- The standard Part B premium is $170.10 for 2022 (largest increase in program history, but Social Security COLA also historically large).
- The Part B deductible is $233 in 2022 (up from $203 in 2021).
- Part A premiums, deductible, and coinsurance are also higher for 2022.
- The income brackets for high-income premium adjustments for Medicare Part B and D start at $91,000 for a single person, and the high-income surcharges for Part D and Part B increased for 2022.
- Medicare Advantage enrollment is expected to continue to increase to a projected 29.5 million.
- Part D donut hole no longer exists, but a standard plan’s maximum deductible increased to $480 in 2022, and the threshold for entering the catastrophic coverage phase (where out-of-pocket spending decreases significantly) increased to $7,050.
Q: What are the changes to Medicare benefits for 2022?
A: There are several changes for Medicare enrollees in 2022. Some of them apply to Medicare Advantage and Medicare Part D, which are the plans that beneficiaries can change during the annual fall enrollment period that runs from October 15 to December 7. (Here’s our overview of everything you need to know about the annual enrollment period.)
But there are also changes to Original Medicare cost-sharing and premiums, the high-income brackets, and more.
The standard premium for Medicare Part B is $170.10/month in 2022. This is an increase of nearly $22/month over the standard 2021 premium, and is the largest dollar increase in the program’s history. But the 5.9% Social Security cost-of-living adjustment (COLA) is also historically large, and will more than cover the increase in Part B premiums for beneficiaries who receive Social Security retirement benefits.
(If a Social Security recipient’s COLA isn’t enough to cover the full premium increase for Part B, that person’s Part B premium can only increase by the amount of the COLA. That’s because Part B premiums are withheld from Social Security checks, and net checks can’t decline from one year to the next. That will not be an issue in 2022, however, due to the size of the COLA.)
CMS noted that the significant Part B premium increase is due to several factors, including costs associated with COVID, uncertainty around potential spending increases due to Aduhelm (a new infusion medication for Alzheimer’s that, if approved by Medicare, would be covered under Part B), and the fact that 2021 premiums were lower than they would otherwise have been, due to a short-term spending bill enacted in 2020 that limited the Part B premium increase for 2021. Under the terms of the spending bill, the increase for 2021 was limited to 25 percent of what it would otherwise have been.[/hio_question]
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How much will the Part B deductible increase for 2022?
Some enrollees have supplemental coverage that pays their Part B deductible. This includes Medicaid, employer-sponsored plans, and Medigap plans C and F. But Medigap plans C and F can no longer be sold to newly-eligible enrollees as of 2020 (people can keep them if they already have them, and people who were already eligible for Medicare prior to 2020 can continue to purchase them). The ban on the sale of Medigap plans that cover the Part B deductible for new enrollees was part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). It’s an effort to curb utilization by ensuring that enrollees incur some out-of-pocket costs when they receive medical care.
Many Medicare Advantage plans have low copays and deductibles that don’t necessarily increase in lockstep with the Part B deductible, so their benefits designs have had different fluctuations over the last few years. (Medicare Advantage enrollees pay the Part B premium plus the Advantage plan premium if the plan has a separate premium — many do not, so the enrollees just pay the Part B premium. Medicare Advantage plans wrap Part A, Part B, usually Part D, and various supplemental coverage together into one plan, with out-of-pocket costs that are different from Original Medicare.)
Part A premiums, deductible, and coinsurance
Medicare Part A covers hospitalization costs. Part A has out-of-pocket costs when enrollees need hospital care, although most enrollees do not pay a premium for Part A. But you’ll have to pay a premium for Part A if you don’t have 40 quarters of work history (or a spouse with 40 quarters of work history).
Are Part A premiums increasing in 2022?
Roughly 1% of Medicare Part A enrollees pay premiums; the rest get it for free based on their work history or a spouse’s work history. Part A premiums have trended upwards over time and they increased again for 2022.
For 2022, the Part A premium for people with 30+ (but less than 40) quarters of work history is $274/month, up from $252/month in 2021. And for people with fewer than 30 quarters of work history, the premium for Part A is $499/month in 2022.
Is the Medicare Part A deductible increasing for 2022?
Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans). The deductible generally increases each year, and is $1,556 in 2022, up from $1,484 in 2021. The deductible increase applies to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.
How much is the Medicare Part A coinsurance for 2022?
The Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the person needs additional inpatient coverage during that same benefit period, there’s a daily coinsurance charge. For 2022, it’s $389 per day for the 61st through 90th day of inpatient care (up from $371 per day in 2021). The coinsurance for lifetime reserve days is $778 per day in 2022, up from $742 per day in 2021.
Can I still buy Medigap Plans C and F?
As a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Medigap plans C and F (including the high-deductible Plan F) are no longer available for purchase by people who become newly-eligible for Medicare on or after January 1, 2020. People who became Medicare-eligible prior to 2020 can keep Plan C or F if they already have it, or apply for those plans at a later date, including for 2022 coverage.
Medigap Plans C and F cover the Part B deductible ($233 in 2021) in full. But other Medigap plans require enrollees to pay the Part B deductible themselves. The idea behind the change is to discourage overutilization of services by ensuring that enrollees have to pay at least something when they receive outpatient care, as opposed to having all costs covered by a combination of Medicare Part B and a Medigap plan.
Because the high-deductible Plan F was discontinued for newly-eligible enrollees as of 2020, there is a high-deductible Plan G available instead.
Are there inflation adjustments for Medicare beneficiaries in high-income brackets?
