JUST PLAIN TALK: 2022 Medicare Open Enrollment, changes announced
For those already 65, Medicare Open Enrollment will continue until Dec. 7. If you turn 65 later this year or next year, your initial open enrollment lasts from three months before your birthday month and ends three months after your birthday month. While the enrollment periods, co-pays, deductible limits, and coverage amounts can be daunting, any Medicare headaches pale compared to buying individual health insurance.
Most people can sign up for Medicare Part A at no cost when they turn 65. Part A covers hospital visits and is funded from payroll taxes. Part B, though, has monthly premiums tied to income, beginning around $158 next year. Part B premiums are tiered with the highest earners, $500,000 single/$750,000 married, paying around $540 per month. While subsidized by general tax revenue Part B premiums are projected to increase 6.7% next year.
Since drugs aren't covered under Part A or Part B, you will need to choose a Part D drug plan or enroll in a Medicare Advantage plan. More on Advantage plans later; let's look at the 2022 Part D changes. First, the initial Part D deductible increases to $480. After that, you pay 25% of covered costs up to the initial coverage limit, which rises to $4,430 next year. Some plans have zero deductible on certain drugs, so it is critical to match your maintenance meds with your plan's coverage.
Part D total out-of-pocket threshold increases to $7,050 next year, and after that, you only pay a small co-pay. When Part D rolled out, the gap between the out-of-pocket threshold and the initial coverage limit became the "donut hole." A more accurate descriptor would have been a money pit because drug coverage was limited or non-existent. However, sanity prevailed, and now costs aren't nearly as oppressive. For example, brand-name drugs cost 25% or no change from initial coverage amounts.
Review your prescription drug usage. Part D coverage can change annually; premium increases are a given. Some states, Florida being an exception, offer low-income residents assistance with costs. In addition, pharmaceutical companies offer discounts, but you have to apply.
The most comprehensive coverage is a Medigap policy coupled with a Part D drug plan. However, since they are free, many people choose Advantage plans, but you could have health issues that Advantage plans don't cover as you age. Also, Medigap plans are only guaranteed-issue the first year. So with health problems opting out of an Advantage plan or switching Medigap plans may be impractical.
Medicare is an important social program. However, when first proposed, opponents labeled it socialism. Maybe it is, maybe it isn't, but I'm just glad it's around. My healthcare costs went down 50%, and if I was in worse health, the savings would have been higher.
Complaining about socialism while you're on Medicare is like an FSU fan criticizing the Tomahawk Chop at Truist Park.
You can't always get what you want, but Buz Livingston, CFP, can help you figure out what you need. For specific advice, visit livingstonfinancial.net or drop by 2050 West County Highway 30A, M1 Suite 230.