Health Insurance Matters: Real Medicare costs

I am hearing people griping over the high costs of health insurance and Medicare in particular. First off, for those individuals and families looking to get health insurance, California is the place to be. Between federal and state subsidies, there is no reason for a family not to have health insurance. It is surely cheap enough. We have some clients paying under $40 for a whole family.

Today I want to talk about Medicare. Yes, the premiums have gone up, and at first glance, possibly through the roof in some people's opinion. It fairly priced in my opinion. Just ask any employer who offers decent coverage, and they will tell you that their employees, say age 60-64, are costing well over $1,000 a month in premiums.

Medicare just announced that the Part B premium will be $170.10 per month in 2022. That is for most Americans. Some will be paying less. Persons with low income and few assets will pay as little as zero per month. Those persons with incomes (based on 2020 tax returns) in excess of $91,000 will pay more. Highest income will pay $578.30 per person for Part B and $77.90 for their Part D prescription benefit in addition to the standard price charged by the prescription plan.

AND, these people are still getting a break! The true cost of Part B, the medical benefit, is in reality $680.40. Paying $578.30 reflects a 15% discount subsidized by the taxpayers. The $170.10 that most people will be paying represents 25% of the real cost.

Switching to the Part D prescription benefit. This benefit costs the consumer typically the published price of the plan they contract with. They start as low as $7.20 a month and can be as much in 2022 as $130.40. The difference between the plans is the lower priced plans have a $480 deductible (typically applied to higher priced drugs and waived on lower costing generics). While the lower priced plans cover a wide variety of medications, the higher priced plans have richer formularies (list of covered drugs) covering more obscure medications.

How can the $7.20 afford it? Well, the price the consumer pays is only a fraction of the real cost. The government is paying these plans about $90 per month in addition to what you and I are paying.

I haven't touched on Medicare Part A, the hospital benefit. People often refer to this as a free benefit as there is rarely a billing for coverage. There was a bill, as each time the working person had a Social Security deduction on a pay stub, Medicare was just below it, taking its percentage from your paycheck, and a match from the employer.

As new pharmaceuticals are created, as newer technology is created and as the field of medicine continues to grow, we will see the costs increase. So here we are, living longer using the medical arts and complaining of the cost. The other side of the coin is bloodletting and "health elixirs" sold out of the back of a buckboard wagon.

And to you all, Harry December, and to my wife and daughter, Rabbits, Rabbits!

Harry P. Thal is the Medicare Guru in Kernville and is available by telephone appointment at 760-376-2100. No office appointments as we are following strict COVID-19 protocols.