Millions of seniors depend on Medicare for health benefits in retirement. But as current enrollees can attest, coverage under Medicare is by no means free.

Medicare is divided into several distinct parts. Part A, which covers hospital care, generally is free for enrollees, but Parts B and D charge participants a premium. The premium for Part B, which covers outpatient care, preventive care, and diagnostic services, is determined on a national level. Part D drug plan availability, meanwhile, can vary from state to state, and the premiums associated with these plans can also vary.

It's not unusual for the costs associated with Medicare Part B to rise from year to year. But unfortunately, seniors may be in for some unpleasant changes going into 2020.

Older man with assorted pills in his hands


How Medicare Part B is changing 

Currently, the standard monthly premium for Medicare Part B is $135.50. In 2020, however, that number is increasing to $144.60. Now a $9.10 jump may not seem all that significant, but consider this: Going into 2020, Social Security recipients are looking at a mere 1.6% cost-of-living adjustment (COLA). For the average beneficiary, that means going from a monthly benefit of $1,479 to $1,503. Thanks to Medicare's upcoming Part B premium hike, more than one-third of that $24 raise will now go toward that increase, leaving seniors on Social Security with even less money in their pockets.

But it's not just Medicare Part B premiums that are going up; the annual deductible for Medicare Part B is also rising from $185 to $198. And while an extra $13 over the course of a year may not seem like such a big deal, for cash-strapped seniors, it just adds insult to injury.

Keep in mind that higher earners will also pay a higher premium (meaning, more than the standard) for Medicare Part B next year. Enrollees who file individual tax returns with incomes above $87,000 will face a surcharge, as will enrolled couples filing joint tax returns with incomes above $174,000.

Budgeting for healthcare

The cost of healthcare should be a major line item on your retirement budget. But you'll also need to keep that figure flexible, since Medicare costs can climb over time. Personal health issues can add to your costs as well, so be mindful of that as you map out your expenses.

Of course, your best bet is to save aggressively prior to retirement so you have money on hand to cover your senior healthcare costs. You can do so by consistently funding an IRA or 401(k), or by participating in a health savings account, or HSA, during your working years, provided you're eligible. HSAs are limited to those enrolled in high-deductible health insurance plans, but HSA funds can be carried into retirement and used to cover the aforementioned Medicare costs.

An increase in Medicare premiums and deductibles is never good news for seniors. The silver lining, however, is that Part B premium hikes shouldn't completely wipe out the average Social Security recipient's COLA. Another positive? Though Part B may be getting more expensive in 2020, it does offer seniors a host of no-cost preventive care options. Taking advantage of these services is a good way to avoid extensive health issues that can add to your out-of-pocket costs on a whole.