The Centers for Medicare and Medicaid Services (CMS) in November announced the 2021 premiums for Medicare Part B.
For most Medicare beneficiaries, premiums, deductibles and surcharges will increase. Premiums will rise to $148.50 per month, an increase of $3.90, while Medicare Part B deductibles will increase by $5 to $203. Retirees will also pay a different premium amount in 2021 if they fall into a different income-related category. This change happens once individual filers reach $88,001 or a joint-filer reaches $176,001, for income earned in 2019.
The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premium. Thus, the income reported on a beneficiary’s 2019 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2021. Beneficiaries whose income has decreased significantly in the past two years may request that the information from more recent years be used to calculate the premium.
Important consideration related to Social Security
For Medicare beneficiaries who have Medicare Part B premiums automatically deducted from Social Security benefits, the Social Security Cost of Living Adjustment (COLA) must be large enough to cover the premium cost. Since some beneficiaries already pay lower-than-standard premiums because of this rule, the 1.3% increase in the 2021 cost-of-living adjustment won’t be enough to cover the premium increase of $148.50 per month, and, as a result, beneficiaries to whom this applies will continue to pay a lower premium.
Reimbursements for PRMB recipients
For those members receiving post-retirement medical benefits paid for by the state of New Jersey, the standard Medicare Part B premium is reimbursed in the member’s pension check. Any income-related adjustment that members or their dependents pay—or that new enrollees pay—is reimbursed at the end of the year in which the adjustment is paid, only after the proper paperwork is filed with the Division of Pensions and Benefits. Notice on how to file for any income-related adjustment reimbursement will be sent to retirees, as well as posted on the New Jersey Division of Pensions and Benefits website by early February.
Additional details can be found by visiting the NJREA webpage at njea.org/njrea and will be in the January issue of the NJEA Review. If you have questions about your Medicare Part B premium, call 800-MEDICARE (800-633-4227.) Any questions regarding the reimbursement process should be directed to the NJ Division of Pensions and Benefits at 609-292-7524. Members also can view updates via the division’s “Letters to Retirees” at state.nj.us/treasury/pensions/pension-retirees.shtml.