Think 65 Is the Best Age for Social Security? Here’s Why You Should Rethink That Plan
You might regret claiming benefits at age 65.
It’s a common misconception that Medicare enrollees don’t pay for that coverage. While Part A, which covers hospital care, is free for most seniors, Part B, which covers outpatient and diagnostic services, comes with a monthly premium that can rise from year to year.
In 2022, the standard monthly Part B premium will increase from $148.50 to $170.10. But some enrollees could end up paying quite a bit more for their Medicare coverage. In fact, Part B could end up costing higher earners up to $578 a month.
Why you might pay more for Medicare
The cost of Medicare Part B hinges on what your earnings look like. If you’re a low or moderate earner, you’ll pay the standard premium that enrollees are charged. But once your earnings exceed a certain threshold, you’ll be subject to an Income Related Monthly Adjustment Amount (IRMAA) that raises your costs.
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Whether you’ll pay more for Medicare or not hinges on your reported income from two years prior. This means that your Part B surcharges for 2022 will be based on your 2020 income. You can consult this table to see if you’ll pay more for Part B next year:
2020 Income: Individual Tax Return
2020 Income: Joint Tax Return
2020 Income: Married With Separate Tax Return
2022 Monthly Part B Premium
$91,000 or less
$182,000 or less
$91,000 or less
$170.10
above $91,000 up to $114,000
above $182,000 up to $228,000
Not applicable
$238.10
above $114,000 up to $142,000
above $228,000 up to $284,000
Not applicable
$340.20
above $142,000 up to $170,000
above $284,000 up to $340,000
Not applicable
$442.30
above $170,000 and less than $500,000
above $340,000 and less than $750,000
above $91,000 and less than $409,000
$544.30
$500,000 or above
$750,000 and above
$409,000 and above
$578.30
Data source: Medicare.gov.
All told, the Centers for Medicare & Medicaid Services estimates that about 7% of Medicare enrollees will be on the hook for IRMAAs in 2022. And it’s not just Part B that will cost higher earners more. Part D plans, which cover prescription drugs, also come with surcharges that follow these same income thresholds.
The only difference is that while there’s a standard monthly Part B premium, there’s no standard monthly premium for Part D. That’s because premium costs vary from plan to plan.
Can you appeal your IRMAA?
If your situation has changed significantly since 2020, the year 2022’s IRMAAs are based on, then you may be eligible to have your surcharge waived. This may apply if you’ve gotten divorced since 2020, or if your income dropped substantially.
Otherwise, higher earning seniors will need to gear up for more expensive Part B premiums. And to make matters slightly worse, the annual Part B deductible is also rising from $203 in 2021 to $233 in 2022. For those earning enough money to be liable for a $578.30 monthly Part B premium, that won’t make a huge difference. But for low and moderate earners, and those who get most of their retirement income from Social Security, it’s yet another stressful healthcare expense to deal with.
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