Medicare Part B Premiums To Rise 14.5% In 2022, With Premiums For Highest-Income Couples Nearly $14,000 A Year

The Centers for Medicare & Medicaid Services has announced Medicare Part B premiums for 2022, and the base premium increases 14.5% from $148.50 a month in 2021 to $170.10 a month in 2022. That $21.60 monthly increase ($260 a year) compares to a $3.90 monthly increase last year. Meanwhile income-related surcharges for high earners have been bumped up again too. The wealthiest senior couples will be paying nearly $14,000 a year in Medicare Part B premiums. Part B (the base and the surcharge) covers doctors’ and outpatient services.

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. Last year, Congress kept the increases in the Part B premiums and the deductible in check with caps as part of a short-term budget bill. So far, no such luck this year.

The CMS announcement comes after last month’s Social Security Administration’s COLA announcement: a 5.9% cost of living adjustment for 2022, compared to the 1.3% cost of living adjustment for 2021. The average Social Security benefit for a retired worker will rise in 2022 by $92 a month to $1,657 in 2022, while the average benefit for a retired couple will grow $154 a month to $2,753. 

The higher Medicare Part B premium cuts into retirees’ monthly Social Security payments. Part B premiums typically are deducted from monthly Social Security checks. You can check in December if you have an online Social Security account for your exact benefit amount.

The Part B increase will consume the entire annual cost of living adjustment of Social Security recipients with the very lowest benefits, of about $365 per month, says Mary Johnson, Social Security and Medicare policy analyst with The Senior Citizens League. Medicare Part B premiums tend to grow several times faster than Social Security benefits cost-of-living adjustments almost every year, and rising Part B premiums have ranked as one of the fastest growing costs that older Americans face in retirement, increasing 226% since 2000, Johnson says.

CMS says 7% of Medicare recipients will have to pay income-related surcharges. Earn $1 more in income, and you’re hit with the next highest monthly surcharge, meaning you could be paying $800 or more a year ($1,600 or more a year for a couple) in Medicare Part B premium surcharges. 

The graduated surcharges for high-income seniors kick in for singles with modified adjusted gross income of more than $91,000 and for couples with a MAGI of more than $182,000. An individual earning more than $91,000, but less than or equal to $114,000, will pay $238.10 in total a month for Part B premiums in 2022, including a $68 surcharge. That’s up 14.5% from 2021, when they paid $207.90 total in a month, including a $59.40 surcharge.

By comparison, the wealthiest retirees—singles with $500,000 of income or more and couples with $750,000 of income or more—will face total premiums of $578.30 a month per person, including a $408.20 surcharge, in 2022. That comes to $13,879.20 a year f0r a couple. 

The income-related premium surcharges (technically known as IRMAA for income-related monthly adjustment amount) apply to Part D premiums for drug coverage too.

Here are the official IRMAA numbers from the CMS release, what you’ll pay per month for 2022, depending on your income, for individuals and couples filing a joint tax return. The 2022 income-related surcharges are based on AGI reported on 2020 tax returns. The surcharge brackets were indexed for inflation for the first time in 2020 (except for the $500,000/$750,000 and above income tier), providing some relief.

The average basic monthly premium for Part D, private health plans which cover prescription drugs, is $43 for 2022, according to a Kaiser Family Foundation’s Medicare Part D brief. The range is huge: from $7 a month for the SilverScript SmartRx plan to $99 a month for the AARP MedicareRx Preferred plan. That makes for a $1,100 difference in annual premiums between the highest- and lowest-premium plan. The huge range in drug and health plan premiums is one reason why it’s so important to shop and carefully compare prices and coverage every year, Johnson says. The State Health Insurance Programs National Network lists places where you can get free help locally to compare plans. Medicare open enrollment runs from October 15, 2021 through December 7, 2021 for the 2022 plan year.

Further Reading:

Maximum Social Security Taxes Will Increase 2.9%, While Benefits Will Rise 5.9% In 2022

IRS Announces 2022 Tax Rates, Standard Deduction Amounts And More

New Higher Estate And Gift Tax Limits For 2022