Why the Big Jump in Medicare Premiums?

Nov 30, 2021 / By Elaine Floyd, CFP®

The Medicare Part B base premium will be going up by 14.5% to $170.10 in 2022. All of the IRMAAs will increase as well, however the income levels will be adjusted for inflation and will start at $91,000 for individuals and $182,000 for couples. The annual deductible will be going up by $30 to $233. Here’s the explanation according to CMS:

  • Rising prices and utilization across the health care system that drive higher premiums year-over-year alongside anticipated increases in the intensity of care provided.
  • Congressional action to significantly lower the increase in the 2021 Medicare Part B premium, which resulted in the $3.00 per beneficiary per month increase in the Medicare Part B premium (that would have ended in 2021) being continued through 2025.
  • Additional contingency reserves due to the uncertainty regarding the potential use of the Alzheimer’s drug, Aduhelm™, by people with Medicare. In July 2021, CMS began a National Coverage Determination analysis process to determine whether and how Medicare will cover Aduhelm™ and similar drugs used to treat Alzheimer’s disease. As that process is still underway, there is uncertainty regarding the coverage and use of such drugs by Medicare beneficiaries in 2022. While the outcome of the coverage determination is unknown, our projection in no way implies what the coverage determination will be, however, we must plan for the possibility of coverage for this high cost Alzheimer’s drug which could, if covered, result in significantly higher expenditures for the Medicare program.

Your Medicare clients will be getting their premium notices in the mail. The IRMAA will be based on 2020 tax returns. Remember, if your clients had a life-changing event, such as retirement, death of a spouse or divorce, they can appeal using Form SSA-44 (PDF). If they are subject to the IRMAA due to a capital gain, Roth conversion, or some other non-life-changing event in 2020, they will have to pay the higher premium for 2022 but will be reassessed next year.

Read more here: Fact Sheet: 2022 Medicare Parts A & B Premiums and Deductibles/2022 Medicare Part D Income-Related Monthly Adjustment Amounts.

As director of retirement and life planning for Horsesmouth, Elaine Floyd helps advisors better serve their clients by understanding the practical and technical aspects of retirement income planning. A former wirehouse broker, she earned her CFP designation in 1986.

 

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