How much does Medicare Part B cost?

Q: How much does Medicare Part B cost the insured?

A: In 2021, most people earning no more than $88,000 ($176,000 for a married couple; note that these amounts are higher than they were prior to 2020) pay $148.50/month for Part B. And in most cases, Part B premiums are just deducted from beneficiaries’ Social Security checks.

For 2021, the Part B premium for most enrollees is projected to increase to $158.50/month. And the income thresholds where higher premiums kick in are projected to increase to $91,000 for a single person and $182,000 for a couple.

As described below, the Social Security cost-of-living adjustment can sometimes limit the increase in Part B premiums, but that’s not expected to be the case for 2022, as the COLA is expected to be historically large.

The Part B premium increase from 2020 to 2021 was smaller than initially projected, thanks to a short-term government spending bill that was enacted in the fall of 2020, and that included a provision to cap the increase in the Part B premium for 2021.

Part B premium can be limited by Social Security COLA, but that hasn’t been an issue for most beneficiaries since 2019

In 2021, most enrollees pay $148.50/month for their Part B coverage, which is the standard amount. Most enrollees were also paying the standard amount in 2020  ($144.60/month) and in 2019 ($135.50/month). And the expectation is that virtually all enrollees will be paying the standard premium in 2022, other than those subject to a high-income surcharge (described below).

But that’s in contrast with 2017 and 2018, when most enrollees paid a premium that was lower than the standard premium. The standard premium in 2018 was actually $134/month, but the cost of living adjustment for Social Security wasn’t quite large enough to cover all of the increase from 2017’s premium for most enrollees. That’s why most people paid about $130/month.

The standard Part B premium increased by about $9/month in 2020. But the 1.6% Social Security COLA for 2020 increased the average beneficiary’s Social Security benefit by $24/month. Since the COLA for most beneficiaries exceeded the premium increase for Part B, most Part B enrollees paid the standard premium in 2020. And for 2021, the 1.3% COLA was adequate to cover the increase to the new standard premium ($148.50/month) for virtually all enrollees. The COLA for 2022 is expected to be the largest its been in many years, and more than adequate to cover the projected increase in Part B premiums.

(If the COLA is ever not sufficient to cover the Part B increase, most enrollees — those who receive Social Security retirement benefits and do not have incomes above the high-income threshold — are charged a lower-than-standard premium for Part B. This is to avoid a year-over-year decrease in their net Social Security check after the Part B premium is subtracted each month.)

Higher premiums for enrollees with high-income (threshold indexed in 2020, and annually after that)

Since 2007, people who earn more than $85,000 ($170,000 for a couple) have paid higher Part B premiums (and higher Part D premiums) based on their income.

For the first time, the threshold for what counts as “high income” was adjusted for inflation as of 2020, increasing it to $87,000 for a single individual and $174,000 for a couple. And it increased again for 2021. Harry Sit, of The Finance Buff, explains how the inflation indexing works here.

Indexing the high-income threshold: The math
The indexing is based on the percentage by which the average of the Consumer Price Index for Urban consumers (CPI-U) for the 12-month period ending in the most recent August exceeds the average of the 12-month period that preceded that. So for 2021, we look at how the average CPI-U from September 2019-August 2020 exceeded the average CPI-I from September 2018-August 2019.

On this page, you can pull up the data for CPI-U (select the first box under “Price Indexes”) and manually calculate how the average CPI-U has changed. You’ll add up all the numbers from September 2019 through August 2020 (don’t include the “Half1” and “Half2” numbers), and divide by 12 to get the average (in this case, 257.72). Then you’ll do the same thing for September 2018 through August 2019 (you’ll get an average of 254.016). The difference between those two numbers is 3.705, which represents a 1.46% increase from the 254.016 average CPI-U for September 2018 to August 2019.

So as Sit explains here (for the 2020 increase, but the process is the same for 2021 albeit with different numbers), we increase 87,000 by 1.46% — which results in 88,270 — and then round to the nearest $1,000. That gives us an income threshold of $88,000, which is the lower bound of “high-income” as of 2021.

For people with income above $87,000 ($174,000 for a couple) in 2020, Part B premiums for 2020 ranged from $202.40/month to $491.60/month.

As explained by the math above, the high-income threshold increased to $88,000 for a single individual and $176,000 for a couple in 2021. The 2021 Part B premiums for people with income above those thresholds range from $207.90/month to $504.90/month.

For 2022, Harry Sit projects that the income threshold for IRMAA surcharges will be $91,000 for a single individual and $182,000 for a married couple.

2021 premium surcharge is based on 2019 tax return; you can appeal it if your income has changed

The government determines whether you have to pay an income-related premium surcharge based on your income tax return from two years ago, since that is the most recent tax return they have on file at the start of the plan year. 2019 tax returns were filed in 2020, so those were the most current returns available when income-related premium adjustments were determined for 2021.

But if a life-change event has subsequently reduced your income, there’s an appeals process you can use. In the appeal, you can request that the income-related premium adjustment be changed or eliminated without having to wait for it to reflect on a future tax return.

Part B deductible also increased for 2021, and will increase again in 2022

Medicare B also has a deductible, which increased to $203 in 2021, up from $198 in 2020. For 2022, the Part B deductible is projected to be $217. The Medicare Part B deductible only has to be paid once per year, unlike the Part A deductible, which has to be paid once per benefit period.

After the Part B deductible is met, the enrollee is generally responsible for 20% of the Medicare-approved cost for Part B services for the remainder of the year. But supplemental coverage (from an employer-sponsored plan, Medigap, or Medicaid) often covers these coinsurance charges.

For people who became eligible for Medicare before the start of 2020, there are Medigap plans available (Plans C and F) that cover the Part B deductible, in addition to coinsurance charges. But those plans are no longer available for Medicare beneficiaries who became eligible for Medicare after the end of 2019.

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Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.