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:
Medicare Part B will make the following changes in cost:
Per CMS, the reasons for the increase include the following:
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.
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.