As Social Security Rises, So Do Medicare Premiums
Following the Social Security Administration's recent cost of living adjustment announcement of 5.9% for 2022, the Centers for Medicare & Medicaid Services (CMS) announced Medicare Part B premiums for 2022 will increase from $148.50 a month in 2021 to $170.10 a month in 2022, a base premium increase of 14.5%. Part D premiums for Medicare drug coverage also increased based on income.
The following table shows the income-related monthly adjustment amounts (IRMAA) for 2022 Part B and Part D premiums. Keep in mind that these amounts are based on your filing status and yearly income in 2020. If your income is significantly lower than it was in 2020 due to a life-changing event (divorce, death of spouse, work reduction, etc.) use Form SSA-44 to request a reduction in your income-related monthly premium.
|Beneficiaries who file individual tax returns with modified adjusted gross income:||Beneficiaries who file joint tax returns with modified adjusted gross income:||Beneficiaries who are married and lived with their spouses at any time during the year, but who file separate tax returns from their spouses, with modified adjusted gross income:||Income-related monthly adjustment amount||Total monthly Medicare Part B premium amount||Medicare Part D Income-Related Monthly Adjustment Amounts|
|Less than or equal to $91,000||Less than or equal to $182,000||Less than or equal to $91,000
|Greater than $91,000 and less than or equal to $114,000||Greater than $182,000 and less than or equal to $228,000||$68.00
|Greater than $114,000 and less than or equal to $142,000||Greater than $228,000 and less than or equal to $284,000||$170.10
|Greater than $142,000 and less than or equal to $170,000||Greater than $284,000 and less than or equal to $340,000||$272.20
|Greater than $170,000 and less than $500,000||Greater than $340,000 and less than $750,000||Greater than $91,000 and less than $409,000||$374.20
|Greater than or equal to $500,000||Greater than or equal to $750,000||Greater than or equal to $409,000||$408.20
Beware The Tax Torpedo
The $1 difference for individuals earning between $91,000 and $91,001 means an additional $964.80 Medicare tax. Likewise, couples earning between $182,000 and $182,001 are subject to an increase of $1,632. For more on this topic be sure to read, "How To Avoid Paying Higher Medicare Premiums The First Two Years After Retiring."
What If You Don't Choose Medicare Part D
Medicare Part B premiums are a standard deduction from Social Security checks to cover physician office visits, outpatient hospital services, durable medical equipment, home health care, and certain preventive services. Medicare Part D for drug coverage is optional. However, if you choose not to sign up for Part D when first eligible, you may have to pay a Part D late enrollment penalty if not covered by another drug plan. Also, keep in mind that even if your retirement plan pays for your Part D plan premiums, high-income earners are required by law to pay the Part D IRMAA. If you don't pay the Part D IRMAA, you may also lose your retirement coverage, and you may not be able to re-enroll.
Eligible Medicare participants can compare 2022 coverage options for Original Medicare, Medicare Advantage, and Part D prescription drug plans during Medicare Open Enrollment for 2022, which began on October 15, 2021, and ends on December 7, 2021.
If you would like help with Form SSA-44, or forecasting future income for tax planning, schedule a free consultation with the Hurlow Wealth Management Group.* Tax planning is just one of the many services included in our proprietary financial planning process we offer to our clients. For nearly two decades, the Hurlow Wealth Management Group’s team of CERTIFIED FINANCIAL PLANNERS™ based in Bloomington and Indianapolis, Indiana, have assisted clients in 25 states through tax, insurance, and other financial planning issues. Click here to schedule an introductory call to see if our services are right for you.