Seniors on Social Security have faced some financial challenges this year, despite the fact they received the highest cost of living adjustment (COLA) in four decades. In addition to surging prices on goods and services, Medicare premiums rose significantly and ate up a large portion of the raise most retirees got in 2022.
Now, however, a powerful senior group is arguing that Medicare may owe older Americans a refund — and some lawmakers also agree. If Centers for Medicare and Medicaid Services acts, retirees could find themselves with higher Social Security checks in the coming months — and perhaps even a back payment for a portion of the big premiums they already paid this year.
Here's what you need to know.
Why seniors may be owed a refund for large Medicare premiums
The Senior Citizens League is an advocacy group for older Americans that was established back in 1992 and focuses on lobbying lawmakers and informing the public about relevant issues.
Recently, the organization called for retirees to receive a refund for a portion of the Medicare Part B premiums they have paid this year. For most retirees, these premiums cost $170.10 per month in 2022 and are withdrawn directly from Social Security checks. This is up from $148.50 per month in 2021. Some higher-earning Americans pay even more.
The Senior Citizens League believes the large year-over-year premium increase wasn't actually justified and that retirees are paying more than they should. “It appears that Medicare is overcharging 57 million older and disabled beneficiaries for their Part B coverage this year,” says Mary Johnson, a Medicare and Social Security policy analyst for The Senior Citizens League, in a press release.
The organization's position is based on the fact that around half of the Medicare premium increase was attributed to the cost of one single drug, Aduhelm. The new Alzheimer's medication was priced at $56,000 per patient when premiums were set. Since Medicare covers the drug, it took these expected costs into account when establishing Part B premiums for 2022.
However, the cost of Aduhelm has now been cut in half, and patients can be treated for just $28,200. The reduction in price, coupled with the fact few patients are likely to be prescribed the medication this year since it's still in clinical trials, may mean Medicare will be spending far less than anticipated.
If that's the case, retirees should get a break. Specifically, the Senior Citizens League believes Part B premium should be reduced by around $11.60 per month. If that were to occur, retirees would face lower costs going forward and should be refunded the money already paid out.
The Senior Citizens League isn't alone in its belief retirees are being overcharged. More than 30 lawmakers wrote to the Administrator of Centers for Medicare and Medicaid Services asking for a reconsideration in the large hike in Part B premiums. And Department of Health and Human Services Secretary Xavier Becerra also urged CMS to reduce Medicare costs in light of the price break for Aduhelm.
It remains to be seen if this change occurs. If it does, it could potentially provide some relief from the ongoing financial struggles seniors are coping with this year by allowing them to keep more of their Social Security raise for other costs besides insurance coverage.
The $18,984 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.