The Truth About Your Medicare Part B Premium
You probably know that your Medicare Part B premium can change each year. Do you know why? Or how the amount is calculated? Or why it may increase?
Medicare costs, including Part B premiums, deductibles and copays, are adjusted based on the Social Security Act. And in recent years Part B costs have risen. Why? According to CMS.gov, The increase in the Part B premiums and deductible is largely due to rising spending on physician-administered drugs. These higher costs have a ripple effect and result in higher Part B premiums and deductible.1
Are Part A Premiums Increasing In 2023
Roughly 1% of Medicare Part A enrollees pay premiums the rest get it for free based on their work history or a spouses work history. Part A premiums have trended upwards over time and they increased again for 2022.
For 2022, the Part A premium for people with 30+ quarters of work history is $274/month, up from $252/month in 2021. And for people with fewer than 30 quarters of work history, the premium for Part A is $499/month in 2022. These amounts are projected to increase to $279/month and $508/month, respectively, in 2023 but again, we wont know the final numbers until the fall of 2022.
How To Apply For Medicare Part B
If youre already receiving Social Security benefits, you get automatically enrolled in Medicare Part A and Medicare Part B on the first day of the month you turn 65.
Otherwise, you will need to sign up yourself during your initial enrollment period, which starts three months before you turn 65. You can also sign up for Medicare during Medicare Open Enrollment, which lasts from October 15th until December 7th.
You can apply by visiting your local Social Security office, calling Medicare at 1-800-772-1213, or simply filling out an application online at the Social Security Administration website. Here is a step-by-step guide to applying for Medicare.
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Skilled Nursing Facility Costs
Part A will only cover a portion of your healthcare costs if you stay in a skilled nursing facility that is approved by Medicare. There also must be a medical need for you to be there. If you are in a skilled nursing facility solely due to your custodial care needs, Medicare will not pay for your stay. Custodial care includes help with bathing, dressing or eating that is not associated with a medical diagnosis or need.
Your Part A coinsurance costs for a stay in a skilled nursing facility in 2021 apply for each benefit period. Once approved by Medicare, you can expect to pay:
- Days 1-20 of your stay will have $0 coinsurance costs.
- Days 21-100 required a coinsurance cost of $194.50 per day in 2022.
- If you stay longer than 100 days, you will be responsible for your entire skilled nursing facility bill.
In years past, Medicare Part A only covered skilled nursing facility costs if a qualifying hospital stay had already occurred. You must also have had enough days left in your benefit period available, after your qualifying hospital stay had taken place. During the COVID-19 pandemic this rule may not apply in all circumstances. In some instances, you may be able to get skilled nursing facility care without a qualifying hospital stay having taken place first. You may also be able to get renewed skilled nursing facility care without starting a new benefit period.
Premiums Paid By Medicare Advantage Enrollees Have Declined Since 2015
In 2022, the average enrollment weighted MA-PD premium, including among those who do not pay a premium, is $18 per month. However, average MA-PD premiums vary by plan type, ranging from $16 per month for HMOs to $20 per month for local PPOs and $49 per month for regional PPOs. Nearly 6 in 10 Medicare Advantage enrollees are in HMOs , 38% are in local PPOs, and 3% are in regional PPOs in 2022. Regional PPOs were established to provide rural beneficiaries with greater access to Medicare Advantage plans.
Average MA-PD premiums have declined from $36 per month in 2015 to $18 per month in 2022. The reduction is driven in part by the decline in premiums for local PPOs and HMOs, that account for a rising share of enrollment over this time period. Since 2015, a rising share of plans are bidding below the benchmark, which enables them to offer coverage without charging an additional premium. More plans are bidding below the benchmark partly because Medicare Advantage benchmarks relative to traditional Medicare have increased over time, and when benchmarks increase, plans are able to keep more for Part A and B services as well as for extra benefits. Further, rebates paid to plans have increased over time, and plans are allocating some of those rebate dollars to lower the part D portion of the MA-PD premium. Together, these trends contribute to greater availability of zero-premium plans, which brings down average premiums.
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The Parts Of Medicare
Social Security enrolls you in Original Medicare .
- Medicare Part A helps pay for inpatient care in a hospital or limited time at a skilled nursing facility . Part A also pays for some home health care and hospice care.
- Medicare Part B helps pay for services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventive services.
Other parts of Medicare are run by private insurance companies that follow rules set by Medicare.
- Supplemental policies help pay Medicare out-of-pocket copayments, coinsurance, and deductible expenses.
- Medicare Advantage Plan includes all benefits and services covered under Part A and Part B prescription drugs and additional benefits such as vision, hearing, and dental bundled together in one plan.
- Medicare Part D helps cover the cost of prescription drugs.
