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Andrew Smith

Andrew Smith

How are Medicare benefits changing in 2022?

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Medicare’s rate revisions for 2022 include premium and deductible increases for Part A and Part B and a Part D deductible.

The most important takeaways

  • For the year 2022, the typical Part B premium will be $170.10. (the largest increase in program history, but Social Security COLA is also historically large).

  • In 2022, the Part B deductible will rise to $233 from the current level of $203 (up from 2021).

  • Additionally, the premiums, deductibles, and coinsurance for Part A will rise in 2022 as well.

  • Starting at $91,000 for a single individual, Medicare Part B and D’s high-income surcharges for 2022 have been increased for those who earn more than that.

  • The predicted number of Medicare Advantage enrollees is expected to rise to 29.5 million.

  • Part D’s donut hole has been eliminated, but the maximum deductible for ordinary plans has climbed to $480 in 2022, and the threshold for catastrophic coverage has increased to $7,050.

How are Medicare benefits changing in 2022?What are the changes to Medicare benefits for 2022?

A: In 2022, Medicare enrollees will face several changes. In the annual fall enrollment period that runs from October 15 to December 7, beneficiaries can alter their Medicare Advantage and Medicare Part D plans. (We’ve compiled a handy guide to help you navigate the annual enrollment process.)

Original Medicare premiums and cost-sharing have changed, as have the high-income groups.

In 2022, the regular Medicare Part B premium will be $170.10 per month. This is the greatest monetary increase in the program’s history, with an increase of about $22 per month over the normal 2021 premium. Benefit recipients who receive social security retirement benefits will see a 5.9% increase in their Part B premiums, which is a historically large COLA.

Part B premiums can only rise by the amount of the COLA for a Social Security beneficiary whose COLA does not cover the full increase in Part B premiums. In part, this is because Social Security checks do not decrease in value from year to year. (In 2022, however, because of the amount of the COLA, this will not be a problem.)

There are several reasons for the significant increase in Part B premiums, including the costs associated with COVID, uncertainty about potential spending increases due to Aduhelm (a new Alzheimer’s infusion medication covered by Part B if approved by Medicare), and the fact that 2021 premiums were lower than they would otherwise have been because of a short-term spending bill passed in 2020 that limited the Part B premium. As a result of the spending deal, the increase for 2021 was capped at a 25 percent increase.

medicare changesHow much will the Part B deductible increase in 2022?

As of 2022, the Part B deductible is set at a whopping $233. For comparison, in 2021, the average cost of a home in the United States was $203.

The deductible for some enrollees is covered by supplemental insurance. Medicaid, employer-sponsored plans, and Medigap plans C and F are included in this group. As of 2020, new participants will no longer be able to purchase Medigap plans C and F. People can keep them if they already have them, and people who were already eligible for Medicare before 2020 can continue to purchase them. The Medicare Access and CHIP Reauthorization Act of 2015 included a ban on the sale of Medigap policies that cover the Part B deductible for new enrollees (MACRA). It’s an attempt to limit utilization by requiring enrollees to pay a portion of the cost of their medical care out-of-pocket.

Over the past few years, the advantages of Medicare Advantage plans have fluctuated due to their low copays and deductibles, which are not always linked to the Part B deductible. Members pay both the Part B payment and the Advantage plan premium if the plan has a separate charge; many do not, so enrollees only pay the Part B premium. Part A, Part B, and sometimes Part D of Medicare, as well as a variety of supplemental insurance plans, are all combined into one Medicare Advantage plan.

Part A premiums, deductible, and coinsurance

Costs associated with hospitalization are covered under Medicare Part A. The out-of-pocket costs of Part A are incurred by members who require hospitalization, although most Part A registrants do not have to pay a premium for the coverage. A surcharge for Part A will apply if you have less than 40 quarters of work experience (or a spouse with 40 quarters of work history).

Are Part A premiums increasing in 2022?

An estimated 1 percent of Medicare Part A participants are required to pay a premium; the remainder is eligible for free coverage due to their or their spouse’s past employment status. There has been a rising tendency in Part A premiums, and they will rise again in 2022.

For those with 30+ (but not more than 40) quarters of work experience, the Part A premium in 2022 will be $274/month, an increase from $252/month in 2021. In 2022, the Part A premium will be $499/month for anyone with less than 30 quarters of employment experience.

