Millions of Americans get health coverage through Medicare once they turn 65. But one common myth about Medicare is that coverage under it is free.
That's not true in the slightest. Though Part A, which covers hospital care, is generally free for enrollees, Part B, which covers different types of preventive and outpatient care, charges participants a monthly premium.
Those who are enrolled in Medicare but aren't yet collecting Social Security have to pay those premiums directly. Those who are receiving Social Security, meanwhile, have their Part B premiums deducted from their benefits.
This year, the standard monthly Medicare Part B premium costs seniors $148.50 a month. Next year, however, that standard premium is skyrocketing, leaving older Americans with yet another rising expense to grapple with.
What will Medicare Part B cost in 2022?
Next year, the standard Part B premium will be $170.10 a month. That's an increase of $29.60 from 2021. It's also a huge jump compared to recent increases.
For context, in 2020, the standard Part B premium was $144.60, which represented an increase of $9.10 a month from 2019. And, as mentioned, the standard premium in 2021 was $148.50, an increase of just $3.90 a month from 2020.
Not only is this year's Part B premium spike substantial, but it's also well more than what the Medicare trustees estimated in their annual report released in August. Back then, they were pointing to a standard Part B premium of $158.50 a month.
It's also worth noting that while the standard Part B premium is rising to $170.10 a month in 2022, higher earners will pay a lot more. And by "higher earners," we're talking about individuals with a 2020 income above $91,000 or joint tax filers with a 2020 income above $182,000.
So much for that generous Social Security raise
In 2022, seniors on Social Security are in line for a 5.9% cost-of-living adjustment (COLA), their largest in decades. All told, the average benefit will rise from $1,565 a month to $1,657 a month, representing a $92 increase.
But now, about one-third of that raise will be wiped out by the higher cost of Medicare Part B. And while it's easy to argue that seniors will still come out ahead financially, let's also remember that the whole reason Social Security benefits are rising so much in 2022 is that inflation has driven the cost of living up substantially. And so while Medicare Part B hikes won't take seniors' entire Social Security raise, the remainder of that increase will no doubt be eaten up by higher gas, grocery, and utility costs.
For years, Medicare premiums costs have risen at a much faster rate than Social Security COLAs, leaving seniors struggling to keep up. In addition to higher monthly premiums, seniors on Medicare will face an annual Part B deductible of $233 in 2022. That's a $30 increase from 2021, and while it may not seem like a huge jump on its own, combined with premium increases, it certainly leaves many beneficiaries in a tough spot.