Seniors may have sticker shock when they open their Medicare monthly premium bills in January. The Centers for Medicare & Medicaid Services (CMS) has released the 2022 Medicare Part B premiums and it’s one of the largest increases ever.
Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. In 2022, the monthly premiums for the insurance will jump by $21.60, one of the largest increases in the program’s history. But CMS said the increase in premium will be offset by the cost-of-living bump in Social Security benefits in January.
Each year the Medicare Part B premium, deductible, and coinsurance rates are determined according to the Social Security Act. The standard monthly premium for Medicare Part B enrollees will be $170.10 for 2022, an increase of $21.60 from $148.50 in 2021. 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.
But CMS said that most people with Medicare will see a 5.9 percent cost-of-living adjustment (COLA) in their 2022 Social Security benefits—the largest COLA in 30 years. This increase will more than cover the increase in the Medicare Part B monthly premium.
Reasons for the jump in premiums
There are three main reasons for the increase in standard monthly premium, according to CMS:
- Rising prices and utilization across the health care system that drive higher premiums year-over-year alongside anticipated increases in the intensity of care provided.
- A statutory requirement to prepare for expenses, such as spending trends driven by COVID-19, and prior Congressional action in the Continuing Appropriations Act, 2021 that limited the 2021 Medicare Part B monthly premium increase during the pandemic.
- The need to maintain a contingency reserve for unanticipated increases in health care spending, particularly certain drug costs. CMS said there is a lot of uncertainty regarding the potential for future coverage of clinician-administered Alzheimer’s drugs (i.e., Aduhelm™), requiring additional contingency reserves. Potential Medicare drug coverage is currently the subject of a Medicare National Coverage Determination (NCD) analysis, which if covered, could increase Medicare spending. The proposed NCD on Aduhelm (as well as any drugs in this category) is still to be determined.
“The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten the affordability and sustainability of the Medicare program,” CMS Administrator Chiquita Brooks-LaSure said in the announcement. “The Biden-Harris Administration is working to make drug prices more affordable and equitable for all Americans, and to advance drug pricing reform through competition, innovation, and transparency.”
By law, the Medicare Part B monthly premium must equal 25 percent of the estimated total Part B costs for enrollees age 65 and over. CMS said it must establish an annual Part B premium that will adequately fund projected Medicare spending and maintain an adequate reserve in case actual costs are higher than estimated.
The annual deductible for Medicare Part B beneficiaries grows with the Part B financing and is increasing from $203 in 2021 to $233 in 2022.