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CMS Announces Largest Hike In Medicare Part B Premiums And Deductibles In The Program's History

November 13th CMS announced that Medicare Part B premiums and deductibles will see the largest hike in the program's history next year.

Seven issues of concern…

  1. The CMS rule boosts the standard Medicare Part B premium to $170.10 a month, up $21.60, or 14.5 percent. It also increased Part B standard deductibles by $30, up 14.8 percent to $233 in 2022
  2. The increase translates to nearly $14,000 in annual costs for the wealthiest senior couples.
  3. Despite a boost in emergency Medicare spending last year, CMS raised Part B premiums less than $4.
  4. Part B premiums have risen 226 percent since 2000, making them one of the fastest growing costs for older Americans.
  5. This year, CMS attributed the Part B price hikes to rising healthcare prices and utilization, congressional efforts to limit 2021's increase and the potential to cover Biogen's expensive Alzheimer's drug, Aduhelm.
  6. CMS said the price hikes will be mitigated by a higher annual Social Security cost of living increase; stakeholders reported that the Medicare increase will eat up most of the record-high Social Security cost-of-living jump.
  7. CMS also is increasing the  Medicare Part A deductible, upping the cost per benefit period $72 to $1,556, a 4.9 percent increase.

(Forbes commentary)

The Centers for Medicare & Medicaid Services has announced Medicare Part B premiums for 2022, and the base premium increases 14.5% from $148.50 a month in 2021 to $170.10 a month in 2022. That $21.60 monthly increase ($260 a year) compares to a $3.90 monthly increase last year. Meanwhile income-related surcharges for high earners have been bumped up again too. The wealthiest senior couples will be paying nearly $14,000 a year in Medicare Part B premiums. Part B (the base and the surcharge) covers doctors’ and outpatient services.

The annual deductible for all Medicare Part B beneficiaries is $233 in 2022, an increase of $30 from the annual deductible of $203 in 2021. Last year, Congress kept the increases in the Part B premiums and the deductible in check with caps as part of a short-term budget bill. So far, no such luck this year.

The CMS announcement comes after last month’s Social Security Administration’s COLA announcement: a 5.9% cost of living adjustment for 2022, compared to the 1.3% cost of living adjustment for 2021. The average Social Security benefit for a retired worker will rise in 2022 by $92 a month to $1,657 in 2022, while the average benefit for a retired couple will grow $154 a month to $2,753.

The higher Medicare Part B premium cuts into retirees’ monthly Social Security payments. Part B premiums typically are deducted from monthly Social Security checks. You can check in December if you have an online Social Security account for your exact benefit amount.

The Part B increase will consume the entire annual cost of living adjustment of Social Security recipients with the very lowest benefits, of about $365 per month, says Mary Johnson, Social Security and Medicare policy analyst with The Senior Citizens League. Medicare Part B premiums tend to grow several times faster than Social Security benefits cost-of-living adjustments almost every year, and rising Part B premiums have ranked as one of the fastest growing costs that older Americans face in retirement, increasing 226% since 2000, Johnson says.

CMS says 7% of Medicare recipients will have to pay income-related surcharges. Earn $1 more in income, and you’re hit with the next highest monthly surcharge, meaning you could be paying $800 or more a year ($1,600 or more a year for a couple) in Medicare Part B premium surcharges.

The graduated surcharges for high-income seniors kick in for singles with modified adjusted gross income of more than $91,000 and for couples with a MAGI of more than $182,000. An individual earning more than $91,000, but less than or equal to $114,000, will pay $238.10 in total a month for Part B premiums in 2022, including a $68 surcharge. That’s up 14.5% from 2021, when they paid $207.90 total in a month, including a $59.40 surcharge.