By now, you’ve probably heard the news. The Medicare Part B premium is increasing by $21.60, making the standard monthly premium $170.10. That is a 14.5% increase, the largest we’ve seen in Medicare’s history.
Why such a big jump in premium? In this article, we’re going to discuss some of the factors involved in the premium increase and what other changes you can expect in 2022.
Factors Causing the Part B Premium Increase
After their announcement on November 12, CMS cited three reasons for the significant increase in Part B premiums.
First, we are all aware of the rising costs of healthcare, especially for the older population, who tends to require more care. Some of the higher costs have also been attributed to the COVID-19 pandemic. Rising prices mean rising premiums – in Medicare and the rest of the health insurance sectors.
Second, Congress limited increases for 2021 when the pandemic was in full swing. In 2021, the premium was increased by only $3. However, Congress did say that the CMS would need to pay back the reduced premium over time. The payback starts in 2022.
Lastly, the CMS is using revenue from the new premium to set aside funds in case it decides to cover a new Alzheimer’s drug – Aduhelm. The Food and Drug Administration (FDA) approved Aduhelm earlier in 2021, but CMS is still determining whether or not it will be included in Medicare coverage.
Aduhelm is expected to cost $56,000 a year – for just one person. Using some of the increased premium revenue as a reserve for this medication does not indicate that it will be approved, but CMS is taking a proactive approach in case of a positive determination. This contribution to the increased premium is what has most Medicare beneficiaries upset. Taxpayers and beneficiaries are paying for the high price that drug companies have placed on their medications.
- Taxpayers and beneficiaries are paying for the high price that drug companies have placed on their medications.
IRMAA Schedule Updates
IRMAA stands for Income-Related Monthly Adjustment Amount. This is an amount that could be added to the standard Part B premium if you make more than certain thresholds. The threshold limits, as well as the adjusted amounts, are changing in 2022.
Individuals who had a Modified Adjusted Gross Income (MAGI) of more than $91,000 or married individuals who filed jointed and made more than $182,000 will have a $68 increase in their individual premiums, bringing their total monthly payment to $238.10. The premium continues to increase over several intervals, reaching the highest amount of $578.30.
Remember, the Social Security Administration uses your MAGI from two years prior to calculate your premium.
For a full breakdown of limits and adjustments, you can go to Medicare.gov.
Medicare Deductibles in 2022
Premiums aren’t the only thing increasing in 2022. Deductibles for Parts A, B, and D are also changing.
The Part A deductible in 2022 is $1556. The Part A deductible works differently than most other deductibles in insurance. This one applies per benefit period, not calendar year. A benefit period begins on the first day of an inpatient hospital stay and ends after you have been hospital-free for 60 days. This means that you could pay the Part A deductible multiple times in one year.
The Part B deductible is much more simple as it is an annual deductible. It is being increased by $30 in 2022, making the total $233 per calendar year.
Most Part D plans use the standard (maximum) deductible, but it can vary based on your plan. The standard Part D deductible is moving to $480 in 2022. That’s not the only change for Part D plans. The catastrophic threshold is also increasing to $7050. This is the amount you must pay out-of-pocket for prescriptions before your catastrophic coverage begins. (Once in the catastrophic phase of coverage, your prescription medication costs are significantly decreased.)
It is now more important than ever to work with a licensed agent to figure out how you can control your healthcare expenses. We can discuss what options you have to strategize your coverage and reduce your out-of-pocket expenses as much as possible. Please call our office today and schedule your free consultation.