2022 Medicare premium and cost sharing increase information has been officially released, and the picture is not as pretty as the preliminary estimates led us to believe. However, it is possible that some people saw this coming. There is an annoying historical correlation between the amount of the annual Social Security Increase (or lack thereof) and the Part B premium and Medicare cost sharing variables. This year Congress announced the largest Social Security Cost of Living Adjustment several decades, and coincidentally this is the largest dollar increase in the history of the Medicare program.
New Premiums An Insult To Senior Citizens
Social Security and Supplemental Security Income are both increasing about 5.9% going in to 2022. This is the largest Social Security increase that has occurred since 1982. The increase was announced on October 13th, and for about a month many Medicare beneficiaries found a bit of solace in the idea that the Cost of Living Adjustment would possibly outpace for a bit inflation and rising costs associated with Medicare. The average Social Security benefit will increase about $71.40 per month, and based on what the early estimates were for Medicare Cost increases, that would have had created a great addition to the average retiree’s disposable income. Unfortunately for them, November 12th came to pass and wrecked that with the announcement of out of control increases.
The Medicare Part B premium has increased at a relatively modest rate for several years. The premium was $104.90 in 2013, $121.80 in 2016, and in 2021 it was $148.50. So, to put that into perspective, the new 2022 premium of $170.10 (approximately a 14.5% increase) is $21.60 more than 2021’s premium. 2021 was only $26.70 more than 2016. That’s not all that much more over a 5 year change than what our nation’s senior citizens are now expected to endure in just one calendar year. So, why on Earth would our leaders do this to our most financially restricted group.
What Deception Looks Like
Well, we have seen this sleight of hand trick before from the powers that be. Robbing Peter to pay Paul is not a new look for the government. It is no secret that the solvency of Medicare and Social Security has been a topic of interest in recent years. While the Social Security fund remains healthy, we are not paying out more than we’re bringing in. It will be impossible to keep it afloat without raising Payroll taxes among other things. However, the Medicare Part B funds come from the Supplementary Medical Insurance Trust Fund. Where does this trust fund get its money? Well, primarily, the beneficiary’s Part B premiums. Congress can put in their budget to add one time funding to it in the case of additional expenses. Also, interest that the fund earned is credited back to its balance. So, while this fund isn’t funded by payroll taxes, it is funded by payments from its users. These payments have to go up at the rate of spending from this fund. This means that all factors, inflation, pandemics, and any other health expense increasing element, will directly affect a Medicare beneficiary’s Part B premium.
Medicare and Social Security do not appear to be in grave danger of insolvency.
In writing this, I did find solace in the research I did around Medicare and Social Security Insolvency scares. Medicare and Social Security do not appear to be in grave danger of insolvency. The things we are facing now budgetarily were actually already experienced by our nation in the early 1980s. At that point Congress did what it had to do to ensure that the funds remained intact. It would be chaos to not take care of our most vulnerable citizens, and Medicare beneficiaries are of course at the apex of that variable. Even so, I find myself wondering all the time how our retired population often lives on such small amounts of money. We often see our clients making peanuts and somehow skating by. It is a true testament to the grit and resourcefulness of that generation. We should not let them suffer just because they do it well and with pride.
What Does All This Mean?
The meat of this article is opinionated, but I did want to put out the official 2022 numbers here. Medicare’s Part B Premium will be $170.10 per month for the majority of beneficiaries in 2022. Medicare’s Part B Deductible will go up $30 to $233. That is a one time per calendar year deductible. If you have Medigap Plan F, this will likely increase your premium disproportionately since they have to pay that deductible. Part A’s hospital admission deductible is increasing from $1,484 to $1,556. This is a per admission deductible.
I hope this article helped clear up some of the confusion and didn’t stoke too much outrage.