Last October, seniors on Social Security got some pretty good news. That's when 2022's 5.9% cost-of-living adjustment (COLA) was announced, and it winds up being the biggest raise recipients have seen in decades.
But that excitement was somewhat short-lived. That's because following the news of a big Social Security raise, seniors on Medicare learned that the standard Part B premium would be increasing from $148.50 in 2021 to $170.10 in 2022. That's an increase of $21.60, and one that now has the potential to eat away at seniors' most recent Social Security COLA.
Though Medicare Part A, which covers hospital care, is free for most enrollees, Part B, which covers outpatient services and diagnostics, costs money for coverage. There's a standard Part B premium that applies to low and moderate earners, while higher earners pay the standard premium plus a surcharge.
Seniors on Social Security have their Part B premiums deducted from their benefits directly. It's a convenient way to pay for Medicare, but it also means that seniors often don't get their Social Security COLA in full.
But now, there's a chance Medicare won't impose such a substantial hike for Part B this year. And if that happens, seniors will get to keep more of their much-needed Social Security raise.
A touch of hope
Many seniors depend on Social Security to provide the bulk of their retirement income. In recent years, those benefits have done a poor job of helping recipients maintain their buying power in the face of inflation. And a big part of the reason is that the cost of healthcare, including Medicare, has risen substantially through the years, and at a faster pace than Social Security COLAs.
But seniors may be in luck this year. On Jan. 10, Health and Human Services Secretary Xavier Becerra announced that he's instructing the Centers for Medicare & Medicaid Services to reassess this year's standard Part B premium hike.
A big reason for this year's giant increase stems from higher costs related to Aduhelm, a medication designed to treat Alzheimer's disease. But the drug's manufacturer has since cut its estimated per-patient cost in half from $56,000 to $28,000 a year. Because Medicare's Part B premium hike was based on that higher number, it's easy to make the argument that the cost of Medicare should not be increasing so drastically.
If Medicare Part B premiums end up with a smaller increase, it could help a lot of seniors stay afloat financially in 2022. Though Social Security benefits are getting a sizable boost this year, the reason for that is because the general cost of living has gone way up over the past number of months. And so seniors getting a 5.9% COLA may not be banking that money so much as using it to cover higher food, gas, and utility costs, among others.
Though making retroactive changes to Part B increases isn't something Medicare normally does, this year, it's a move that could make a lot of sense -- and help a lot of seniors financially.