What Medicare will cost you in 2022 depends, to some extent, on the amount and kind of medical treatment you need during the year.
Because of that, no one can give you a 100% accurate, to the penny prediction of your Medicare costs. However, in this video, we’ll give you all the information you need to make an educated estimate of your Medicare healthcare costs for 2022.
Confused about your Medicare coverage options? Watch our free video: How to Find the Best Medicare Coverage Without Paying More Than You Need To…
Let’s go through the costs associated with Medicare Parts and Medicare plans so you can figure out what your Medicare coverage could cost you in 2022.
For each Part and plan, note which expenses are required and which are likely for you based on your normal healthcare needs.
I’ll also mention the worst case scenario amounts where they exist, so you can be prepared if you have a catastrophic illness or injury and require far more care than usual.
First, the Parts of Original Medicare, Part A and Part B.
Medicare Part A
Medicare Part A is inpatient or hospital coverage. If you or your spouse worked 40 quarters, which is 10 years, and had Medicare taxes taken out during that whole time, you will not have to pay a monthly premium for Medicare Part A. You prepaid that premium with your taxes.
If you haven’t paid Medicare taxes for 40 quarters, you can still enroll in Medicare Part A, but you will have to pay a monthly premium for it. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $499 per month. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $274 per month.
Medicare Part A has hospital deductibles and coinsurance amounts that are your financial responsibility if you need inpatient medical care.
These costs are per benefit period, not annual charges, so you could potentially owe these amounts more than once in a calendar year. Here is a link to a video that explains Medicare Part A benefit periods: https://youtu.be/nhYpekW8OAA
A very limited benefit for skilled nursing facility care is also covered under Medicare Part A. You only qualify for this coverage if you first had a three day inpatient hospital stay. These costs are also per benefit period, not per year.
Hospice care is covered at no cost to you. Hospice drugs may have a copay of up to $5 and there may be a 5% coinsurance charge for respite care.
Durable medical equipment is covered by Medicare Part A at 80% leaving a 20% coinsurance amount for you to pay.
Medicare Part B
Medicare Part B is outpatient insurance. The monthly premium for Medicare Part B in 2022 is $170.10 per month for most people.
If you have high income, you may be charged more for Medicare Part B. The chart here shows which income levels qualify for the Income Related Monthly Adjustment Amount or IRMAA.
Please note that Medicare looks at your Modified Adjusted Gross Income from two years ago to determine your IRMAA.
There is an appeals process available if your income has declined significantly in the past two years. A link to the IRMAA appeal form is here: www.ssa.gov/forms/ssa-44-ext.pdf
Medicare Part B covers preventive medical care at 100% with no cost to you. Here is a link to a pdf guide from Medicare that explains which preventive services are covered at 100%: https://www.medicare.gov/Pubs/pdf/10110-Medicare-Preventive-Services.pdf
Medicare Part B has an annual deductible that you have to meet before Medicare will pay anything for outpatient medical care that is not preventive care.
In 2022, that deductible is $233. You pay the full cost for outpatient care until you reach $233 in spending. Depending on the complexity of your outpatient care, it could take several office visits to reach that $233 deductible.
If you do reach the Medicare Part B deductible, Medicare will pay 80% of your covered outpatient medical care for the rest of the year, leaving 20% as your responsibility.
Medical care is billed to Medicare Part B for all outpatient care. Even if you are in a hospital, if you have not been admitted as an inpatient, your care will be covered by Medicare Part B rather than Part A and your costs will be 20% of the total cost after the deductible is met.
Why Does Almost Everyone Enroll in Medicare Plans?
Most Medicare beneficiaries do not have just Medicare Parts A and B. Almost everyone has additional coverage to protect themselves from the financial risks built into Medicare Parts A and B.
There is no out-of-pocket spending limit with either Medicare Part A or Medicare Part B, so there’s no limit to how much you can end up spending on your medical care with the Part A and Part B deductibles, copays, and coinsurance.
In addition to not having any way to cap your spending with Original Medicare, Medicare Parts A and B do not cover some things that individual and group health insurance have evolved over the years to cover.
If you only have Medicare Parts A and B, you won’t have coverage for most outpatient prescription drugs, most dental care, dentures, most vision care, long term care, routine foot care, or hearing care, including hearing aids.
Medicare Supplements/Medigap
Medicare Supplements, also known as Medigap plans, are the oldest type of Medicare plan offered by private insurance companies. These policies work with Medicare Parts A and B.
Parts A and B are primary insurance, and a Medicare Supplement is secondary insurance. There are many different levels of coverage available with Medigap plans to help you cover the deductibles, copays, and coinsurance that would otherwise be your responsibility with Medicare Parts A and B.
The monthly premium cost for a Medicare Supplement varies depending on what level of coverage you choose and where you live.
A high deductible Medigap plan can have a premium below $50/month, while the most comprehensive Medigap plans’ premiums can be several hundred dollars per month.
Unless you have a high deductible Medicare Supplement, you will have very few out-of-pocket costs through the year when you need medical care.
