The Biden administration announced the standard monthly premium for Medicare Part B will be going up, wiping 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, administrator of the Centers for Medicare and Medicaid Services (CMS), of the decision announced on November 12.
“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, and medical equipment.
The minimum premium will rise from $148.50 to $170.10 for 2022, a 14.5 percent increase, far higher than the 5.9 percent rise in Social Security benefits for next year.
Deductibles for Medicare Part B will increase from $203 to $233.
Medicare Part B premiums are based on income, and next year they 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.
Social Security benefits will continue to rise but are no longer safe from rising Medicare costs, says Robert A. Klein, a Medicare benefits and long-term care planning 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 vote for 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.
Things to Come
Klein says the current changes may be a harbinger of future manipulation of programs with trust funds facing long-term shortfalls.
“[The government] could increase Social Security and then increase Part B so it eats up more of the benefit,” said Klein. “This then means that Social Security is flat or has a tiny increase. Social Security doesn’t go insolvent; it just pays out less.”
Under this scenario, many retirees will take a loss, 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,” said Klein. “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.”
Klein says enrollees need to be mindful of Part D prescription coverage, which went up 14.75 percent from the previous year. “Thankfully, total costs for Part D are cheaper monthly than Part B, but there are also co-pays for medications that come with it, which of course, can drive up out-of-pocket costs.
“You don’t know if you are going to get sick and the only medication is some very expensive, non-generic one,” said Klein.
There is even worse news for some retirees, says Klein.
“Next year, in 2022, many baby boomers will be hitting age 65 in the same year,” said Klein. “Many of them will not have pensions, but after reaching age 65 they can sign up for Medicare and they’ll hit their retirement plans earlier than initially planned.
“That and their Social Security income could have them reach IRMAA sooner,” said Klein. “The powers that be are in control here.”
AnneMarie Schieber (firstname.lastname@example.org) 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: