The Biden administration announced on November 12 the standard monthly premium for Medicare Part B will be going up, a move that wipes out the cost-of-living adjustment to the Social Security benefit announced one month earlier.
Rising prescription drug costs are to blame, said Chiquita Brooks-LaSure, the administrator of the Centers for Medicare and Medicaid Services (CMS). “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,” stated Brooks-LaSure in a news release.
Medicare Part B covers fees not related to hospitalization such as physician services, outpatient hospital services, some home health services, medical equipment. The premium will rise from $148.50 to $170.10 for 2022, a 14.5 percent increase, far higher than the 5.9 percent adjustment made to Social Security benefits for next year.
Deductibles for Medicare Part B will also increase from $203 to $233. Medicare Part B premiums are based on income and next year will range from $170.10 to $578.30. Most people over the age of 65 are eligible for free hospitalization under Medicare “Part A.” Beneficiaries can delay enrollment in Part B if they are covered by a qualified health plan.
Get Used to It
Social security benefits are no longer safe from rising costs in Medicare says Robert A. Klein, a health care advisor on retirement benefits and a policy advisor to The Heartland Institute, which co-publishes Health Care News.
“For at least the next year, possibly longer, if the Republicans cave on the BBB (Build Back Better, the Biden economic recovery plan), we can expect inflation to rise,” said Klein. “It behooves Social Security to continue to have a COLA (cost of living adjustment), that is north of 3 percent, even better, if it is 5 percent to 6 percent.”
A special rule called the “hold harmless provision” protects beneficiaries from having an adjustment in Social Security wiped out by Medicare Part B premium hikes but the provision is based on the dollar amount, not the percentage. In 2022, the standard Part B premium will increase by $21.60. Next year, the average Social Security benefit will increase by $92 per month from $1,565 to $1,657.
Klein says he imagines one particular scenario playing out for programs whose trust funds face long-term shortfalls. “[The government] could increase Social Security and then increase Part B so it eats up more of the benefit. This then means that social security is flat or has a tiny increase,” said Klein. “Social security doesn’t go insolvent; it just pays out less.”
But there could be a catch for retirees, says Klein. “More retirees may get hit with the IRMAA (higher income surcharges), which must be deducted from the Social Security benefit if they are collecting it. They will be in danger of hitting IRMAA sooner because they may have to sell off investments or make retirement plan withdrawals earlier than needed to offset inflation.”
It gets worse, says Klein. “Next year in 2022, many baby boomers will be hitting age 65 in the same year. Many of them will not have pensions, but they will hit their IRAs or 401(k)s for money,” said Klein. “The powers that be are in control here.”
AnneMarie Schieber (email@example.com) is the managing editor of Health Care News.
“Is Your Social Security Check Safe from Medicare? – (Guest: Robert Klein),” The Heartland Daily Podcast, April 10, 2019: