Heads Up: Medicare Premiums on an Upswing for 2022

As the calendar flipped to 2022, increases for certain Medicare premiums have already taken effect. Being fully aware of the rising costs is important so you can smartly and strategically plan financially.

Medicare, a national health insurance program that subsidizes healthcare services for people with certain diseases, for those aged 65 or older, and younger individuals with certain eligibility criteria. It is divided into four categories that help cover specific services—Medicare Part A, Part B, Part C, and Part D. Most of these categories are on an upswing this year.

Medicare Part A Costs

Part A premiums are free for enrollees who paid taxes during their working years, or those whose spouses paid these taxes. This covers bills that are related to inpatient care at hospitals, skilled nursing facilities, or home health services, including supplies and drugs.

Medication and doctor’s services for terminally ill patients, as well as grief-and-loss counseling for the families are also covered.

In a recent announcement by the Centers for Medicare and Medicaid Services (CMS), there will be a $72 or nearly 5% increase of Medicare Part A inpatient hospital deductible that beneficiaries will pay if admitted to the hospital, from $1,484 in 2021 to $1,556 in 2022. Beneficiaries’ share of costs for the first 60 days of inpatient hospital care in a benefit period is covered in this premium.

A coinsurance amount of $389 per day is also needed to be paid for the 61st through 90th day of hospitalization within a benefit period in 2022 from an amount of $371 in 2021. Moreover, daily coinsurance for lifetime reserve days will rise from $742 to $778. For those receiving care in nursing homes, Medicare’s daily coinsurance amount for days 21-100 will jump from $185.50 in 2021 to $194.50 in 2022. After day 100, the coverage ends.

Medicare Part B Costs

Medicare Part B is optional. It pays a portion of non-hospital provided medical care like physician and outpatient services. Mental health costs, preventive services, ambulance services, and durable medical equipment are also included.

Part B premiums will see an increase of nearly 15% in the coming new year. Enrollees will be paying $170.10, an increase of $21.60 from 2021’s $148.50 payment.

This steep hike is attributed to the rising prices and utilization across the health care system, the uncertainty over Medicare’s outlay for an expensive new drug that was approved recently to treat Alzheimer’s disease.

Higher-income beneficiaries pay an income-related monthly adjustment amount in addition to their Part B premium. Their total payments are as follows:

· A monthly premium of $238.10 will be paid by beneficiaries with annual earnings between $91,000 and $114,000, and married couples with annual earnings between $182,000 and $228,000.

· A monthly premium of $340.20 will be paid by beneficiaries with annual earnings between $114,000 and $142,000, and married couples with annual earnings between $228,000 and $2846,000.

· A monthly premium of $442.30 will be paid by beneficiaries with annual earnings between $142,000 and $170,000, and married couples with annual earnings between $284,000 and $340,000.

· A monthly premium of $544.30 will be paid by beneficiaries with annual earnings above $170,000 and less than $500,000, and married couples with annual earnings beyond $340,000 and less than $750,000.

· A monthly premium of $578.30 will be paid by beneficiaries with annual earnings above $500,000, and married couples with annual earnings beyond $750,000 will pay.

For individuals who are married but file tax returns separately from their spouse, rates are different. A monthly premium of $544.30 will be paid by those with incomes greater than $91,000 and less than $409,000 while those with incomes greater than $409,000 will pay a monthly premium of $578.30.

The income reported two years ago to determine a Part B individual’s premium is used by the Social Security Administration as a basis. This means that a beneficiary’s income reported on his or her 2020 tax return will be used to find out whether or not a beneficiary must pay a higher monthly Part B premium in 2022. If your income significantly decreased in the past two years, you may request that more recent income information be used for calculation. You may also request to reverse a surcharge.

People enrolled in Medicare Advantage plans may have different cost-sharing arrangements. An average monthly premium is expected to be lower in 2022, from an average of $21 in 2021 to $19 in 2022, according to CMS.

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