Plan on Paying (a Lot) More for Medicare Part B Next Year

It was only a matter of time. Medicare is in worse financial shape than Social Security, so it wasn’t a complete surprise to see the new standard Medicare Part B premium increase substantially for 2022. 

The standard rate is going up 14.5%, from $148.50 per month for one person to $170.10 per month. The standard premium rate is what you pay if your modified adjusted gross income (as reported on your tax return from 2020) is $91,000 or less if you file an individual return, or $182,000 or less when filing a joint return. The amounts assessed for higher-income Medicare enrollees also went up, of course, to as much as $578.30 per person per month.

If you don't sign up for Part B, which covers medically necessary care and preventive services,  when you're first eligible at age 65 during your initial enrollment period, your monthly premium may permanently increase by 10% for each 12-month period you didn't sign up. There are exceptions to this penalty and allowances for a special enrollment period if you’re covered by health insurance through current employment.

AARP provides excellent Medicare resources, one of which provides a list of situations where you would not pay the Part B late enrollment penalty.

When combined with some Federal Employees Health Benefits plans that provide Medicare enrollment incentives, the cost of combining parts A and B can save money over continuing FEHB alone. You can learn more about combining Medicare and FEHB at the National Active and Retired Federal Employees Association’s open season resources page. There you will find webinars, plan comparison resources and links to other information. 

For example, compare the cost of FEHB Blue Cross/Blue Shield’s standard option without Medicare Part B enrollment compared with enrolling in the BC/BS basic option plan that provides incentives to enroll in Part B, including lower rates, partial Part B reimbursement, and a waiver of cost-sharing when Medicare is the primary payer. Here are the details:

BC/BS standard option will cost $276.19 per month for self only and $627.49 a month for self plus one next year. It has an annual deductible of $350 per person, plus coinsurance of 15% (when using preferred providers) or 35% (when using participating or non-participating providers), copayments of $35 for specialists, and a variety of other out of pocket expenses and plan limitations. The catastrophic protection out of pocket maximum with this plan is $6,000 for self only and $12,000 for self plus one and family (when using preferred providers) or $8,000 for self only and $16,000 for self plus one and family enrollments (participating and non-participating providers). Plus, there is exposure to services that Medicare Part B may have covered.

For retirees who choose to enroll in the BC/BS basic option, the cost for premiums in 2022 will be $173.73 a month for self only and $424.95 a month for self plus one. In this plan, you must see BC/BS preferred providers to receive benefits. If you are enrolled in Medicare A and B, this plan provides an $800 per year reimbursement of Part B premiums per person. If you are covered by Part B and your  physician accepts Medicare’s approved amount for the service, you pay nothing for covered charges.

The total annual cost for the standard Medicare Part B premium along with the BC/BS Basic premium minus the Part B reimbursement is $3,305.96 per year, which is $8.32 less than enrolling in BC/BS standard option without Part B—and potentially incurring up to $8,000 a year in out of pocket expenses for self only coverage.

Most cost-sharing will be waived when Medicare is the primary payer, which makes it less likely that you would incur much in the way of out-of-pocket expenses other than premiums and copayments for outpatient prescriptions. 

Besides BC/BS basic, there are many other FEHB plans that offer Medicare incentives, such as partial reimbursement of Part B premiums, waivers of cost-sharing and low premiums. It is definitely worth shopping for coverage during the annual FEHB open season underway now.