Rising prices are a fact of life, and people enrolled in Medicare have come to expect annual premium increases.
Because many Medicare beneficiaries live on a fixed income, being aware of increases in Medicare premiums is essential to help you stay on budget. As you prepare for Medicare costs going up, this might be an excellent time to consider your overall Medicare coverage.
Will Any Medicare Premiums Stay the Same?
As you already know, there are four parts to Medicare, labeled Medicare Parts A through D. For many Medicare beneficiaries, Medicare Part A has no premiums. Individuals (and their spouses) who worked more than 40 quarters during their careers and paid Medicare taxes are eligible for premium-free Part A Medicare.
However, if you don’t meet the eligibility requirements to receive free Medicare Part A, those premiums will rise from 5% to 10%, depending on the number of quarters you worked during your career.
As a reminder, Medicare Part A covers the following:
- Inpatient hospital care (including lab tests and surgery)
- Care at a skilled nursing facility
- Certain home health services
It’s important to note that Part A isn’t 100% free. The deductible has gone from $1,484 to $1,556, and the copayment for hospital stays and skilled nursing has also risen in 2022.
Medicare Part B Premium Increases
In 2022, Medicare Part B covered 62% of Medicare beneficiaries, so understanding how much your Part B premium will go up is highly relevant.
The monthly Part B premium went up more than 14%, from $148.50 to $170.10. Further, in 2022, Part B deductibles also went up by $30.
Medicare Part B premiums provide the workhorse of Medicare coverage, including health insurance benefits for the following outpatient services:
- Ambulance services
- Durable medical equipment
- Doctor’s appointments and physician services
- Mental health
- Limited prescription drugs
The Medicare Part B Premium Increase Explained
Even given inflationary pressures, a 14.5% increase in the Part B premium seems excessive, but there’s a logical (if unfair explanation).
A new Alzheimer’s drug hitting the market may be covered by the Centers for Medicare and Medicaid (CMS), depending on whether the clinical trials yield evidence development to demonstrate that it’s a necessary treatment for Alzheimer’s.
When CMS announced that Medicare Part B premium costs would rise, the federal government agency explained that it was to cover Aduhelm, the new Alzheimer’s drug that is estimated to cost $56,000 per year.
Savvy Medicare and Medicaid beneficiaries are right to question why the Medicare Part B monthly premium would be affected by drug prices when prescription drugs are generally under the Part D umbrella. The reason is that Aduhelm will be administered in the physician’s office, making it a component of Medicare Part B.
Even though Medicaid beneficiaries don’t incur out-of-pocket expenses or a monthly premium for Medicaid services, the potential costs of this drug are still relevant because this overwhelming expense affects Medicaid spending overall and could have implications for the Medicaid budget.
A Potential Silver Lining
On the heels of the CMS announcements about the rising monthly premium for Medicare Part B, Biogen, the maker of Aduhelm, agreed to cut price by 50%, for a “cost savings” of $28,000.
There is now renewed public interest in granting Medicare negotiating power. The goal is to prevent a succession of Medicare Part B premium increases that would end up reflecting a high percentage of Medicare beneficiaries’ income who receive Social Security benefits and rely on the annual cost of living increases from the Social Security Administration.
Other Rate Increase Considerations
Individuals with Medigap and those with higher incomes may face a different set of rate increases, depending on the coverage plan, income, marital status, and whether you file a separate tax return from your spouse.
Medicare Part C Premium Changes
While Medicare Parts A and B covers physician services (with some exceptions), Medicare beneficiaries are still vulnerable without prescription drug coverage. As drug costs continue to rise and instances of Alzheimer’s Disease become more prevalent in our aging population, many seniors choose Medicare Advantage plans to ensure they have adequate health insurance.
As an aside, Medicare Part C is also referred to as Medicare Advantage. It combines the coverage that’s available in both Medicare Parts A and B, along with additional cover for other types of health and human services, such as dental and vision benefits.
Some Medicare Advantage plans also include prescription drug coverage. You can learn more about Medicare supplement plans by The Modern Medicare Agency here.
There is also some good news about Medicare Part C, and if you’re interested in lowering health care costs, this might be an ideal time to investigate Medicare Advantage. While some Medicare beneficiaries are eligible for coverage with no monthly premiums, the insured who do pay will be pleased to hear that Medicare Advantage is dropping premiums.
Medicare Part C coverage varies depending on your plan, but it may cover some or all of the following:
- Everything covered by Medicare Part A and Medicare Part B
- Prescription drugs
- Dental and vision
- Wellness programs
- Chiropractic care
Medicare Part D Premium Changes
The cost of Part D premiums varies, with CMS reporting an increase in the average monthly premium from $31.47 to $33.00. The modest cost increase can be credited to a new federal policy that requires drug companies to issue rebates for drug prices that rise more than inflation. The law also caps how much a Medicare beneficiary will have to pay for prescription drugs.
Part D exclusively covers prescription and generic drugs. And, people with Medicaid services are automatically enrolled in Part D.
Navigating the ever-evolving landscape of Medicare can be challenging. With limited enrollment periods and rising health care costs, the wrong move can jeopardize both your health and your retirement nest egg.
A Medicare Advantage Advisor can assist you in ensuring that you get the best Medicare coverage at a rate that fits your budget.