You can budget for the Medicare Supplement plan premium and then expect very little in other costs for covered Medicare Part A and Part B care.
For more information on the best Medicare Supplement plans for 2022, please see the video linked here: https://youtu.be/BGIQVEgszUQ
Medicare Part D
Medicare Part D is prescription drug coverage. Part D coverage can be purchased through a standalone Part D plan or as included coverage in a Medicare Advantage plan.
Medicare Part D, like Part B, includes an IRMAA payment if you have a high income. The chart here shows how much you will pay in addition to the plan premium if you fall into one of the high income categories.
This extra amount does not go to the Part D insurance company. It is paid to Medicare. Part D IRMAA applies whether you purchase a standalone Part D plan or have Part D coverage through a Medicare Advantage plan.
The only way to avoid Part D IRMAA is if you have creditable drug coverage from another source like an employer plan, the VA, or a state pharmaceutical assistance program.
If you don’t take any medications or take just a few inexpensive generic drugs, you may be tempted to skip Part D to save money. Unfortunately, that’s a risky move that could cost you a lot in late enrollment penalties down the line. More info on that in the video here: https://youtu.be/PtJ7-0EUqh8
Even though Part D is a Part of Medicare, Part D coverage is not offered through Medicare itself. Private companies contract with Medicare to offer Part D prescription medication insurance to Medicare beneficiaries.
Part D plans have to meet annual Medicare standards before they are allowed to be marketed. Every Part D plan has to be at least as good as the Medicare Part D Defined Standard Benefit Plan.
Because Medicare makes adjustments to the Part D Defined Standard Benefit Plan every year, all the Part D plans change, at least a little, every year.
It’s very important to look at all your Part D plan options every year during the Annual Enrollment Period between October 15 and December 7. The best Part D plan for you this year might not be the best plan for you next year because they all can change every year.
How do you shop for Part D plans?
Do not start by looking at the monthly premium cost. The plan with the lowest monthly premium may not be the least expensive plan for you.
Similarly, whether a Part D plan has a deductible or not might not matter. You have to look at your overall cost, not just premium or deductible amounts.
Part D plans are complicated. There are four different coverage levels: deductible, initial coverage, coverage gap, and catastrophic coverage.
How much your prescriptions cost to fill depends on which level you are in. How far you progress through those levels depends entirely on the cost of the medications you take.
Looking at the premiums, deductibles, and copays of plans generically won’t give you any useful information.
The only way to get an accurate cost estimate for Part D plans is to enter your prescription medications into a plan estimator tool, either at medicare.gov or through an insurance brokerage. These options will give you the best and fastest overall view of all plans available where you live.
What you are looking for is the plan with the fewest restrictions and lowest overall cost for the year based on your medications.
Medicare Part C/Medicare Advantage
Medicare Part C is Medicare Advantage plans. These are, for the most part, the HMOs and PPOs of Medicare. Like Part D, Medicare Part C plans are offered by private insurance companies that contract with Medicare and have to meet yearly standards to market plans to the public.
If you enroll in a Medicare Advantage plan, you have to continue to pay your Medicare Part B premiums, and Medicare Part A premiums, if you owe Part A premiums.
Medicare Advantage plans may have a monthly premium, although many have $0 monthly premiums.
There are deductibles, copays, and coinsurance amounts for all medical services received through a Medicare Advantage plan. These amounts vary from plan to plan.
Use the plan’s Summary of Benefits and Evidence of Coverage documents to estimate how much you will likely spend in a year toward deductibles, copays, and coinsurance if you use your usual amount of medical services.
Every Medicare Advantage plan also has a maximum out-of-pocket spending limit for the year. If you reach that limit, all further medical costs for the year will be covered by the plan.
That maximum out-of-pocket spending limit is important to keep in mind when shopping for Medicare Advantage plans because it represents the absolute worst case scenario for that plan. In 2022, this limit cannot be higher than $7,550.
If your Medicare Advantage plan includes Part D drug coverage, those costs will be estimated separately in the plan information, similar to quoting a standalone Part D plan.
Medicare Coverage Choices
You can’t have a Medicare Advantage plan and a Medicare Supplement at the same time. In most cases, you can’t have a Medicare Advantage plan and a standalone Part D plan.
The most common choices for coverage are either Medicare Parts A and B plus a Medicare Supplement and a Part D plan, possibly with a dental, vision, hearing policy OR a Medicare Advantage plan.
With either option, you have to pay your Medicare Part B premium and Medicare Part A premium, if you owe it. Beyond that, your costs for 2022 can be estimated by adding plan premiums and likely expenses based on plan deductibles, copays, and coinsurance.
Have Questions? We Can Help!
This can get complicated, but help is available!
If you have questions about your Medicare coverage or would like some assistance figuring out how much Medicare is likely to cost you in 2022, give our office a call at 877-312-1414 or schedule a free, no obligation Medicare Plan Consultation.
We’re here to help you sift through Medicare confusion to find the best possible coverage solution for you!
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