- Cost adjustments can affect premiums, deductibles and other cost-sharing aspects of Medicare.
- Beneficiaries who have limited income might qualify for Medicaid or other programs that reduce out-of-pocket costs, while higher-income beneficiaries pay more for some parts of coverage.
- Here are costs that change for 2022.
When the calendar flips to 2022, certain Medicare costs will creep higher.
For the program's 63.6 million beneficiaries — most of whom are 65 or older — annual adjustments can affect premiums, deductibles and other cost-sharing aspects of Medicare. While each change doesn't necessarily involve a huge dollar amount, experts say it's important to consider how any increases will affect your household budget.
"This year, it is especially important to be aware of the increasing costs of Medicare because it's happening at a time where we are also experiencing inflation," said Danielle Roberts, co-founder of insurance firm Boomer Benefits. "Planning ahead for ways to reduce your expenses may make a bigger impact this year."
Overall, your coverage choices can affect how much you pay in premiums, deductibles and copays or coinsurance. And, of course, how often you use the health-care system can contribute to your costs.
Your income also is a determining factor. Beneficiaries with limited income may qualify for Medicaid or other programs that help defray out-of-pocket costs. On the other hand, higher-income beneficiaries pay more for certain parts of coverage.
Basic Medicare consists of Part A (hospital coverage) and Part B (outpatient care). About 42% of beneficiaries choose to get those benefits delivered through Advantage Plans, which are offered by private insurers.
Those plans usually include Part D (prescription drug coverage), as well as extras such as dental or vision. Unlike basic Medicare, they also come with out-of-pocket maximums.
Other beneficiaries stick with basic Medicare and often pair it with a standalone Part D plan. Some also purchase a supplement plan — aka "Medigap" — which picks up some of the costs that come with basic Medicare, such as coinsurance or copays. You cannot have both an Advantage Plan and Medigap.
Most Medicare beneficiaries pay no premium for Part A because they have enough of a work history — at least 10 years — of paying into the system through payroll taxes to qualify for it premium-free.
If you don't meet the minimum requirement, though, monthly premiums could be as much as $499 a month next year, depending on whether you've paid any taxes into the Medicare system at all. That maximum is up from $471 in 2021.
Regardless of whether you pay a premium, there are cost-sharing aspects that go with Part A.
For those who don't have additional coverage beyond basic Medicare, the amount you'd pay when admitted to the hospital will be $1,556 next year, up from $1,484 in 2021. That covers the first 60 days of inpatient hospital care in a benefit period.
For the 61st through 90th days of a hospitalization, beneficiaries will pay $389 per day, up from $371 in 2021, and then $778 per day for 60 "lifetime reserve" days, up from $742.
The standard monthly premium for Part B will be $170.10 in 2022, up from $148.50 this year and marking the program's largest annual jump dollar-wise ($21.60). Some recipients won't pay the full standard premium due to a "hold harmless" provision that prevents their Part B premiums from rising more than their Social Security cost-of-living adjustment, or COLA.
Others, however, will pay more than the standard due to income-adjusted surcharges (see table below).
Keep in mind that the government uses your tax return from two years earlier to determine whether you'll pay those monthly adjustments. So for 2022, it would be your 2020 return. To request a reduction in that income-related amount due to a life-changing event such as retirement, the Social Security Administration has a form you can fill out.
"Medicare beneficiaries will definitely want to appeal their Part B premiums in January if they believe they had a significant change in income that would place them in a lower Part B bracket," said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans.
The annual deductible for Part B will rise to $233, up from $203. Once you meet that deductible, you typically pay 20% of covered services. Keep in mind that beneficiaries in Advantage Plans might pay a different amount through copays, and Medigap policies either fully or partially cover that coinsurance.
Also, while Advantage Plan premiums vary among plans — the average for 2022 is $19 monthly, down from about $21 this year — any charge would be on top of your Part B premium. And, some of those options either have no monthly charge or will pay your Part B premium. (If you don't like your Advantage Plan, you can switch or drop it in the first three months of the year.)
The maximum out-of-pocket limit for Advantage Plans can reach up to $7,550 in 2022 for in-network services. For out-of-network, that cap would be $11,300.
The average monthly premium for Part coverage in 2022 will be $33, up from $31.47 this year. As with Part B premiums, higher earners pay extra (see chart below).
While not everyone pays a deductible for Part D coverage — some plans don't have one — the maximum it can be is $480 in 2022 up from $445.
For people with high prescription costs, be aware that the amount that Part D enrollees pay out of pocket before qualifying for "catastrophic coverage" will jump to $7,050 in 2022 from $6,550 this year (manufacturer discounts count toward that amount). In that phase of coverage, your share of prescription costs drops.
Remember, though, there is no out-of-pocket cap when it comes to Part D coverage.