Most people age 65 or older are eligible for free Medicare hospital insurance if they have worked and paid Medicare taxes long enough. You can sign up for Medicare medical insurance by paying a monthly premium. Some beneficiaries with higher incomes will pay a higher monthly Part B premium. To learn more, read .
B Standard Premium Increases In 2022
In 2021, most individuals with Medicare Part B paid $148.50 per month. In 2022, their monthly premium jumps to $170.10 per month an increase of $21.60 per month. This is the standard, or base, premium that all Part B enrollees pay. Higher-income people pay additional amounts .
Part B is the component of Medicare that helps retirees pay for physicians, outpatient services, durable medical equipment, and certain types of home health services. Services such as outpatient chemotherapy treatments and drugs, and dialysis, along with visits to a primary care physician or a specialist are covered under Part B.
When Medicare was signed into law in 1965, Part B was included. From the beginning, it has always carried a monthly premium that retirees and those who get Medicare due to certain disabilities are required to pay. The premiums are automatically deducted from Social Security payments once an individual is in both programs.
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Medicare Part B Vs Medicare Part C
Since Original Medicare do not cover everything, some Medicare recipients opt for Medicare Part C. Also known as Medicare Advantage, these health insurance policies are provided by Medicare-approved private health insurance companies and may cover additional services like dental or vision care or help lower out-of-pocket expenses.
However, to get a Medicare Advantage plan, you still need to enroll in Original Medicare and pay your Medicare Part B premium in addition to the Medicare Advantage premium. The exact cost and benefits will depend on the insurer and the plan that you choose. Part C plans often operate like private health insurance plans and may come with their own restrictions on how to use them.
Read more about Medicare Part C.
People With Esrd Can Join Medicare Advantage Plans
Under longstanding rules, Medicare Advantage plans used to be unavailable to people with end-stage renal disease unless there was an ESRD Special Needs Plan available in their area. But starting in 2021, Medicare Advantage plans are guaranteed issue for all Medicare beneficiaries, including those with ESRD. This is a result of the 21st Century Cures Act, which now gives people with ESRD access to any Medicare Advantage plan in their area.
Many people with ESRD will still find that Original Medicare plus a Medigap plan and Medicare Part D plan is still the most economical option overall, in terms of the coverage provided. But in some states, people under 65 cannot enroll in guaranteed-issue Medigap plans, or can do so only with exorbitantly high premiums. And some of the states that do protect access to Medigap for most beneficiaries under 65 do not extend those protections to people with ESRD. Without supplemental coverage, there is no cap on out-of-pocket costs under Original Medicare.
Medicare Advantage plans do have a cap on out-of-pocket costs, as described below. So for ESRD beneficiaries who cannot obtain an affordable Medigap plan, a Medicare Advantage plan could be a viable solution, as long as the persons doctors and hospitals are in-network with the plan.
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How To Appeal A Part B Premium Income Adjustment
You may request an appeal if you disagree with a decision regarding your income-related monthly adjustment amount. Complete a Request for Reconsideration or contact your local Social Security office to file an appeal.
You may be able to skip the formal appeal and simply provide documentation if your income changed due to any of the following:
- You married, divorced or became widowed.
- You or your spouse stopped working or reduced your work hours.
- You or your spouse lost income-producing property due to a disaster or other event beyond your control.
- You or your spouse experienced a scheduled cessation, termination or reorganization of an employers pension plan.
- You or your spouse received a settlement from an employer or former employer because of the employers closure, bankruptcy or reorganization.
These methods apply to the Part B premium. Contact the IRS if you disagree with your adjusted gross income amount, which is provided to Medicare by the IRS.
Nearly All Medicare Advantage Enrollees Are In Plans That Require Prior Authorization For Some Services
Medicare Advantage plans can require enrollees to receive prior authorization before a service will be covered, and nearly all Medicare Advantage enrollees are in plans that require prior authorization for some services in 2022. Prior authorization is most often required for relatively expensive services, such as Part B drugs , skilled nursing facility stays , and inpatient hospital stays , and is rarely required for preventive services . Prior authorization is also required for the majority of enrollees for some extra benefits , including comprehensive dental services, hearing and eye exams, and transportation. The number of enrollees in plans that require prior authorization for one or more services stayed the same from 2021 to 2022. In contrast to Medicare Advantage plans, traditional Medicare does not generally require prior authorization for services and does not require step therapy for Part B drugs.
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Medicare Part B Eligibility And Enrollment
Medicare Part B is available to U.S. citizens and legal residents who fall under one of the following criteria:
- Over the age of 65
- Under the age of 65 with a disability
- Have end-stage renal disease
- Have Lou Gehrig’s disease
If you contributed to Social Security while working and are getting benefits for at least four months prior to turning 65, you will be enrolled in Medicare Part A automatically. You’ll also be enrolled in Part B, but you can choose to decline it since you must pay a separate monthly fee for Part B insurance.
