The Centers for Medicare & Medicaid have made several changes to Medicare premiums and deductibles that take effect in 2022. These changes include costs associated with Original Medicare (Parts A and B) and Part D Income-Related Monthly Adjustment amounts. To understand these changes, we will explore the cost increases and adjustments and how they will impact your 2022 benefits.
Premium and Deductible Changes to Parts A, B and D in 2022
Medicare Part A offers coverage for inpatient hospital care, inpatient rehabilitation services, hospice, skilled nursing facility care and home health care. Two of the changes in costs for Part A in 2022 include an increase in your Part A deductible to $1,556. In 2021, the deductible was $1,484. Additionally, the daily copay for outpatient rehab/nursing home will increase from $185.50 in 2021 to $194.50 for 2022.
Medicare Part B covers a wide range of medical care including outpatient care, preventative services, certain types of physical therapy, some additional home health care services, occupational therapy and mental health services. For 2022, the standard monthly premium for Medicare Part B beneficiaries is $170.10 compared to $148.50 in 2021. (For the approximate 7% of those whose individual modified adjusted gross income (MAGI) exceeds $91,000, their Part B premium is $170.10 plus the income-related monthly adjustment amount for their income bracket.) Those filing jointly would have an IRMAA adjustment for Part B if their 2020 MAGI exceeded $182,000. The last change that impacts anyone on the popular Medicare Supplement plans G and N, the annual Part B deductible for 2022 is to $233, compared to $203 in 2021.
Since 2011, Medicare Part D prescription drug beneficiaries have paid monthly premiums based on their income. Part D premiums vary from plan to plan, but the income-related monthly adjustment amount is what beneficiaries with MAGI above $91,000 per year will pay in addition to their plan premium. The 2022 monthly adjustment amounts for such beneficiaries are slightly higher than 2021.
In light of these changes in premiums in 2022, eligible beneficiaries should evaluate their current plan choices and other potential options, such as Medicare Part C or Medicare Supplement plans.
What Is Medicare Part C?
Medicare Advantage plans, also called Medicare Part C, are alternative plan options that provide Part A (hospital insurance) and Part B (medical insurance) coverage plus additional benefits offered through private insurance companies. Part C plans may provide coverage for vision, hearing, dental and other wellness programs not covered under Original Medicare. Lastly, some of Medicare Advantage plans also include Medicare prescription drug coverage (Part D).
What Are Medicare Supplement Plans?
Medicare Supplement plans, also known as Medigap, cover out-of-pocket “gaps” in Original Medicare coverage. Private insurance companies offer Medicare Supplement plans to provide coverage for medical costs such as coinsurance, copays and deductibles that come with Original Medicare. With a Medicare Supplement plan, Medicare Parts A and B get billed first for services. The supplement plan operates as a secondary payer to Medicare and is triggered anytime you receive Medicare eligible services.
So, why would beneficiaries want to consider plan options that help with Medicare costs? Since these plans cover costs that Original Medicare coverage doesn’t, and because costs have risen for Medicare Parts A, B and D, beneficiaries can lower their total out-of-pocket medical costs by enrolling in a Medicare Supplement plan.
Why Do Medicare Premium and Deductible Costs Continue to Increase?
There are a number of reasons why Medicare premium and deductible costs keep increasing. Healthcare and prescription drug prices are rising in general, and this is one of the reasons why the Medicare Part B premium and deductible have been increased alongside the Part D income-related monthly adjustment amount.
CMS is also setting money aside in contingency reserves. The move is in anticipation that CMS may be required to cover costs for a new drug to treat Alzheimer’s disease that the Food & Drug Administration (FDA) recently approved. This drug is quite expensive, and providing Medicare coverage for its costs at the current plan rates is not possible.
Overall Healthcare and Medicare Cost Trends
Medicare aside, health spending generally grows faster than both the growth of the U.S. economy as well as the rate of economic inflation. This means healthcare expenses outpace incomes earned as well as changes to the value of the dollar. As mentioned earlier in this post, healthcare costs in general continue to increase – per capita out-of-pocket expenditures have grown significantly since 1970, even with dollar amounts adjusted for inflation.
When you consider the increase in healthcare spending coupled with new treatments and prescription medications that arise as years pass, it’s no surprise to find healthcare costs and Medicare premiums and deductibles growing over time as well.
Fortunately, for beneficiaries, Medicare Portal’s team of licensed Medicare insurance agents is available to go over the details of how 2022 Medicare premium and deductible cost increases affect existing plans and out-of-pocket expenditures. Our Medicare insurance agents can help you evaluate your options and find a plan that suits your needs and fits your budget. Contact us today.