Medicare and Social Security Changes in 2022

It’s hard to believe but the new year is nearly here! We’ve gotten quite a few questions from our clients about how 2022 is going to change both their Medicare costs and their social security checks.

Every year there is a Cost-of-Living Adjustment (COLA) to social security benefits and an update to the standard Medicare premiums for Parts A and B. Medicare Advantage (Part C) plans and your prescription drug coverage (Part D) plans will also be changing. We’ll touch on each of those in this article.

Let’s discuss the changes coming in 2022!

Social Security Cost-of-Living Adjustment

The predictions we saw from some companies for the 2022 COLA adjustment were pretty accurate. The Social Security Administration announced a 5.9% increase to social security benefits. This will impact more than 64 million Americans in 2022.

They are also increasing the maximum amount of earnings that are subject to the Social Security tax to $147,000. The limit for those who are younger than the full retirement age will increase to $19,560 and those who will reach full retirement age in 2022 will have a limit of $51,960.

Part A Premiums and Deductibles in 2022

Most Medicare beneficiaries won’t notice any change in the Part A premium as they receive premium-free Part A. As long as you’ve paid Medicare taxes for ten years, you won’t pay a premium for Part A. 

However, that’s not the case for everyone. If you have not met the requirement, your premium will be based on how many quarters you did pay in to Medicare taxes. If you paid Medicare taxes for less than 40 quarters but more than 30, your premium will be $274. If you paid Medicare taxes for less than 30 quarters, your premium will be $499.

The Part A deductible will increase from $1484 to $1556 in 2022. Remember, this deductible applies to a benefit period, not a calendar year.

Part B Premiums and Deductibles in 2022

No one receives Part B premium-free. (Unless you’ve been accepted to a Medicare Savings Program.) In 2021, the premium for Part B was $148.50. That monthly premium is increasing to $170.10 in 2022.

The deductible associated with Part B has also been increased. It increased from $203 in 2021 to $233 in 2022. This deductible is paid annually.

Part C Premiums in 2022

Premium changes for Medicare Advantage plans won’t be the same for everyone as these plans vary greatly. While there are quite a few Part C plans that have a $0 premium, the average Medicare Advantage plan that included prescription drug coverage was $33.57 in 2021.

Unlike the other parts of Medicare, Part C premiums are actually decreasing. You’ll be able to see rates during the Annual Election Period (AEP) that happens each year from October 15 – December 7.

Part D Premiums and Deductibles in 2022

Much like Part C plans, your Part D premium will depend on the plan you’re enrolled in. According to the Centers for Medicare & Medicaid Services (CMS), the average Part D plan in 2022 will be approximately $33, which is an increase of $7 from 2021.

The standard (maximum) deductible that most plans will employ is now $480, which is up from $445 in 2021.

Part D Catastrophic Threshold

Another important change to note is the increase in the catastrophic threshold associated with Part D plans. This is the amount that must be paid by the beneficiary before catastrophic coverage begins. (You’ll reach catastrophic coverage after spending time in the coverage gap.) In 2022, the threshold is $7050. The threshold in 2021 was $6550. Quite the leap for one year. This could be a huge financial burden for those who are taking more expensive medications.

How to Approach These Changes

Even though there is nothing that can be done about the increased premiums, you should still talk to your agent about increases in premiums of your Medicare supplement, Part C, and Part D plans. We may be able to find you a cheaper option that still provides you with the healthcare coverage you need.