If you do not receive benefits from Social Security, then you’ll need to manually enroll in Medicare Part B. Enrollment begins three months before your 65th birthday and ends three months after the month you turn 65, for a total of seven months.
During this initial enrollment period, you can sign up for any part of Original Medicare. When you enroll before the month you turn 65, coverage begins on the first day of your birth month. If you sign up the month you turn 65 or in the final three months of your enrollment period, your Medicare policy will be effective on the first day of the following month.
If you delay enrolling in Medicare, you may have to wait for a general enrollment period to apply, which runs from Jan. 1 to March 31 each year. Your coverage would start on July 1 following the GEP.
Will There Be Inflation Adjustments For Medicare Beneficiaries In High
Medicare beneficiaries with high incomes pay more for Part B and Part D. But what exactly does high income mean? The high-income brackets were introduced in 2007 for Part B and in 2011 for Part D, and for several years they started at $85,000 .
But the income brackets began to be adjusted for inflation as of 2020. For 2022, these thresholds increased to $91,000 for a single person and $182,000 for a married couple .
For 2023, the projection is that the IRMAA brackets will start at an income of $97,000 for a single individual a significant increase from 2022, driven by the higher-than-normal inflation weve seen in 2022.
For 2022, the Part B premium for high-income beneficiaries ranges from $238.10/month to $578.30/month, depending on income . These may or may not increase for 2023 details will be finalized in the fall of 2022.
As part of the Medicare payment solution that Congress enacted in 2015 to solve the doc fix problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees. These new brackets took effect in 2018, bumping some high-income enrollees into higher premium brackets.
And starting in 2019, a new income bracket was added on the high end, further increasing Part B premiums for enrollees with very high incomes. Rather than lumping everyone with income above $160,000 into one bracket at the top of the scale, theres now a bracket for enrollees with an income of $500,000 or more .
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Drug Coverage In Medicare Advantage Plans
Most Medicare Advantage Plans include prescription drug coverage . You can join a separate Medicare Prescription Drug Plan with certain types of plans that:
- Cant offer drug coverage
- Choose not to offer drug coverage
Youll be disenrolled from your Medicare Advantage Plan and returned to Original Medicare if both of these apply:
- Youre in a Medicare Advantage HMO or PPO.
- You join a separate Medicare Prescription Drug Plan.
What You Need To Know
Each year the Centers for Medicare and Medicaid Services announces the Medicare Part B premium. The 2022 Standard Medicare Part B premium amount is $170.10 .
According to CMS, most Medicare beneficiaries will pay the standard Medicare Part B premium amount.
If your Modified Adjusted Gross Income , as reported on your IRS tax return, is above the set threshold established by CMS, youll pay the standard Medicare Part B premium amount plus an additional Income-Related Monthly Adjustment Amount . If you are required to pay an IRMAA, you will receive a notice from the Social Security Administration advising you of your Medicare Part B premium cost for 2022, and how the cost was calculated.
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Delaying Part B Coverage
Some people choose to delay enrolling in Part B. This is often the case if they are are still working and receive health insurance coverage through their workplace, or if theyre on their spouses health insurance plan.
If your workplace has 20 more employees, you may choose to keep employer-sponsored coverage and save from paying the Part B monthly premium. Once you leave work and retire, you will be given an eight-month special enrollment period to apply for Medicare Part B.
If you dont sign up during special enrollment, youll have to wait until general Medicare open enrollment starts on January 1 to sign up for coverage that wont be effective until July 1. Youll also have to pay a lifetime late-enrollment penalty a monthly penalty that lasts as long as you have Part B.
Learn more about how to apply for Medicare.
Senior Editor & Disability Insurance Expert
Elissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.
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Why Do Some People Pay Less For Their Medicare Part B Premium
Some people who get Social Security benefits will still pay less than $170.10 in 2022. This affects around 2 million Medicare beneficiaries. Legislation prevents the cost of Medicare Part B from increasing more than the Social Security annual cost-of-living increase.
In recent years, we have had low COLA increases, so these individuals have only been paying less than the standard base Part B premium. Though the Social Security COLA increases for the last couple of years have been somewhat larger, there is still a small group of beneficiaries being protected by the hold harmless provision.
Though this all very confusing, remember that you do not have to calculate this yourself. Again, Social Security will determine your Part B premium for 2022 and notify you by mail if you exceed the Medicare income limits and must pay a higher adjusted amount.
Most Medicare beneficiaries qualify for premium-free Part A. However, the Medicare Part B premium is deducted from your Social Security check if you are receiving Social Security benefits. In 2022, the Part B premium is $170.10.
You can also request your Part D premium be deducted from your Social Security check.
Most People Pay the Standard Part B Premium
Youll pay the standard Medicare Part B premium amount if: