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NAIFA Supports Life Insurance Awareness Month

Statistics show 96% of people over the age of 65, many of whom are your clients, are enrolled in Medicare Parts A and B. For decades, post-retirement medical expenses have been increasing faster than income growth. Therefore, when forecasting retirement expenses, it is important to keep up with the annual changes in Medicare costs and premiums.

Every November, the Centers for Medicare and Medicaid Services (CMS) release the medical costs for Medicare Parts A and B for the upcoming year. This includes the Income Related Monthly Adjustment Amounts (IRMAA) for Parts B and D, as well as premiums, copays, and coinsurance associated with the Medicare program.

For 2022, here is a summary of changes for Medicare Parts A and B.

Medicare Part A, which for most is premium-free, had the following changes to the costs:

  • Hospital deductible of $1556, an increase of $72 from 2021.
  • Daily coinsurance for days 21-100 of extended care services is $194.50, an increase of $9 from 2021.
  • Those needing to purchase Part A will pay $499 a month, an increase of $28 from 2021. 
  • If an individual has 30 quarters, they will pay $274 a month, a $15 increase from 2021.

Medicare Part B will make the following changes in cost:

  • 2022 Part B base premium of $170.10, an increase of $21.60 per month from 2021.
  • Part B deductible for 2022 will be $233, an increase of $30 from 2021.

Per CMS, the reasons for the increase include the following:

  • They cited “rising prices and utilization across the healthcare 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 (which would have ended in 2021) being continued through 2025.
  • The need to create additional contingency reserves due to the uncertainty regarding the potential use of the Alzheimer’s drug, Aduhelm, by Medicare beneficiaries. Since July 2021, CMS has begun a National Coverage Determination analysis process to determine whether and how Medicare will cover Aduhelm and other similar medications used to treat Alzheimer’s disease. Treatment using Aduhelm is costly, and if covered, would result in “significantly higher expenditures for the Medicare program.”

To better serve your clients, it is beneficial to understand the historical trend in Medicare Part B premiums. Prior to 2022, the average compounded annual increase was 7.7%. However, 2022 bucks the trend and will increase 14.5%, almost doubling the historical trend.  

  • 2017-$134.00 
  • 2018-$134.00
  • 2019-$135.50
  • 2020-$144.60
  • 2021-$148.50
  • 2022-$170.10

Medicare costs will continue to rise because individuals are living longer, thus, using more healthcare services as they age. 

I’m not a financial advisor and my agency focuses solely on providing education and enrollment services to Medicare eligible individuals throughout the country. On a daily basis, we engage in conversations covering all aspects of Medicare, including costs.

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