The Centers for Medicare/Medicaid Services (CMS) has released the costs for Medicare in 2022 and for those who have not planned for health coverage in retirement they may be in for some shock.
The 2022 Medicare Costs are:
Part A |
2022 Costs |
Percent Change from 2021 |
Deductible |
$1,556.00 |
4.85% |
Co-Insurance days 61 – 90 |
$389.00 |
4.85% |
Co-Insurance days 91 > |
$778.00 |
4.85% |
Part B |
2022 Costs |
Percent Change from 2021 |
Premium |
$171.10 |
14.55% |
Deductible |
$233.00 |
14.78% |
Part D |
2022 Costs |
Percent Change from 2021 |
Deductible maximum |
$480.00 |
7.87% |
Premium national avg. |
$41.69 |
14.40% |
Future Projections:
When looking to the future on planning for Medicare costs the outlook, unfortunately, due to Covid-19 has become somewhat murky.
Each year the Medicare Board of Trustees release estimates for the next 8 years in terms of costs. Since the outbreak of Covid-19 the past two reports, 2020 and 2021, are, according to the MBT, not accurate.
The last MBT report with estimates that the MBT consider to be accurate is from 2019, which of course is before the impact of Covid-19.
From the 2019 MBT Report between 2023 and 2028 Medicare costs are projected to inflate by:
Part A* |
Projected Inflation Rate |
Deductible |
3.37% |
Co-Insurance days 61 – 90 |
3.37% |
Co-Insurance days 91 > |
3.37% |
Part B |
Projected Inflation Rate |
Premium |
6.33% |
Deductible |
6.25% |
Part D |
Projected Inflation Rate |
Deductible maximum |
5.54% |
Premium national avg**. |
7.59% |
* The Part A Deductible can be covered by Supplemental Polices (Medigap Plans) which, historically have inflated by over 2.00% more than the cost of this deductible when factoring in the step-up for age.
** The data for Part D is provided by the Centers of Medicare and Medicaid Services (CMS) and reflects the costs associated to the 1,145 Part D plans available in the U.S.
Medicare’s Income Related Monthly Adjustment Amount – IRMAA
With IRMAA there are two pieces of good news:
-
The income thresholds in the first 4 brackets have increased by just under 3.30% from 2021.
-
The Part D surcharge, unlike Part B surcharge, only inflated by less 0.01%
The 2022 IRMAA Brackets are:
File individual tax return |
File joint tax return |
Part B Monthly Premium |
Part D Monthly |
< $91,000 |
< $182,000 |
$170.10 |
Plan Premium |
$91,000 – $114,000 |
$182,000 – $228,000 |
$238.10 |
$12.40 + Plan Premium |
$114,000 – $142,000 |
$228,000 – $284,000 |
$340.20 |
$32.10 + Plan Premium |
$142,000 -$170,000 |
$284,000 -$340,000 |
$442.30 |
$51.70 + Plan Premium |
$170,000 -$500,000 |
$340,000 – $750,000 |
$544.30 |
$71.30 + Plan premium |
$500,000 and above |
$750,000 and above |
$578.30 |
$77.90 + Plan Premium |
Unfortunately, though, the Part B IRMAA surcharge, which tracks the Part B premium, has increased by 14.55% from 2021 in each income bracket.
Future projections for IRMAA:
According to federal regulations IRMAA Brackets were to remain level starting in 2017 through at least 2028. Thankfully, since 2017 each Administration has slightly increased the first 4 brackets over time.
Currently, there is no future projection on where the IRMAA brackets will be, but the MBT has addressed the surcharges.
From 2023 through 2028, according to last “accurate” MBT report the Part B IRMAA surcharge is projected to inflate by 6.46% while the Part D surcharge will inflate by over 7.50%
Planning for the cost of healthcare in retirement is no longer a line item in a financial plan. With increasing healthcare costs as well as IRMAA and Covid-19 this one cost is easily on pace to be the largest expense everyone will have in retirement.
Your health is your greatest asset, the time to plan for it is today.