Is the Medicare Part A deductible increasing in 2022?

Each benefit period has a separate deductible for Part A (rather than a calendar year deductible like Part B or private insurance plans). It’s $1,556 in 2022 compared to $1,484 in 2021, which is an annual increase. Although many subscribers have supplemental coverage that covers all or part of the Part A cost, the deductible increase applies to all enrollees.

How much is the Medicare Part A coinsurance for 2022?

An enrollee’s first 60 inpatient days are covered by his or her Part A deductible during a benefit period. Daily coinsurance is charged if the patient requires further inpatient care within the same benefit period. For the 61st through 90th days of inpatient care in 2022, the cost is $389 per day (up from $371 in 2021). The cost of coinsurance for reserve days will rise from $742 per day in 2021 to $778 per day in 2022.

In skilled nursing facilities, the first 20 days of care received are covered by the Part A deductible that was paid for the prior inpatient hospital stay. For those afflicted by the COVID pandemic, Medicare will pay for skilled nursing facility treatment even if they haven’t spent at least three days in the hospital before being transferred. There is a coinsurance charge for days 21 to 100 in a skilled nursing facility. The daily wage will rise to $194.50 in 2022 from $185.50 in 2021.

brand name drugsCan I still buy Medigap Plans C and F?

As a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), those who are newly eligible for Medicare will no longer be able to purchase Medigap plans C and F (including the high-deductible Plan F), on or after January 1, 2020. Plan C or F can be kept by anyone who was eligible for Medicare coverage before 2020 and can be applied for at any time in the future, even in 2022.

Most states require medical underwriting if you switch Medigap policies after your first enrollment period has ended, although some states offer guaranteed-issue Medigap insurance even after the initial enrollment period has expired.

The Part B deductible ($233 in 2021) is fully covered by Medigap Plans C and F. As for the Part B deductible, some Medigap plans ask participants to pay for this out-of-pocket. Instead of having Medicare Part B and a Medigap plan cover all of the costs of outpatient treatment, members will be required to pay at least a portion of their outpatient care expenditures going forward.

To replace the high-deductible Plan F, a high-deductible Plan G is now available for newly qualified participants beginning in 2020.

Are there inflation adjustments for Medicare beneficiaries in high-income brackets?

Medicare Part B and D premiums are higher for Medicare beneficiaries with higher earnings. But what does it mean to have a “large income?” For several years, the high-income brackets began at $85,000 ($170,000 for a married couple) and were established in 2007 for Part B and 2011 for Part D. Income brackets were only updated for inflation starting in 2020. As of 2022, the income requirements for a single individual are $91,000 and for a married couple, $182,000 (note that this is based on income tax returns from 2020, since those are the most recent tax returns on file when 2022 begins; there is an appeals process if your income has changed since then).

In 2022, the monthly Part B premium for high-income recipients will range from $238.10 to $578.30, depending on income (up from a monthly premium range of $207.90 to $504.90 in 2021).

Medicare Part B premiums for high-income members were recalculated as part of Congress’ 2015 “doc fix” solution for Medicare payment issues. As a result of the implementation of these new rates in 2018, some registrants with high incomes now face higher premiums.

With the introduction of a new high-income income tier in 2019, Part B premiums for those with extremely high earnings will rise even further. Enrollees earning more than $500,000 ($750,000 for married couples) have been given their bracket rather than being lumped in with everyone making more than $160,000.

Part B costs $578.30 per month for those in this group in 2022. There has been no change in the top bracket’s income level since 2020 — $500,000+ for a single individual or $750,000 for a couple. Those in the other tax categories, on the other hand, will see their starting points rise from $85,000 to $87,000 in 2020, and so on (except the top tax bracket, which has remained unchanged).

How are Medicare Advantage premiums changing for 2021?

For the year 2022, the average cost of Medicare Advantage (Medicare Part C) premiums is $19/month, down from roughly $21/month in 2021 and $23/month in 2020, according to the Centers for Medicare and Medicaid Services (CMS). For the past few years, average Advantage premiums have decreased.

In addition to Part B premiums, beneficiaries must pay Medicare Advantage premiums as well. Participants in Medicare Advantage pay a single premium to the private insurer, who then bundles their Part B and Medicare Advantage plans together.

