Many older Americans rely on Medicare for their health care needs – in 2019, Medicare covered about 61.5 million Americans, and that number is expected to increase to 75 million by 2027. However, it's not always easy to understand what's covered, or how much care will cost. Medicare benefits change yearly, and 2022 brings another increase in premiums for participants. Here's what you need to know about this year's Medicare changes.
Part A Changes
In general, Part A covers hospital stays, nursing home care, hospice care, and home health care. While most participants don't pay a monthly premium for their Part A coverage, those who do (a minority of individuals on Medicare Part A) will see an increase in premiums for 2022.
Deductibles for Medicare Part A will also increase this year. For each benefit period—60 days from your first day at the hospital or nursing home—the deductible will be $1,556, which is $72 more than in 2021. If your stay lasts longer than 60 days, you'll be responsible for paying coinsurance—that means you'll be responsible for a percentage of your health care costs. For Medicare Part A participants, this is a daily fee that will vary depending on whether you're staying in a hospital or nursing home. You can find more information about specific coinsurance costs on the Medicare website.
Part B Changes
Medicare Part B covers two main types of services: medically necessary services and preventative services. This includes physician fees, ambulance services, medical equipment, outpatient services, and certain medications and home health services.
Part B premiums will rise in 2022. Medicare Part B premiums are based on income, so premium increases could be greater for individuals with higher levels of income. This is called an income-related monthly adjustment (IRMAA). The Social Security Administration determines your IRMAA based on information provided by the IRS.
If you benefit from Social Security, Railroad Retirement Board, or Office of Personnel Management, your premium will be automatically deducted from your benefit.
If you receive Social Security Benefits, the 5.9% Cost of Living Adjustment (COLA) coming in 2022 may help offset some of the increase.
Part C and D Changes
Medicare Part C, also known as Medicare Advantage, is a combination of Parts A and B, while Medicare Part D covers prescription drugs. Both plans are optional and offered through private insurance companies, so plan costs vary by provider. Premium costs are adjusted based on your income. You can compare plans on the Medicare website.
Planning for Medicare and its associated expenses represents an important component of a holistic financial plan. If you're concerned about how Medicare coverage affects your finances or would like more information on premium costs and coverages, talk to your trusted financial professional—we can assist you with questions about Medicare and with developing a personalized financial plan tailored to your unique needs and goals.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented, nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.