When you see the light at the end of your retirement, you likely have all your money and bills aligned so you can retire with confidence that you have money to retire on. But have you considered your healthcare costs? Medicare is health insurance for seniors 65 years and older and others who qualify earlier due to Social Security disability benefits. There are rumors Medicare is free, but that is false!
If you are now wondering, “What does Medicare cost in 2022,” you can visit boomerbenefits.com/new-to-medicare/medicare-cost, or you can keep reading to learn more about the cost of Medicare!
How much is Medicare Part A?
The cost of Medicare Part A, inpatient coverage, is unlike any other part of Medicare. This means many beneficiaries can enroll in Part A and have a $0 monthly premium. If you or your spouse have worked ten years (40 quarters) in the U.S. and paid payroll taxes, you will have a $0 premium for Part A.
However, if you only have 30-39 quarters, you will pay the pro-rated premium of $274/month in 2022. Those who have no more than 30 quarters will pay the total cost of Part A, which is $499/month. So, keep in mind that if you had a career where you did not have to pay payroll taxes, such as Texas teachers, you would pay the total Part A premium.
Other costs to Part A besides the monthly premium include the Part A deductible and Part A copayments and coinsurance. When you are an inpatient at the hospital, you will pay the Part A deductible of $1,556 in 2022. Once you meet the Part A deductible, Medicare covers your inpatient stay for up to 60 days. After day 60, you will begin to pay a daily copayment until you are discharged from the hospital.
What is the cost of Medicare Part B?
Regardless of how many quarters you have, you must pay the monthly Part B (outpatient care) premium. In 2022, the standard Part B premium is $170.10/month. But if you are in a high-income bracket, you will pay an Income Related Monthly Adjusted Amount (IRMAA) fee on top of your monthly premium.
The Social Security Administration looks at your tax returns from two years ago. If they find you were in a high-income bracket, you will pay more for Medicare Part B. The tax brackets vary whether you filed your taxes as single or jointly with your spouse. If you filed as single and made $91K or less or filed jointly and made $182K or less, you will pay the standard Part B premium in 2022. But, if you made more than that, you would pay more for your Medicare.
Just like Part A, Medicare Part B also has a deductible. In 2022, the annual Part B deductible is $233. Once you pay the deductible, Part B will cover 80% of Medicare-approved services, and you will pay a 20% coinsurance.
The cost of Medicare Part D
Although Medicare Part D is not available through the federal government, you should still consider enrolling in a Part D plan for prescription drug coverage. Private insurance companies sell Part D plans, so the monthly premium for a Part D plan varies. However, the average monthly premium for Part D in 2022 is $33/month.
The Social Security office will also look at your tax returns from two years ago to determine if you will pay an IRMAA charge for Part D, just like Part B. If you are in a high tax bracket, you will be subject to IRMAA for Medicare Part D.
The annual deductible for Part D is $480 in 2022. However, a Part D carrier can offer a smaller deductible plan. Once you pay the Part D deductible, you will move to the initial coverage stage, where you will pay a copayment for your medications until you meet $4,430 in 2022. After spending $4,430, you will move to the coverage gap, also known as the donut hole.
When you are in the coverage gap, you will pay 25% of the retail cost of your drug until you have paid $7,050 out-of-pocket in 2022. After you and your plan meet $7,050, you will move to the catastrophic coverage stage, where your Part D plan will pay 95% of the total cost of your prescriptions for the remainder of the year.
There are many costs to Medicare, and they change from year-to-year. Many beneficiaries purchase either a Medigap or Medicare Advantage plan from a private insurance carrier to help with these out-of-pocket costs. Consider working with a Medicare broker to see which route would be the best one for you to help lower your out-of-pocket costs in retirement!