If you rely on Medicare for health coverage, you’re in good company. But here’s something that’s far from good — you could be in line for some hefty costs come 2022. Here are a few reasons why you may be looking at spending more money on healthcare next year.
1. Part B premium costs are rising
Though Medicare Part A, which covers hospital care, is available at no cost to most enrollees, there’s a premium associated with Part B that changes from year to year. This year, that standard premium costs $148.50 a month. Next year, it’s rising to $170.10. That’s an increase of nearly $30 — one that will eat heavily into seniors’ expected Social Security raise.
2. Your prescriptions may be getting pushed into a higher tier
All Medicare Part D drug plans have a formulary that groups medications by tiers. The higher a tier your prescriptions fall into, the more they’ll cost you.
Even if you’ve kept the same Part D plan for 2022 as you have currently, plan formularies can change from one year to the next. And if you didn’t read your plan’s change notice carefully, you could be in line for some sticker shock once the new year rolls around.
3. You may be subject to an IRMAA
Next year, $170.10 will represent the standard Medicare Part B premium. But some seniors will pay a lot more money than that for coverage in the form of an IRMAA, or Income Related Monthly Adjustment Amount.
Whether you’ll face an IRMAA in 2022 will depend on what your income looked like in 2020. If you’re single and earned more than $91,000 last year, you’ll pay more for Part B. The same holds true if you’re married and had a 2020 income above $182,000.
Incidentally, IRMAAs apply to Part D drug plans, too. You may be forced to pay extra on top of your plan’s standard premiums if your earnings are high enough.
4. Part B deductibles are going up
It’s not just Medicare Part B premiums that are rising. Deductibles are increasing as well. Right now, the annual Part B deductible is $203. Come next year, it will amount to $233.
Gear up for rising costs
Medicare costs can rise from year to year, making healthcare a tricky thing to budget for during your senior years. If you’re already retired and fear you’ll struggle to keep up with your costs, you may need to look at cutting back on other less essential expenses or taking a part-time job.
If you’re still working, you have a prime opportunity to prepare for higher-than-expected Medicare costs. For one thing, you could always pad your IRA or 401(k) plan so there’s more money in there to cover whatever needs of yours arise during retirement.
And if you’re enrolled in a high-deductible health insurance plan, you can sock money away in a health savings account. HSA funds never expire, so you can carry that money into retirement and use it to pay your Medicare premiums, deductibles, and whatever other medical expenses arise.
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