Although the annual cost-of-living adjustment (COLA) will increase benefits by 5.9% in 2022 — the highest inflation adjustment in 40 years — the Medicare Part B premium increase is still rapidly outpacing the COLA percentagewise, by jumping 14.5%. That’s one of the biggest Part B premium increases on record and the highest since 2016 when premiums grew by 16.1%. The standard Part B premium will increase by $21.60 per month, and by even more, for the 7% of beneficiaries whose incomes exceed $91,000 (single filers) or $182,000 (married couples filing jointly).
Most Medicare beneficiaries should see at least some extra funds left over in their Social Security benefits after the deduction for Part B premiums, but those people with the lowest Social Security benefits of about $365 or less, could see the entire amount of the Part B premium increase consume their entire COLA.
Medicare blamed rising Part B premiums for 2022 on three main causes:
- Rising prices and utilization costs. More people are expected to get care as they return to receiving elective care and services that were postponed during the pandemic.
- Contingency funding. Congress took action last year to significantly lower the Part B premium in 2021 to just $3.90 per month when it became clear that the COLA of 1.3% would only raise average Social Security benefits by roughly $20. Had Congress raised Part B by that much or more for 2021, roughly one half of all retirees would not have had a COLA high enough to cover a $20 per month increase. That would have created the need for Congress to make up the difference in revenues from general revenues because a provision of law protects most individuals’ Social Security benefits from reduction when the dollar amount of the Part B premium increase is greater than the dollar amount of an individual’s COLA. Congress thus opted to restrict the Part B premium increase.
- The uncertainty over the potential use of a controversial new Alzheimer’s drug, Aduhelm™. This decision to raise Part B premiums due to the new drug is controversial for several reasons, not the least of which is the fact that Aduhelm hasn’t even been approved for coverage by Medicare yet. The Center for Medicare and Medicaid services said, “we must plan for the possibility of coverage for this high-cost Alzheimer’s drug which could, if covered, result in significantly higher expenditures for the Medicare program.” Critics contend that the drug has not been proven effective. The controversial drug which costs $56,000 per year is still undergoing Medicare’s National Coverage Determination process. It drives up Part B costs for everyone because patients would receive the drug intravenously at a doctor’s office driving up Part B costs rather than a pharmacy under Part D where it would be the responsibility of private insurers and the individuals who are covered by their plans.
The discrepancy between the rate of growth in Part B premiums and COLAs, has caused concern for years. Over the past 12 years, there have been multiple times when beneficiaries have seen Part B premiums take the entire dollar amount of their COLA. In 2021, TSCL surveyed on this issue to learn how Social Security recipients fared this year, when the COLA increased Social Security benefits by just 1.3% and the Part B increase was only $3.90 per month. Here’s how survey participants responded:
Q: Which of the following amounts most closely matches your monthly Social Security benefit increase for 2021, AFTER the deduction for the Medicare Part B increase?
|No increase. My net Social Security benefit in 2021 is less than received in 2020.
|No increase. My net Social Security benefit in 2021 is the same as received in 2019.
|$15.10 - $25.00
|More than $25.00
|Does not apply. I don’t receive Social Security benefits yet.