2019 Medicare Changes: Everything You Need to Know

Get the latest info on the healthcare program that tens of millions of older Americans rely on.

Dan Caplinger
Dan Caplinger
Mar 7, 2019 at 1:43PM
Investment Planning

Every year, the federal health insurance program called Medicare sees some changes to the coverage it provides. Many of these changes come in the form of adjustments to costs, as the program is designed to pass on a portion of its costs to its participants, and those costs typically rise slightly from year to year.

Some of these annual changes are small -- amounting to just a few dollars per month in some cases -- and therefore don't have a material impact on participants, but many changes are quite important for those who rely on the program.

Below, this guide details all the Medicare changes that have taken effect in 2019, so you'll know what to expect from the program for yourself and your loved ones.

Paper labeled "Medicare" with a stethoscope on top of it, on a wood desk.

Image source: Getty Images.

What is Medicare?

Medicare provides healthcare coverage to more than 60 million Americans, most of whom became eligible to get Medicare when they turned 65. Medicare doesn't pay all of the medical expenses that its participants incur, but it covers the majority of those costs, reducing the amount that people have to pay out of their own pockets. With programs that include coverage for hospital expenses, outpatient medical procedures, doctor visits, prescription drugs, and much more, Medicare has a broad scope that matches up well with the needs of the vast majority of its participants.

Medicare gets its funding from a couple of primary sources. First, workers have payroll taxes withheld from their paychecks that go toward funding a portion of Medicare benefits. As you'll see below, those taxes largely make it possible for recipients to get part of their Medicare coverage without paying a monthly premium. In addition, some parts of Medicare do charge a premium to participants, and while those payments don't cover all of the program's costs, they play a vital role in supplementing the general government expenditures that make up a huge portion of Medicare's budget.

Medicare's history starts in 1965, when President Johnson signed legislation to create the program. Prior to Medicare, only about 60% of those 65 or older had health insurance, and it was difficult for many to get coverage due to the high costs of private insurance.

Medicare initially provided coverage for two types of expenses: hospital stays and inpatient procedures, and doctor visits and outpatient procedures. Over time, Medicare has expanded its coverage. An option to get Medicare-like coverage provided by private insurance, now known as Medicare Advantage, got officially added to Medicare in the mid-1990s, and prescription drug coverage became part of Medicare in the early 2000s.

The current version of Medicare offers participants a wide array of choices with which they can tailor their healthcare coverage to their specific medical needs.

What changes does Medicare make every year?

With these substantial expansions over the years, Medicare has increasingly become a cornerstone on which older Americans rely for their financial security. For most people, having Medicare available is a key element of their financial planning during retirement, and the stability of the program makes it easier for people to plan exactly how their coverage will help them handle their healthcare needs.

However, the government agency responsible for overseeing Medicare makes a number of minor changes each and every year. Most of these adjustments are tied to the financial contributions that participants are expected to make in order to obtain their Medicare coverage, ensuring that the costs of the program don't become too burdensome to the federal government. These annual changes regularly include adjustments to the following:

  • Monthly premium costs for those who have to pay them for hospital coverage under Medicare Part A.
  • Deductibles and coinsurance amounts for hospital stays and skilled nursing facilities under Part A.
  • Standard monthly premium costs for medical coverage under Medicare Part B.
  • Surcharges and income limits for additional premiums that high-income individuals must pay under Part B.
  • Deductibles for Part B coverage.
  • Deductibles, initial coverage limits, and out-of-pocket maximums for prescription drug coverage under Medicare Part D.
  • Surcharges and income limits for additional premiums that high-income individuals must pay under Part D.

Let's take a closer look at each of these changes for 2019 and how they will affect participants.


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Monthly premium costs for Medicare Part A hospital coverage

Medicare Part A is designed to cover expenses related to hospital stays as well as expenses for skilled nursing facilities. In general, covered hospital expenses include a semiprivate room, meals, nursing services, and prescription drugs and other treatment and services you receive during your stay. Typically, you need two nights of care at a hospital for Medicare coverage to apply. If you're assigned to a skilled nursing facility outside a hospital, the visit must be in connection with at least a three-day hospital stay in order for Part A coverage to apply. In addition, some other services are included in Part A, such as hospice care for a terminal condition.

For most people, Part A coverage comes at no cost as long as you or your spouse worked the required minimum amount and had Medicare payroll taxes withheld from your pay. Workers can earn up to four coverage credits each year, and for 2019, it takes $1,360 in earnings to get a credit. It takes 40 coverage credits over your lifetime to get full no-cost Part A coverage, so most people end up getting full coverage after about 10 years. You can track your credits yourself, or you can get information on Medicare credits and coverage in the annual Social Security statement that's available to workers through the Social Security website.

If you don't have enough credits, then you'll pay a monthly premium for Part A coverage. The updated premiums for 2019 are listed below:

Number of Credits

2019 Monthly Premium (Change From 2018)

40 or more

None

30 to 39

$240 (up $8)

Less than 30

$437 (up $15)

Data source: Medicare.gov.

