Medicare Part D Prescription Drug Plan Changes in 2022

Fact Checked

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.

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Medicare consultant and expert, seniors advocate, and author

Ron Elledge is an accomplished Medicare agent, planner, and author. Elledge earned a bachelor’s degree in Bible theology from International Seminary and spent 30 years in pastoral ministry. He began his current career in insurance with a specialty in Medicare in 2008 and has since authored “Medicare Made Easy: What Expats, Frequent Travelers and You Need to Know” and is often a featured speaker at the International Living conferences. Elledge is a contributor to International Living, supporting Medicare beneficiaries with articles, podcasts, and Q&As.

“A licensed seniors market insurance agent in Arizona and New Mexico, Elledge has helped thousands decipher the intricacies of Medicare rules and regulations, enabling them to make educated selections for their health care needs. As a world traveler with his wife, Shelli, Elledge specializes in Medicare for expats and frequent travelers. He’s up to date with Medicare regulations, coverage options, and enrollment protocols and is fervent in his resolve to present trustworthy data on this confusing and often maligned program.

“By obtaining dependable details on how to read their Medicare options, recipients can plan for it correctly and make the best choices,” says Elledge. “These choices often make a huge financial and emotional difference in their futures. When Medicare is correctly utilized, it becomes a powerful financial and medical tool for all who qualify.”

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