Ron Elledge is a seasoned Medicare consultant and author of “Medicare Made Easy.” As a Medicare expert, he regularly consults beneficiaries on Medicare rules, regulations, and strategies.
Kelly Blackwell is a Certified Senior Advisor (CSA)®. She has been a healthcare professional for over 30 years, with experience working as a bedside nurse and as a Clinical Manager. She has a passion for educating, assisting and advising seniors throughout the healthcare process.
Original Medicare Parts A and B do not include outpatient prescription drug coverage. Medicare Part D prescription drug coverage is available through standalone Prescription Drug Plans (PDPs) or as a bundled service with Medicare Advantage Plans (MA-PDs).
All Part D prescription drug coverage is regulated by the Centers for Medicare and Medicaid Services (CMS) and offered by Medicare-approved private insurance companies. Each year CMS issues updated costs for Part D. This article includes the cost changes effective in 2022.
Medicare Part D Cost Differences for 2022
Part D premiums: According to CMS, the average monthly premium for a basic Medicare Part D Plan is $33 in 2022. This average includes standalone PDPs and Medicare Advantage Plans with drug coverage. The average cost for a standalone PDP in 2022 is $43 per month.
Part D deductible: The deductible refers to the annual amount you must pay out of pocket before your plan begins to pay its portion of drug costs. CMS has capped the deductible at a maximum of $480 in 2022, up from $445 in 2021. Plans may charge a lower or even $0 deductible, but cannot exceed the maximum.
Part D copayments and coinsurance: Copayments and coinsurance, dollar amounts or percentages that you must pay after you’ve met your deductible, vary depending on:
- Your plan
- Which tier your drug is on (for example, generic versus brand-name)
- Which coverage phase you are in
Medicare rolled out the Part D Senior Savings Model in 2021. This five-year test program caps the price beneficiaries pay for select types of insulin at a $35 copay for a 30-day supply. According to the Kaiser Family Foundation, 2,159 Part D plans will participate in the Senior Savings Model in 2022, including 258 PDPs and 1,901 Medicare Advantage Plans with drug coverage. Monthly premiums may be higher for participating plans.
Changes to the Four Stages of Drug Medicare Part D Drug Coverage
Here are the four stages of Medicare Part D prescription drug coverage:
|Stage 1: Yearly Deductible||While in this stage, you pay the full cost of all covered drugs that have not been excluded from the deductible. You stay in this stage until your yearly deductible is met. Some plans exclude preferred and non-preferred generic drugs from the 2022 yearly deductible.|
|Stage 2: Initial Coverage||During this stage, your plan pays its share, and you pay your share of the cost of your drugs. You stay in this stage until your year-to-date “total drug costs” (your payments plus any Part D plan payments) total the initial coverage limit of $4,430 for 2022, an increase of $300 from $4,130 in 2021.|
|Stage 3: Coverage Gap||Also known as the “donut hole:” The maximum allowable charge for a covered drug during this stage, whether brand-named or generic, will be 25% in 2022. You stay in this stage until your year-to-date true out-of-pocket costs (TrOOP) reach a total of $7,050 for Plan year 2022 (an increase from $6,550 in 2021) and then move to Stage 4.|
|Stage 4: Catastrophic Coverage||During this stage, your plan will pay most of the cost of your drugs for the rest of the year. Out-of-pocket costs are capped at the greater of 5% of the cost of the drug or a copay of $3.95 for generics and $9.85 for brand-name drugs. Both of these amounts are about a 9% increase from 2021.|
True Out of Pocket Cost Changes in 2022
After your TrOOP costs reach $7,050 in 2022, you’ll enter the catastrophic phase. TrOOP costs that count toward you moving out of the donut hole include:
- All payments you have made, including your deductible copayments and coinsurance
- The discount you get on brand-name drugs
- What you pay for drugs that are covered by your plan.
Out-of-pocket costs that do not count include:
- Your plan premium
- Pharmacy dispensing fee
- The percentage your plan pays for drugs in the coverage gap
- What you pay for drugs that are not covered by your plan
What You Need to Know About Income-Based Surcharges
How much will IRMAA add to my Part D costs in 2022?
Income Related Monthly Adjustment Amounts (IRMAA) are an additional charge based on your yearly income and determined by your tax bracket and filing status. The calculated amount is added to your monthly Medicare Part B and or Part D premiums. Each year Social Security calculates and adjusts the IRMAA amount to apply to Medicare beneficiaries who have incomes higher than their threshold determination.
Unlike Part B, there is no standard monthly premium for Part D plans. The private insurance company offering your policy determines monthly premiums. The IRMAA is then added to the premium amount charged and goes to Medicare, not your plan’s provider.
The table below provides information on the Part D surcharge amounts for 2022, based on your 2020 income.
|IRMA Surcharges for Medicare Part D in 2021|
|Yearly income in 2020: individual||Yearly income in 2020: married, filing jointly||Yearly income in 2020: married, filing separately||Yearly income in 2020: Part D monthly premium for 2022|
|≤ $91,000||≤ $182,000||≤ $91,000||your plan premium (no surcharge)|
|> $91,000 — $114,000||> $182,000 — $228,000||not applicable||your plan premium + $12.40|
|> $114,000 — $142,000||> $228,000 — $284,000||not applicable||your plan premium + $32.10|
|> $142,000 — $170,000||> $284,000 — $340,000||not applicable||your plan premium + $51.70|
|> $170,000 — <$500,000||> $340,000 — <$750,000||> $91,000 — <$409,000||your plan premium + $71.30|
|≥ $500,000||≥ $750,000||≥ $409,000||your plan premium + $77.90|
Visit Medicare Part D Enrollment to learn more about Medicare Part D and how it works.
Learn More From Our Sources
- CMS | 2022 Projected Part D Average Premiums | Last accessed January 2022
- KFF | First Look at Medicare Part D in 2022 | Last accessed January 2022
- Medicare | How Original Medicare Works | Last accessed January 2022
- Medicare | Medicare Advantage Plans | Last accessed January 2022
- Medicare | How to Get Prescription Drug Coverage | Last accessed January 2022
- Medicare | Monthly Premiums for Drug Plans | Last accessed January 2022
- Medicare | Costs for Medicare Drug Coverage | Last accessed January 2022