Medicare is Hiding Price Increases

Categories : Financial, News
October 12, 2022

In our current inflationary environment, finding a bargain should make our day. And so it seemed recently, when Medicare announced a price decrease for Part B premiums, starting in January 2023. However, 2022 pricing was excessive, having been predicated on an extremely high estimated cost of the new drug Aduhelm, which everyone was forced to cover, notwithstanding individual needs. The reported 2023 decrease of $5.20 monthly, coupled with a $7.00 per year reduced deductible, beats an increase of any size, right?

Not so fast. When is a price decrease not a price decrease? When your annual cost goes up, of course. And that is exactly what is happening to many Senior Citizens. The devil is always in the details, and those details lie in IRMAA, Medicare’s Income Related Monthly Adjustment Amounts. IRMAA imposes surcharges for Medicare Parts B and D, based on family income.

True, only a percentage of Medicare beneficiaries are subjected to IRMAA surcharges, but their next year’s surcharges will be raised by an amount that for many will exceed reported savings from reduced Part B premiums. IRMAA income brackets will increase somewhat, but far less than the rate of inflation. Overall, higher-income Medicare B recipients will incur a substantial increase, rather than savings. And that is after getting fleeced throughout 2022 by having had to pay for an expensive, but personally unused, Aduhelm.

Worse, IRMAA surcharges also apply to Medicare Part D, which is the optional Prescription Drug Plan. While signing up for Part D is optional, paying IRMAA surcharges is not. These same people are required to pay Part D IRMAA surcharges, despite not being part of the Drug Plan.

Only in America.

Within the overly complex U.S. Tax Code, there are many hidden costs and even more that are not necessarily hidden but require taxpayers to dig into the details to identify hidden costs. Additional costs, along with price increases, amount to bracket creep, albeit at a somewhat slower rate than in pre-Reagan days (before indexing became law).

One indicator of hidden taxes and bracket creep is easily seen in the taxation of Social Security benefits. In 1984, only 10% of Social Security recipients paid income tax on any part of their monthly benefits. That percentage has crept up to today’s 40% of recipients. That is a topic for another Blog.

Don’t be fooled; you are getting ripped off, quietly and stealthily.

Van Wie Financial is fee-only. For a reason.