The big changes coming to Medicare in 2022 are increased costs for premiums, coinsurance, and deductibles. If you are a higher income earner, income-related adjustments are also to be considered. This article will break down each change and how it may impact you. We will first start by answering the question of why all the changes?
Why is Medicare increasing costs?
The rising cost of Medicare in 2022 can be attributed to the following factors:
– The increase in healthcare costs across the board
– An aging population that requires more medical services
– Drug prices are increasing faster than other types of expenses
In addition, in 2021, Congress fought hard to reduce the premium increase to help those impacted by Covid-19. This reduced premium increase ($3.90) for 2021 is something congress requested to be paid back overtime.
The repayment period starts in 2022 and is the partial reason for the Premium increase in 2022.
Part A Changes
You may know Part A as Hospital Insurance. Part A helps by covering costs for inpatient care in hospitals, skilled nursing facility care, hospice Care, and home healthcare.
While 99% of Americans don’t pay a premium for Part A coverage everyone still is responsible for inpatient deductibles, and coinsurance.
The additional inpatient cost adjustments are as follows:
- $1,484 ($1,556 in 2022) deductibles for each benefit period
- Days 1-60: $0 coinsurance for each benefit period
- Days 61-90: $371 ($389 in 2022) coinsurance per day of each benefit period
- Days 91 and beyond: $742 ($778 for 2022) coinsurances per each “lifetime reserve day.”
Part B Changes
Part B is the part of Medicare that covers services from doctors and health care providers such as outpatient care, home health care, durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment), and preventative services.
Your Medicare Part B premiums will increase by an average of 14.5%, which is $22.60 for the standard monthly premiums in 2022. When the Center for Medicare Services decided on the premium increase, they also factored in the 5.9% COLA increase for SSA benefits.
In most cases, this will result in a net dollar increase in paid benefits but does limit retirees’ benefits from keeping up with the increasing inflation rates.
In addition, if retirees need to utilize any of the services that require coinsurance or deductibles, it may offset the small benefit from the boost to SSA payments.
Medicare Part D Income Adjustments
The Center for Medicare and Medicaid Services announced that Part D coverage, which covers prescription drugs, will impact 8% of current enrollees based on their modified adjusted gross income.
Every prescription plan is different, and it is essential to reach out to your current provider to make sure you have a clear understanding how the changes that apply to your Part D coverage.
Income-Related Monthly Adjustment Amounts
|Individual Tax Return||Joint Tax Return||Monthly Adjustment|
|$0 – $91,000||$0 – $182,000||$0|
|$91,001 – $114,000||$182,001 – $228,000||$12.40|
|$114,001 – $142,000||$228,001 – $284,000||$32.10|
|$142,001 – $170,000||$284,001 – $340,000||$51.70|
|$170,001 – $499,999||$340,001 – $749,999||$71.30|
|$500,000 or more||$750,000 or more||$77.90|
What should you do to prepare?
All these changes can feel overwhelming for both current retirees and those seeking to retire in 2022. However, there are many resources available to help you prepare. Suppose you are working with a financial planner.
In that case, you should consult with them to see how this may impact your financial plan, and this is a crucial step if you currently rely on Original Medicare exclusively and have health needs that require regular medical attention.
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