $2 trillion coronavirus emergency stimulus package called the CARES (Coronavirus Aid, Relief, and Economic Security) Act. It expands Medicare's ability to cover treatment and services for those affected by COVID-19. The CARES Act also:

  • Increases flexibility for Medicare to cover telehealth services.
  • Authorizes Medicare certification for home health services by physician assistants, nurse practitioners, and certified nurse specialists.
  • Increases Medicare payments for COVID-19-related hospital stays and durable medical equipment.

For Medicaid, the CARES Act clarifies that non-expansion states can use the Medicaid program to cover COVID-19-related services for uninsured adults who would have qualified for Medicaid if the state had chosen to expand. Other populations with limited Medicaid coverage are also eligible for coverage under this state option.

Part D Donut Hole

The "donut hole" closed for all drugs in 2020, so you now pay a smaller percentage of the costs of your drugs than you had to in the past. Even though the donut hole has technically closed, you still pay more for prescription drugs during the coverage gap in your Part D plan.

For 2020, this coverage gap starts when you and your drug plan have spent $4,020 on covered drugs. Once you reach this level, you'll pay no more than 25% of the cost for covered drugs (brand-name and generic), whether you buy your prescriptions at a pharmacy or online. Before the donut hole closed, you paid a higher percentage.

While you pay up to 25% of costs during the coverage gap, almost the full price of your prescriptions count as out-of-pocket costs. This helps you get through the coverage gap faster. Once you reach your out-of-pocket maximum for covered drugs ($6,350 for 2020), you enter the catastrophic coverage phase, in which you pay only a small coinsurance or copayment for covered drugs for the rest of the year.

2019 Medicare Changes

2019 saw many improvements to Medicare and Medicare Advantage Plans, which are still in effect for 2020:

Improved Medicare Handbook

The Medicare & You handbook, which the agency sends to beneficiaries every year, was updated for 2019 to include checklists and flowcharts that make it easier to evaluate coverage. In addition, the online Medicare Plan Finder tool was updated, along with an improved coverage wizard designed to help you compare costs and options between Original Medicare and Medicare Advantage.

Improved Telemedicine

Telehealth services, which allow patients to connect with medical professionals via video conference, now cover those with end-stage renal disease or undergoing treatment for a stroke. This is important for seniors with mobility problems who may previously have delayed going for treatment for those reasons.

Medicare Therapy Cap Gone

If you have Original Medicare, you are no longer subject to a cap on outpatient physical, speech, and occupational therapy. Historically, Medicare has limited the amount of coverage you had for those types of services.

More Part D Preferred Pharmacy Plans

Many Part D prescription drug plans now offer lower premiums and copayments if you agree to use a pharmacy in the plan’s network. Otherwise, you may pay a lot more. Before signing up for a Part D plan, find out if it includes preferred pharmacies and if your favorite drugstore is in the network.

New Part D Pain Management Policies

Starting in 2019, Medicare restricted initial opioid prescriptions to a seven-day (or less) supply. Additionally, if your daily dosage exceeds a set amount, the pharmacy must contact the prescriber for the claim to be paid. If a patient is identified as “at risk” for opioid abuse, Medicare will contact the prescriber to determine whether a drug management program should be utilized.

MA Plan Expanded Network Coverage

Some MA Plans provide more expansive coverage for the use of out-of-network providers. In most cases this improved coverage comes at a higher cost. Choosing one of these plans could make sense if you want to be able to use out-of-network providers with an MA plan.

MA Plan Expanded Choices

About 600 new Medicare Advantage Plans were added in the U.S. in 2019. The CMS says more than 91% of Medicare recipients will have access to 10 or more Medicare Advantage plans, and in some areas the number of Part D prescription drug plans and options will increase as well.

MA Plan Lifestyle Support

As of January 2019, Medicare Advantage Plans have the option to cover nicotine replacement therapy, diabetes, congestive heart failure, meals delivered to your home, transportation to a doctor’s office and certain safety features, such as bathtub grab bars and wheelchair ramps. If your plan provides this coverage, you will need the recommendation of your doctor to obtain it.

MA Plan Home Health Care

MA plans can elect to pay for home health aides to help with dressing, eating, personal care, and other daily activities. As with other types of lifestyle support, your doctor must recommend coverage for you.

MA Plan Step Therapy Option

Also new for 2019, Medicare Advantage Plans have the option to apply step therapy for certain doctor-ordered and Part B drugs. This means you may be required to try a lower-priced medication before the plan approves a higher-priced medication to treat your condition. If your MA plan has elected step therapy, it must offer a drug management care coordination program and may offer you incentives, such as gift cards, to encourage your participation.

The Bottom Line

Familiarize yourself with the changes listed above and watch for changes in the works for 2021 and beyond, including plans to mandate lower drug prices and offer even more services to Medicare beneficiaries.