2022 Healthcare Costs in Retirement

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2022 Healthcare Costs in Retirement

When it comes to health insurance in retirement there is only Medicare. The cost of Medicare, like every expense, is inflating at an incredible pace. Next year, 2022, will see seniors paying the highest amount ever for their Medicare coverage.

The costs of Original Medicare in 2022:
Coverage 2022 Monthly Costs Change from 2021
Part B $170.10 14.55%
Part D $78.23 11.55%
Medigap Plan G $179.15 4.01%

Please note that with both Part D Plans and Medigap Policies they are administered by private health insurers. There may be other plans which may be much cheaper than the national average.

Total cost for a Medicare beneficiary in 2022 if insured under Original Medicare with a Plan G Medigap Policy on a national average:
  • $427.48 – Monthly Cost.
  • $5,129.76 – Annual Cost.
  • $10,259.52 – Annual Cost Per Couple.
Future projections on the costs of Original Medicare:

Each year the Medicare Board of Trustees releases an annual report that projects the estimates of the premiums and costs needed to keep the Medicare program solvent.

Unfortunately, due to Covid-19 the last two reports from the MBT could not project “accurate estimates” at the time.

The last MBT report that contained “accurate estimates” is from 2019. This MBT Report estimates that Medicare coverage will inflate between 2023 and 2028 by:

  • Part B: over 6.25% not including IRMAA.
  • National Base Premium (Part D): over 5.30% which include the Part D Deductible.
    • Coverage is provided by private health insurance who establish the premiums, co-pays and deductibles.
    • On a national average, historically, premiums to continuous Part D Plans have inflated by over 7.00% annually since inception.
  • Part A: 5.8%.
    • Coverage is typically covered by most Medigap Plans and includes the average annual increase in age on a national level.
Projected future out-of-pocket Medicare costs for retirees (premiums):

Let’s look at an example. Assume there is a couple with both individuals being 65 years old. They are enrolling into Original Medicare, and each have a Medigap Plan G policy. The female is expecting to plan until age 87 while the male plans to age 85. With this arrangement, the projected cost for Medicare premiums, according to the data provided by the federal government is:

$439,465

This is an increase of just under 9.25% from 2021.

Medicare Advantage Plans:

For those enrolling and enrolled into Medicare there is another form of creditable coverage available which is Medicare Advantage (MA Plans).

These plans, according to regulations, must provide at least the same coverage as Part A and B of Original Medicare and may also include other types of coverage that Original Medicare does not offer.

There are multiple forms of coverage within MA Plans include:

  • Cost Plans
  • Local HMO’s
  • Local PPO’s
  • Regional PPO’s

Each type of MA Plan may have a premium, deductible and or a maximum out-of-pocket cost for “In-Network” services or MOOP. Please note that Private Fee for Service Plans (PFFS) are not included.

According to the Centers for Medicare Services (CMS) the average annual cost on a national average for MA Plans with drug coverage in 2022 which include Premium, Deductible and MOOP  are:

Type of MA Plan 2022 Cost Change from 2021
Cost Plans $6,133.32 1.91%
HMO Plans $5,206.38 -4.61%
PPO Plans $6,345.69 -4.24%
Regional PPO Plans $8,006.98 2.46%

Due to the structure of MA Plans, future projections are not available at this time. Historically, these plans have remained consistent with Original Medicare in terms of any changes with costs.

The cost of healthcare has become one of the fast growing and largest expenses people have in retirement, 2022 will highlight that even further.

Covid-19 has greatly impacted the United State’s healthcare system. On top of that, the Income Related Monthly Adjustment Amount (IRMAA) is using income to increase costs to retirees. These factors and more mean healthcare can no longer be just a line item in a retirement plan.

Your health is your greatest asset – the time to plan for it is today!

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