Compliance News | November 19, 2021

Medicare Part A and Part B Premium Increases for 2022

The Centers for Medicare & Medicaid Services released the Medicare Part A and Part B premiums and deductibles and coinsurance, as well as the Medicare Part B and D income-related monthly adjustment amounts, that will take effect on January 1, 2022. Both the standard Part B premium and the Part B deductible for all Medicare beneficiaries will increase by more than 14 percent. The Medicare Part A inpatient deductible will increase by less than 5 percent.

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Sponsors of group health plans that cover retirees need to know this information when reviewing their coverage for Medicare-eligible retirees, including Medicare Prescription Drug Plans or Medicare Advantage Plans.

Part B premiums and deductible

Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items. According to the November 12, 2021 announcement, the standard monthly Part B premium will be $170.10 for 2022, an increase of $21.60. In 2022, the annual deductible for Medicare Part B beneficiaries will be $233, an increase of $30.

The Part B dollar amounts are in the first four rows of the following table, which also shows the base Part D beneficiary premium for prescription drug coverage.

Part B Premium, Part B Deductible and Part D Premium

 
  2021 2022
Standard monthly Part B premium* $148.50 $170.10
Medicare Part B deductible $203.00 $233.00

*A statutory “hold-harmless” provision protects most Medicare beneficiaries from having to pay increases in the Medicare premium that exceed the cost-of-living adjustment (COLA) for Social Security, as discussed below.

Impact of the “hold-harmless” provision on individual Medicare premiums

A statutory “hold-harmless” provision protects some Medicare beneficiaries from having to pay increases in the Medicare premium that exceed the Social Security’s COLA. Those who are not protected by the hold-harmless provision include new beneficiaries, Medicaid recipients, those who do not pay Medicare through Social Security and those who pay an income-related premium.

For 2022, the COLA will increase Social Security benefits by 5.9 percent. The Social Security Administration announced this increase in October 2021. Beneficiaries who are protected by the hold-harmless rules, but whose increased Social Security benefit is not large enough to cover the full Part B premium increase, will pay less than $170.10. The premium amount will vary depending on the amount of their COLA.

For individuals with higher incomes, higher Part B premiums and modest increase in Part D premiums

Since 2007, high-income Medicare-eligible individuals who enroll in the Part B program have been required to pay a monthly Part B premium that is higher than the standard premium on a sliding scale. The Part B premium for high-income Medicare-eligible individuals varies depending upon enrollees’ modified adjusted gross income and income tax filing status.

There is also an income-related monthly adjustment for enrollees in Part D prescription drug plans, which started in 2011. The ACA requires Part D enrollees whose incomes exceed the thresholds established for Part B to pay their regular Part D premium to their plan (that amount will vary based on the plan they choose) and also pay an income-related adjustment to Medicare.

The last column of the following table shows the 2022 income-related monthly adjustment amounts for the Part D premium. They all represent decreases of a few cents compared to the 2021 adjustments.

Income-Related Adjustments to Part B Premiums and Part D Premiums

   
Income Ranges for Individual Return Tax Filing Status* Income Ranges for Joint Return Tax Filing Status Monthly Adjustment Amounts for Part B Premium Total Monthly Part B Premium Part D Premium Monthly Adjustment Amounts
$91,001 to $114,000 $182,001 to $228,000 $68.00 $238.10 $12.40
$141,001 to $142,000 $228,001 to $284,000 $170.10 $340.20 $32.10
$142,001 to $170,000 $284,001 to $340,000 $272.20 $442.30 $51.70
$170,001 to $500,000 $340,001 to $750,000 $374.20 $544.30 $71.30
$500,001+* $750,001+* $408.20 $578.30 $77.90

*Married beneficiaries with income of more than $91,000 but less than $409,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following Part B monthly premium adjustment in 2022: $374.20 (resulting in a total monthly premium of $544.30). (The Part D monthly adjustment for these couples will be $71.30.) Married beneficiaries with income of more $409,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following Part B monthly premium adjustment in 2022: $408.20 (resulting in a total monthly premium of $578.30). (The Part D monthly adjustment for these couples will be $77.90.)

Part A deductible and coinsurance

Part A pays for inpatient hospital, skilled nursing facility, hospice and certain home health care services. The Part A deductible and coinsurance increases are noted in the following table.

Part A Deductible and Coinsurance

  
  2021 2022
First-day Part A hospital deductible $1,484.00 $1,556.00
Daily Part A coinsurance for the 61st through 90th day of a hospital stay1 $371.00 $389.00
Daily Part A coinsurance for hospital stays longer than 90 days $742.00 $778.00
Daily Part A coinsurance for the 21st through 100th day in a skilled nursing facility $185.50 $194.50

1 There is no cost-sharing requirement for the second through 60th day of a hospital stay.

Many public plans and employers have current and future retirees that do not have, or will not qualify for, zero-premium Part A coverage. Alternative market opportunities and strategies exist to provide benefits to these retirees in a more effective manner.

Action items

Plan sponsors that reimburse Medicare-eligible retirees for Part B premium costs will likely want to revisit their payment policies to ensure that they accurately reflect the new premiums.

Plan sponsors should ensure that if they reimburse retirees for Part B or D costs, they do so in a clear manner that states the amount reimbursable, and do not merely state that Medicare premiums will be reimbursed.

Have questions about how changes to Medicare may affect your retiree coverage?

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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