All Medicare Advantage plans, including those that don’t include Part D coverage, are included in the average premiums listed above. Because most Advantage members only pay for Part B, the overall average is lower than it would be otherwise. This is because most Advantage plans have “zero premiums.” For Advantage plans that incorporate Part D and have a premium in addition to the cost of Part B, the average premium is significantly greater.

There will be 27.5 million Medicare Advantage enrollees by the year 2021, and CMS anticipates that number will rise to 29.5 million by the year 2022. For the past 15 years, the number of people signing up for these programs has been continuously increasing. Growth in Medicare beneficiaries has been steady, although participation in Medicare Advantage plans has greatly surpassed the overall growth in Medicare enrollment. Medicare Advantage plans were only available to 13% of Medicare recipients in 2004. By 2021, that figure had risen to more than 43%.

centers for medicare medicaidPeople with ESRD can join Medicare Advantage plans.

People with end-stage renal disease (ESRD) were previously denied access to Medicare Advantage plans unless an ESRD Special Needs Plan was available in their location. However, starting in 2021, all Medicare enrollees, including those with ESRD, will be eligible for Medicare Advantage coverage. People with end-stage renal disease (ESRD) will be able to enroll in any Medicare Advantage plan in their area starting in 2021 thanks to the 21st Century Cures Act.

Original Medicare, paired with a Medigap plan and a Medicare Part D plan, is the most cost-effective option for many people with end-stage renal disease (ESRD). However, in some jurisdictions, those under 65 are not able to enroll in guaranteed-issue Medigap insurance, or they can only do so at astronomical costs. Furthermore, several states that safeguard the majority of beneficiaries under 65 from losing their Medigap coverage do not extend similar protections to those with end-stage renal disease (ESRD). If you don’t have supplemental coverage, original Medicare has no cap on out-of-pocket expenses.

Out-of-pocket expenditures for Medicare Advantage plans are capped, as explained below. As long as the patient’s doctors and hospitals are part of the Medicare Advantage plan’s network, a Medicare Advantage plan may be an option for ESRD beneficiaries who cannot afford a Medigap plan.

Is the Medicare Advantage out-of-pocket maximum changing for 2022?

Medicare Advantage plans must have a limit on out-of-pocket costs for beneficiaries (unlike Original Medicare, which does not have a cap on out-of-pocket costs). The cost of prescription pharmaceuticals is covered by Medicare Part plans must have a limit on out-of-pocket costs for beneficiaries (even if it is integrated with a Medicare Advantage plan) and the cap does not include those costs.

However, most plans have had a cap of less than $6,700 in out-of-pocket expenses for several years now. As of 2021, all Medicare Advantage plans have a maximum out-of-pocket limit of $7,550 (in addition to out-of-pocket expenditures for prescription medicines). The government’s maximum out-of-pocket limit will continue to apply to most plans.

How is Medicare Part D prescription drug coverage changing for 2022?

For stand-alone Part D prescription drug plans, the highest permissible deductible for typical Part D plans is $480 in 2022, up from $445 in 2021.

A catastrophic barrier of $6,550 in 2021 will be raised to $7,050 in 2022, with the out-of-pocket limit (where coverage begins) to follow suit in 2023. The copay levels for consumers who reach the catastrophic coverage level in 2021 will increase marginally, to $3.95 for generics and $9.85 for brand-name medications.

Some Medicare beneficiaries with Part D coverage (stand-alone or as part of a Medicare Advantage plan) will continue to have access to insulin with a payment of $35/month, and more insurers are participating in this program for 2022.

The donut hole in Medicare Part D has been “closed” by the Affordable Care Act. By 2020, brand-name and generic pharmaceuticals will no longer have a “hole” in the market 2020: Enrollees in regular Part D plans pay 25 percent of the cost (after meeting their deductible) until they reach the catastrophic coverage threshold. Before 2010, members paid their deductible, then 25 percent of the costs until they hit the donut hole, and then they were responsible for 100 percent of the costs until they reached the catastrophic coverage barrier.

After several years of steady decline, the donut hole for brand-name pharmaceuticals was finally closed one year early, in 2019, rather than 2020.

The donut hole is still significant, however, in terms of how drug prices are calculated towards reaching the catastrophic coverage threshold and in terms of who covers the costs of the pharmaceuticals (i.e., the drug maker or the enrollee’s Part D plan). Here’s more on how that all works.

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