Medicare beneficiaries with high incomes pay more for Part B and Part D. But what exactly does “high income” mean? The high-income brackets were introduced in 2007 for Part B and in 2011 for Part D, and for several years they started at $85,000 ($170,000 for a married couple). But the income brackets began to be adjusted for inflation as of 2020. For 2022, these thresholds have increased to $91,000 for a single person and $182,000 for a married couple (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’s an appeals process you can use if your income has changed since then).
For 2022, the Part B premium for high-income beneficiaries ranges from $238.10/month to $578.30/month, depending on income (up from a range of $207.90/month to $504.90/month in 2021).
As part of the Medicare payment solution that Congress enacted in 2015 to solve the “doc fix” problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees. These new brackets took effect in 2018, bumping some high-income enrollees into higher premium brackets.
And starting in 2019, a new income bracket was added on the high end, further increasing Part B premiums for enrollees with very high incomes. Rather than lumping everyone with income above $160,000 ($320,000 for a married couple) into one bracket at the top of the scale, there’s now a bracket for enrollees with an income of $500,000 or more ($750,000 or more for a married couple).
People in this category pay $578.30/month for Part B in 2022. The income level for that top bracket — income of $500,000+ for a single individual or $750,000 for a couple — has remained unchanged since 2020. But the thresholds for each of the other brackets increased slightly (starting with the lowest bracket increasing from $85,000 to $87,000 in 2020, and so on; a similar adjustment has applied at each level except the highest one).
How are Medicare Advantage premiums changing for 2021?
According to CMS, the average Medicare Advantage (Medicare Part C) premiums for 2022 is about $19/month (in addition to the cost of Part B), which is down from about $21/month for 2021, and $23/month in 2020. Average Advantage premiums have been declining for the last several years.
(Note that Medicare Advantage premiums are in addition to Part B premiums. People who enroll in Medicare Advantage pay their Part B premium and whatever the premium is for their Medicare Advantage plan, and the private insurer wraps all of the coverage into one plan.)
The average premiums described above account for all Medicare Advantage plans, including those that don’t include Part D coverage. And the overall average is driven down due to the fact that the majority of Advantage enrollees actually have no premiums other than the cost of Part B (ie, they’re in “zero premium” Advantage plans). If we only consider the Advantage premiums for plans that do include Part D and that do have a premium in addition to the cost of Part B, the average premium is quite a bit higher.
Almost 27 million people had Medicare Advantage plans in 2021, and CMS projects that it will grow to 29.5 million in 2022. Enrollment in these plans has been steadily growing for the last 15 years. The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth. In 2004, just 13% of Medicare beneficiaries had Medicare Advantage plans. That had grown to more than 43% by 2021.
People with ESRD can join Medicare Advantage plans
Under longstanding rules, Medicare Advantage plans used to be unavailable to people with end-stage renal disease (ESRD) unless there was an ESRD Special Needs Plan available in their area. But starting in 2021, Medicare Advantage plans are guaranteed issue for all Medicare beneficiaries, including those with ESRD. This is a result of the 21st Century Cures Act, which gives people with ESRD access to any Medicare Advantage plan in their area as of 2021.
Many people with ESRD will still find that Original Medicare plus a Medigap plan and Medicare Part D plan is still the most economical option overall, in terms of the coverage provided. But in some states, people under 65 cannot enroll in guaranteed-issue Medigap plans, or can do so only with exorbitantly high premiums. And some of the states that do protect access to Medigap for most beneficiaries under 65 do not extend those protections to people with ESRD. Without supplemental coverage, there is no cap on out-of-pocket costs under Original Medicare.
Medicare Advantage plans do have a cap on out-of-pocket costs, as described below. So for ESRD beneficiaries who cannot obtain an affordable Medigap plan, a Medicare Advantage plan could be a viable solution, as long as the person’s doctors and hospitals are in-network with the plan.
Is the Medicare Advantage out-of-pocket maximum changing for 2022?
Medicare Advantage plans are required to cap enrollees’ out-of-pocket costs for Part A and Part B services (unlike Original Medicare, which does not have a cap on out-of-pocket costs). The cap does not include the cost of prescription drugs, since those are covered under Medicare Part D (even when it’s integrated with a Medicare Advantage plan).
For several years, the cap was $6,700, although most plans have had out-of-pocket caps below that level. For 2021, the maximum out-of-pocket limit for Medicare Advantage plans increased to $7,550 (plus out-of-pocket costs for prescription drugs), and it’s staying at that level for 2022. As usual, most plans will continue to have out-of-pocket caps below the government’s maximum.
How is Medicare Part D prescription drug coverage changing for 2022?
And the out-of-pocket threshold (where catastrophic coverage begins) will increase to $7,050 in 2022, up from $6,550 in 2021. The copay amounts for people who reach the catastrophic coverage level in 2021 will increase slightly, to $3.95 for generics and $9.85 for brand-name drugs.
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 copay of $35/month, and more insurers are participating in this program for 2022.
The Affordable Care Act has “closed” the donut hole in Medicare Part D. As of 2020, there is no longer a “hole” for brand-name or generic drugs: Enrollees in standard Part D plans pay 25% of the cost (after meeting their deductible) until they reach the catastrophic coverage threshold. Prior to 2010, enrollees paid their deductible, then 25% of the costs until they reached the donut hole, then they were responsible for 100% of the costs until they reached the catastrophic coverage threshold.
That amount gradually declined over the next several years, and the donut hole closed one year early — in 2019, instead of 2020 — for brand-name drugs.
The donut hole is still relevant, however, in terms of how drug costs are counted towards reaching the catastrophic coverage threshold, and in terms of who covers the costs of the drugs (ie, the drug manufacturer or the enrollee’s Part D plan). Here’s more about how that all works.
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.