Deductibles and coinsurance amounts for Medicare Part A coverage

Everyone has to pay deductibles and coinsurance amounts if they take advantage of Medicare Part A coverage during a particular year. The deductible is the amount that you have to cover before Medicare kicks in at all. The coinsurance amount is your share of additional costs, which varies depending on exactly what type of service you're using.

The table below summarizes the costs involved:

Medicare Charge

2019 Cost (Change From 2018)

Hospital deductible

$1,364.00 (up $24)

Coinsurance for days 61-90 of hospital stay

$341.00 (up $6)

Coinsurance for days 91 and beyond of hospital stay using lifetime reserve days

$682.00 (up $12)

Coinsurance for days 21-100 of skilled nursing facility stay

$170.50 (up $3)

Data source: Medicare.gov.

So for instance, say you're in the hospital for five days and incur charges of $40,000. You'll pay the first $1,364 as your deductible. However, there's no coinsurance for the first 60 days of a hospital stay, so Medicare will cover the remainder of your costs. If you were in the hospital for longer than 60 days (but less than 91 days), then you'd have to pay the $341-per-day amount, with Medicare covering the rest.

Standard monthly premium costs for Medicare Part B medical coverage

Medicare Part B covers expenses for medically necessary services and treatments to address a disease or medical condition. The costs of diagnosing, treating, curing, detecting, or preventing illnesses or injuries are included in this part of Medicare coverage. Doctor visits are the most common service under Part B, but coverage also includes diagnostic tests, ambulance services, and medical equipment.

For most people, Part B premiums during 2019 will be $135.50 per month. That's up $1.50 from 2018's monthly premium amount. However, there are a couple of situations in which those premiums will be different. First, as you'll see in greater detail below, those who have incomes above certain levels have to pay additional amounts toward their Medicare premiums. On the other hand, those whose increases in Social Security benefits are insufficient to cover the additional cost of Medicare Part B premiums are allowed to pay lower amounts. This reduced premium applies to about 2 million Medicare beneficiaries, or roughly 1 in 30 participants in the program.

Surcharges and income limits for additional Medicare Part B monthly premium costs

Medicare coverage is available to all regardless of income. But in order to shore up the finances of the Medicare system, higher-income individuals have to pay higher monthly premiums for their Part B coverage.

The table below shows who's considered in this case to be a high-income individual, as well as how much extra one has to pay every month, depending on level of income.

Income Level for Individual Taxpayers*

Income Level for Joint Filers

Income Level for Married Filing Separately*

Added Monthly Charge for Part B Premium

$85,000 to $107,000

$170,000 to $214,000

N/A

$54.10

$107,000 to $133,500

$214,000 to $267,000

N/A

$135.40

$133,500 to $160,000

$267,000 to $320,000

N/A

$216.70

$160,000 to $500,000

$320,000 to $750,000

$85,000 to $415,000

$297.90

More than $500,000

More than $750,000

More than $415,000

$325.00

Source: Medicare.gov. *Those married filing separately are covered under the individual column if they did not live together at any time during the tax year.

Not only are the surcharge amounts higher than they were in 2018, but there's also an additional income bracket at the top of the income range. For the first time in 2019, the individual income bracket above $160,000 was broken into two pieces, and the upper bracket that covers incomes above $500,000 has a new, higher charge associated with it.

Deductibles for Medicare Part B coverage

Just like Part A, Medicare Part B comes with a deductible that you have to pay before coverage begins. For 2019, the Part B deductible will be $185. That's $2 higher than it was in 2018.

Deductibles, initial coverage limits, and out-of-pocket maximums for prescription drug coverage under Medicare Part D

Medicare Part D provides prescription drug coverage. However, unlike Parts A and B, Part D coverage is provided through private health insurance companies. You'll pay a monthly premium directly to the insurance company you choose for your Part D coverage, and there's no set amount that you'll have to pay. Insurance companies can tailor their coverage and set their own premiums accordingly, choosing to cover certain prescription drugs but not provide coverage for others. That can lead to a dramatic difference in the amount you'll pay for Part D premiums.

However, Part D plans are required to have set deductibles, initial coverage limits, and out-of-pocket maximums. In between the initial coverage limit and the out-of-pocket threshold, you're responsible to cover a portion of the costs of your prescription drugs. A plan can offer better coverage than these amounts, but they can't have worse coverage.

Medicare Charge

2019 Cost (Change From 2018)

Initial prescription drug deductible

$415 (up $10)

Initial coverage limit

$3,820 (up $70)

Brand-name drug shared cost above initial coverage limit

25% (down 10 percentage points)

Generic drug shared cost above initial coverage limit

37% (down 8 percentage points)

Out-of-pocket threshold

$5,100 (up $100)

Data source: Medicare.gov.

Consider this example of how this all works. Let's say you were in need of prescription drugs. Under the deductible, you'd initially be responsible for paying the first $415 of your prescription drug costs. Then coverage under your Part D plan kicks in up to $3,820 in drug costs, limiting what you have to pay to whatever copayments your plan requires you to make. Above $3,820, you have to cover 25% of the cost of brand-name drugs or 37% of generic drug costs until your total costs get to $5,100. Above that threshold, catastrophic coverage kicks in, and you pay only 5% of the remaining cost of prescription drugs.

