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Medicare Cost Changes for 2022

The Centers for Medicare & Medicaid Services (CMS) recently released the 2022 changes for Medicare premiums and deductibles for Part A and Part B. The Medicare Income-Related Monthly Adjustment Amount (IRMAA) amounts were also revealed for next year. IRMAA is the means-testing component for Part B, where higher income recipients pay additional costs for coverage.

Part A covers inpatient hospital care in addition to skilled nursing facilities and inpatient rehabilitation. Individuals who are qualified for Social Security benefits do not pay monthly premiums for Part A coverage. They are subject to annual deductibles. Those increase roughly 5% to $1,556 compared to 2021 deductibles ($1,484). Purchasing a Part B supplement or Medicare Advantage Plan can help offset these annual Part A costs.

Part B costs, which cover outpatient care like doctors’ visits, saw a significant increase for 2022. Both Part B premiums and deductibles are set to increase by nearly 15% next year. The monthly standard premium will increase from $148.50 to $170.10 per recipient. The annual deductible will increase to $233 per person, up from $203 in 2021. Per the CMS, these increases are related to a handful of factors:

  • The continued rising costs across the health care system, which pushes premiums higher.
  • Congressional action that reduced the premium increase in 2021 due to the Covid-19 pandemic. This led to increases for recipients through 2025.
  • The need for additional reserves to account for the utilization of the Alzheimer’s drug, Aduhelm. CMS is still determining the cost & utilization of this and other Alzheimer’s drugs and how they will be covered by Medicare in the future.

For higher-income recipients, they may see even higher Part B premiums due to IRMAA. CMS released the new brackets for 2022, which tack on additional monthly costs for Part B and Part D drug plans. These increases are based on modified adjusted gross income (MAGI) from two year’s prior and vary based upon tax filing status. The Part B IRMAA changes for 2022 are:

Beneficiaries who file individual tax returns with modified adjusted gross income: Beneficiaries who file joint tax returns with modified adjusted gross income: Income-related monthly adjustment amount Total monthly premium amount
Less than or equal to $91,000 Less than or equal to $182,000 $0.00 $170.10
Greater than $91,000 and less than or equal to $114,000 Greater than $182,000 and less than or equal to $228,000 $68.00 $238.10
Greater than $114,000 and less than or equal to $142,000 Greater than $228,000 and less than or equal to $284,000 $170.10 $340.20
Greater than $142,000 and less than or equal to $170,000 Greater than $284,000 and less than or equal to $340,000 $272.20 $442.30
Greater than $170,000 and less than $500,000 Greater than $340,000 and less than $750,000 $374.20 $544.30
Greater than or equal to $500,000 Greater than or equal to $750,000 $408.20 $578.30

 

For Part D drug plans, high income recipients can expect the following changes:

 

Beneficiaries who file individual tax returns with modified adjusted gross income: Beneficiaries who file joint tax returns with modified adjusted gross income: Income-related monthly adjustment amount
Less than or equal to $91,000 Less than or equal to $182,000 $0.00
Greater than $91,000 and less than or equal to $114,000 Greater than $182,000 and less than or equal to $228,000 $12.40
Greater than $114,000 and less than or equal to $142,000 Greater than $228,000 and less than or equal to $284,000 $32.10
Greater than $142,000 and less than or equal to $170,000 Greater than $284,000 and less than or equal to $340,000 $51.70
Greater than $170,000 and less than $500,000 Greater than $340,000 and less than $750,000 $71.30
Greater than or equal to $500,000 Greater than or equal to $750,000 $77.90

Given the large cost of living (COLA) increase for Social Security benefits, it is not surprising to see a large jump in Medicare costs next year. Given that Medicare premiums are automatically taken from Social Security payments, those currently collecting Social Security will see a bigger than normal bite coming out of their monthly check.

If you have questions about these changes and how it may impact your financial situation, please feel free to contact us!

 

Source: https://www.cms.gov/newsroom/fact-sheets/2022-medicare-parts-b-premiums-and-deductibles2022-medicare-part-d-income-related-monthly-adjustment

Will Goodson

Will is a senior advisor who designs financial plans and investment strategies for clients. He is a University of Texas graduate and a CERTIFIED FINANCIAL PLANNER™ professional. Additionally, Will has obtained the National Social Security Advisor (NSSA®) designation and works closely with wealth management clients to determine the most optimal strategies for taking Social Security and Medicare. Read Will’s Profile HereRead More Articles by Will

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