Inflation is saturating national news these days, which should come as no surprise to anyone. Blatant examples of rising prices are everywhere, exemplified by gasoline, where prices are announced on the marquee before you even reach the pump. Driving past the same station day after day, you have likely noticed the price change from under $2.00 to over $3.00, and more in some areas.
Some inflation is more subtle and difficult to assess without taking time to analyze. A classic example came to light this week when our private Medicare Supplemental Prescription Drug insurance provider sent a 12+ page booklet itemizing changes for the coming year. A dive into the paperwork revealed a collection of increases that together will add significantly to our 2022 out-of-pocket medical expenses.
Our basic monthly premium increase is the “face value” of prescription drug insurance. In this case, the increase was “only” 4.88%, or $43.20/year (each). However, that is just the beginning. Our Annual Deductible increased by $75.00 (again, each), piling an additional 8.48% onto the inflationary impact. Think I’m done yet? Not at all, because our Tier 1 - Preferred Generic Drug $0.00 copay will suddenly be $3.00. Due to the rules of math, there is no percentage increase calculation, as we can’t divide by zero. We could go through our 2021 records to see how often this might apply, but it is simpler to say that each $3.00 charge adds to our inflation-adjusted cost.
Tier 2 - Preferred Generic Prescription Drug copay will rise from $11.00 to $13.00 each, again adding to the inflating cost of our insurance. There may be other subtle inflation indicators hidden from view. Sometimes meds get changed from Tier 1 to Tier 2 or higher, increasing out-of-pocket expenses for repetitive prescriptions. Whatever other increases are looming remain as yet unidentified.
Putting it all together, it appears that we will be experiencing about 15% inflation in this single budgetary item. When the national Social Security COLA is released later this year, along with the increased cost for Medicare, we will update the inflationary impact. Meanwhile, study your own costs and watch for changes. Shop relentlessly for better deals. It’s all up to you to control expenses to the degree possible.
Remember, the government is lying to all of us regarding inflation. If you doubt that, Senator Rick Scott of Florida recently proffered a Bill to require Senate Committees to include an inflationary impact statement for every Bill passed out of committee. Senate Democrats voted him down. Why?
Van Wie Financial is fee-only. For a reason.