Medicare Part B costs: key takeaways
- Standard Part B premiums are $170.10/month in 2022.
- Premium increase for 2022 is larger than normal, but the Social Security COLA is also historically large, and is sufficient to cover the Part B rate increase.
- The high-income threshold (where premiums increase based on income) grew to $91,000 for a single person for 2022.
- The Part B deductible increased to $233 for 2022.
Q: How much does Medicare Part B cost the insured?
A: In 2022, most people earning no more than $91,000 ($182,000 for a married couple; note that these amounts are based on 2020 tax returns) will pay $170.10/month for Part B. And in most cases, Part B premiums are just deducted from beneficiaries’ Social Security checks.
The standard Part B premium increase for 2022 amounts to nearly $22/month, and is higher than the premium that had been projected in the Medicare Trustees Report.
CMS noted that the higher Part B premiums are due to a variety of factors, including costs associated with the COVID pandemic, the 2020 legislation that kept 2021 Part B premiums lower than they would otherwise have been (so premiums are catching up to where they would have been), and potential costs related to new drugs that might be covered under Part B in the near future (most medications are covered under Part D, but infusion drugs that are administered in a clinic are covered under Part B instead; the potential approval of Medicare coverage for Aduhelm is one of the reasons Part B premiums are increasing for 2022).
As described below, the Social Security cost-of-living adjustment can sometimes limit the increase in Part B premiums, but that’s not the case for 2022. Although the premium increase is significant, the Social Security COLA was historically large for 2022, and adequate to cover the additional Part B premiums.
Standard Part B premiums in previous years
The Part B premium has generally increased over time, although there have been some years when it stayed the same or even decreased. Here’s an historical summary of Part premiums over the last several years (see Table V.E2):
- 2005: $78.20
- 2006: $88.50
- 2007: $93.50
- 2008: $96.40
- 2009: $96.40
- 2010: $110.50
- 2011: $115.40
- 2012: $99.90
- 2013: $104.90
- 2014: $104.90
- 2015: $104.90
- 2016: $121.80
- 2017: $134.00
- 2018: $134.00
- 2019: $135.50
- 2020: $144.60
- 2021: $148.50
- 2022: $170.10
Part B premium can be limited by Social Security COLA, but that hasn’t been an issue for most beneficiaries since 2019
In 2022, most enrollees will pay $171.10/month for their Part B coverage, which is the standard amount. Most enrollees were also paying the standard amount in 2021 ($148.50/month), in 2020 ($144.60/month), and in 2019 ($135.50/month). Some enrollees pay more than the standard premium, if they’re 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 was the largest it had been in 30 years, and more than adequate to cover even the substantial 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)
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. It increased again for 2021 and again for 2022. 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, for example, we can 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 and 2022, 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 was 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. And for 2022, the threshold grew again, to $91,000 and $182,000, respectively. The 2022 Part B premiums for people with income above those thresholds range from $238.10/month to $578.30/month.
2022 premium surcharge is based on 2020 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. 2020 tax returns were filed in 2021, so those were the most current returns available when income-related premium adjustments are determined for 2022.
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 2022
Medicare B also has a deductible, which increased to $233 in 2022, up from $203 in 2021. 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.
Part B deductibles in previous years
The Part B deductible has generally increased over time, although there have been some years when it stayed the same or even decreased. The increase for 2022 is the largest year-over-year dollar increase in the program’s history. Here’s an historical summary of Part deductibles over the last several years (see Table V.E2):
- 2005: $110
- 2006: $124
- 2007: $131
- 2008: $135
- 2009: $135
- 2010: $155
- 2011: $162
- 2012: $140
- 2013: $147
- 2014: $147
- 2015: $147
- 2016: $166
- 2017: $183
- 2018: $183
- 2019: $185
- 2020: $198
- 2021: $203
- 2022: $233
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.
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