Medicare Premium and Annual Deductible Updates for 2022
The Centers for Medicare and Medicaid Services (CMS) released the 2022 Parts A and B premiums, deductibles and coinsurance amounts, and the 2022 Part B and D income-related monthly adjustment amounts (IRMAA).
Most people with Medicare will see a 5.9% cost-of-living-adjustment (COLA) in their 2022 social security retirement benefit, which is the largest COLA in 30 years.
The standard Part B monthly premium increases from $148.50 in 2021 to $170.10 in 2022 and the Part B annual deductible increases from $203 to $233.
The average social security benefit in 2021 was $1,565 and is expected to increase to $1,657 in 2022. The average $92 increase will more than offset the $21.60/month increase in the standard Medicare Part B premium.
IRMAAs are determined based on a taxpayer’s Modified Adjust Gross Income (MAGI) from two years prior; 2022 IRMAA is based on MAGI from 2020 tax return.
Part B IRMAAs (above the base rate of $170.10) apply to approximately 7% of all Medicare Part B participants. Most Medicare beneficiaries have their Part B premiums deducted from their Social Security retirement benefit. You pay the Part B premium whether you have original Medicare or a Medicare Advantage (MA) plan.
The 2022 increase in the Part B standard premium is based in part on the statutory requirement to prepare for expenses, such as spending trends driven by COVID-19 and prior Congressional action that limited the 2021 Part B monthly premium increase during the COVID-19 pandemic. It also reflects the need to maintain reserves for unanticipated increases in health care spending and the potential for future coverage on clinician-administered Alzheimer’s drugs such and Adulhem™, which, if covered, could increase Medicare spending.
The Medicare Part A Deductible and coinsurance amounts for 2022 are as follows:
The Part D (prescription coverage) annual deductible is increasing to $480 in 2022 from $445 in 2021. You pay the Part D deductible before initial coverage begins. The initial coverage limit for 2022 is $4,430 and the out-of-pocket threshold for Part D in 2022 is $7,050.
Similar to Part B, Part D IRMAAs apply to approximately 8% of all Medicare beneficiaries and are based on MAGI from two years prior.
Navigating health care costs and Medicare in retirement is more important than ever. Creating a plan to ensure that health care and other essential expenses are covered is also essential. Talk to your ACM Wealth Advisor about your plan for your cash flow in retirement and reach out with any questions you may have.
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