Surcharges and income limits for additional Medicare Part D monthly premium costs

As with Part B coverage, Medicare boosts the monthly premiums for prescription drug coverage if your income is above certain levels. The table below works the same way that the similar Part B table above does, showing how much extra you'll have to pay each month depending on where your income level falls.

Income Level for Individual Taxpayers*

Income Level for Joint Filers

Income Level for Married Filing Separately*

Added Monthly Charge for Part D Premium

$85,000 to $107,000

$170,000 to $214,000

N/A

$12.40 (down $0.60)

$107,000 to $133,500

$214,000 to $267,000

N/A

$31.90 (down $1.70)

$133,500 to $160,000

$267,000 to $320,000

N/A

$51.40 (down $2.80)

$160,000 to $500,000

$320,000 to $750,000

$85,000 to $415,000

$70.90 (down $3.90)

More than $500,000

More than $750,000

More than $415,000

$77.40 (up $2.90)

Source: Medicare.gov. *Those married filing separately are covered under the individual column if they did not live together at any time during the tax year.

These amounts are actually less than the corresponding surcharges for 2018, with the exception of the top income bracket. That bracket didn't exist last year, with all single filers earning $160,000 or more and all joint filers earning $320,000 or more paying the same amount of $74.80 per month in 2018.

How do I make changes to my Medicare coverage?

That covers all the automatic changes to Medicare that happen each year. But you also have the right to make changes of your own to your Medicare coverage. These changes can happen in the following ways:

  • During an initial enrollment period.
  • During the annual open enrollment periods.
  • During special enrollment periods.

Your initial enrollment period begins three months before you turn 65 and ends three months after your 65th birthday. During that initial eligibility period, you can sign up for original Medicare, or you can choose a Medicare Advantage plan. You're also entitled to choose a Part D prescription drug plan if you wish. Also, from Jan. 1 to March 31 each year, you can sign up for Medicare under the general enrollment period if you didn't sign up during your initial enrollment period when you first became eligible.

Every year, Medicare has set open enrollment periods during which you can make changes to your coverage. In the regular open enrollment from Oct. 15 to Dec. 7, you can:

  • Switch from original Medicare to a Medicare Advantage plan.
  • Switch from a Medicare Advantage plan to original Medicare.
  • Switch from one Medicare Advantage plan to another.
  • Drop, add, or switch Part D drug plans.

There's also a Medicare Advantage open enrollment period from Jan. 1 to March 31, during which you can do the following:

  • Switch from a Medicare Advantage plan to original Medicare.
  • Switch from one Medicare Advantage plan to another.

However, during this Medicare Advantage open enrollment period, you're not allowed to go from original Medicare to a Medicare Advantage plan.

Finally, there are special enrollment periods during which you can sign up for Medicare or make changes to your coverage. For instance, if you had healthcare coverage at your job or through your spouse's employer, you might not have signed up for Medicare when you turned 65. When that coverage ends -- for example, if you retire or your spouse changes jobs -- then you get a special enrollment period to sign up for Medicare. The special enrollment period lasts for eight months.

Some other events can trigger a special enrollment period as well. If you were eligible for other types of need-based healthcare coverage such as Medicaid but you lose eligibility, then a special enrollment period for Medicare begins. Similarly, if a Medicare Advantage plan or Part D drug plan stops providing coverage, you're able to make changes.

When is it smart to make a change to Medicare coverage?

Most Medicare participants never make changes to their initial choices for coverage. That isn't always your best move, because making changes can have many benefits for you, especially if your health status changes.

One common situation involves Part D drug plans. If you don't use any prescription drugs, then you might opt either not to enroll in a Part D plan at all or to choose one that comes at no monthly premium cost to you. Even though the coverage under a no-premium Part D plan might be quite limited, it doesn't really matter since you don't need any drugs at that time.

However, if your health changes and you suddenly need a selection of prescription drugs, then you might save money overall by choosing a Part D plan that includes attractive coverage for those particular drugs. Even if the monthly premium on a new plan is higher, your total costs could drop if the new plan includes lower deductibles and copays on the drugs you need.

The same is true for choosing between original Medicare and Medicare Advantage plans. In some cases, the costs of coverage under Medicare Advantage can be cheaper, but it depends on the nature of your medical needs. By tailoring your coverage each year, you can figure out which plan will serve you best during one year and then change to a more suitable plan the following year if your health circumstances change.

Finally, one thing to consider is whether you should get Medicare supplemental insurance -- also known as Medigap coverage -- to cover the portion of costs that Medicare doesn't cover. There's an additional premium involved, but if your overall costs are high enough, then a Medigap policy can save you money in the long run. For more on Medigap policies, the Medicare website has useful information to help you consider your options.

Make the most of Medicare in 2019

Whether you're brand new to Medicare or have been part of the program for years, it's essential to know how it works and what options are available to you. By understanding the automatic changes that happen with Medicare as well as your own choices that are available to you each year, you'll be able to make Medicare work as hard as it can for you.