Minnesota seniors face largest jump in Medicare Part B premiums in a decade

Minnesota seniors are facing a sharp increase in monthly premiums next year for the Part B portion of their Medicare health insurance benefits.

The federal government announced Friday that monthly costs would increase from $148.50 this year to $170.10 in 2022. That jump of $21.60 per month, or more than 14%, greatly exceeds a typical year's increase, state officials say.

Minnesota has about 1.1 million Medicare beneficiaries, and the vast majority of them pay premiums for Part B, which covers a wide variety of outpatient medical needs including physician services.

"It's the largest increase in many, many years," said Kelli Jo Greiner of the Minnesota Board on Aging. "It is going to very negatively affect Medicare beneficiaries."

The increase will significantly dent the 5.9% cost-of-living increases seniors will see next year in Social Security payments, Greiner said. The cost-of-living adjustment is significantly higher than in recent years. At an average of $92 per month, it should exceed the premium increase for the vast majority of beneficiaries, advocates say.

It's been more than a decade since seniors saw a similarly large jump in Medicare Part B premiums, Greiner said.

A "hold-harmless" provision in the Medicare statute means that individuals won't see a net reduction in their benefits, said Tricia Neuman, executive director for the Program on Medicare Policy at the California-based Kaiser Family Foundation.

"But it will take a bite out of seniors' cost-of-living increase," Neuman wrote in an e-mail.

The deductible that seniors must pay before Part B coverage kicks in is increasing as well, from $203 to $233 per year.

Rising health care costs and reserves to pay for the potential use of a costly new Alzheimer's drug are driving the increases, the federal government said. Another factor is that Congress opted to spread out over several years — including 2022 — increases that would have hit in 2021 to avoid adding to the economic shock of the pandemic, according to AARP, the lobby for older Americans.

"Once again, American seniors and taxpayers will pay the price for the outrageous pricing behavior of big drug companies," Bill Sweeney, AARP senior vice president for government affairs, said in a statement.

But the Pharmaceutical Research and Manufacturers of America said in a statement the cost estimates from the federal government "appear to be grounded in inaccurate, outdated information." The trade group added that "AARP is using a new treatment for patients with Alzheimer's to justify a government price-setting scheme that will ultimately lead to less access to medicines and fewer new treatments for seniors."

AARP is calling on Congress to quickly pass prescription drug reforms proposed by Democrats in the Build Back Better Act, which U.S. Secretary of Health and Human Services Xavier Becerra and U.S. Sen. Amy Klobuchar, D-Minn., promoted at an event last week in Burnsville.

Part B is separate from Medicare Part A, which covers in-patient hospital services. It's also distinct from the Medicare Supplement, Medicare Advantage and Medicare Part D benefits for which many seniors pay monthly premiums directly to health insurance companies.

Seniors with very low incomes and limited assets should look into whether they can get help, Greiner said, through the Medicare Savings Program. More information is available at the state's Senior LinkAge line at 1-800-333-2433.

Otherwise, seniors might try shopping around to see if they can save money on their monthly costs for Medicare Supplement, Medicare Advantage or Part D coverage. In many cases, seniors can find Medicare Advantage health plans with lower premiums, but the choice can come with trade-offs.

"If they're choosing Medicare Advantage, [they need to] make sure their provider participates with that plan, make sure that their pharmacy participates and that their drugs are going to be covered — that their drugs are on the formulary," Greiner said. "Those are the three big ones."

Seniors can find good Medicare Advantage options that provide savings, but compensating for the Part B premium increase won't be easy, said Tom Peterson, owner of the Roseville insurance agency Twin City Underwriters. The jump comes to about $260 per year, he said, which is particularly hard to take for seniors living on fixed incomes.

"This is bad because it affects the people who have the least ability to adapt to it," he said. "The bulk of their Social Security increase is going to be sucked up by this."