Modest slowdown in premium growth distinguishes second-quarter financial results for MPL specialty insurers
We look at the financial results for medical professional liability (MPL) insurers for the second quarter of 2022.
The Centers for Medicare and Medicaid Services (CMS), of the U.S. Department of Health and Human Services, has announced cost-of-living adjustments (COLAs) for Medicare Parts A and B for 2022. In January this year, CMS announced the 2022 amounts (also provided in this Health & Group Benefits Update) for the Medicare Part D standard prescription drug benefit.
Individuals who have at least 40 quarters of Medicare-covered employment—nearly all Medicare beneficiaries—pay no premiums for Part A coverage. For others, the table below summarizes the 2022 and 2021 Medicare Part A premium, deductible, and payroll tax amounts:
|Medicare Part A (Hospital insurance)||2022||2021|
|Up to 30 quarters of Medicare-covered employment or disabled under age 65 who lost disability benefits because of work and earnings||$499||$471|
|31 to 39 quarters of Medicare-covered employment or disabled under age 65 who lost disability benefits due to earnings above threshold amounts||$274||$259|
|Participant cost sharing|
|Deductible for up to 60 days of inpatient care||$1,556||$1,484|
|Daily coinsurance for days 61 to 90||$389||$371|
|Daily coinsurance for more than 90 days (lifetime reserve days)||$778||$742|
|Daily coinsurance for extended care services in a skilled nursing facility for days 21 through 100 in a benefit period||$194.50||$185.50|
Regarding payroll taxes, the Medicare hospital insurance tax rate on all wages remains 1.45% for both employees and employers. This tax rate has not changed since 1986. Since 2013, employees also pay an additional 0.9% tax on wages over $200,000 ($250,000 for joint filers), requiring an employer to withhold the additional amounts when the employees’ wages reach that threshold.
Part B is medical insurance that covers physician and outpatient services and durable medical equipment. The Part B deductible in 2022 for all beneficiaries is $233 (up from $203 in 2021).
Medicare Part B premiums depend on beneficiaries’ income levels. Individuals generally pay a “standard” premium amount if their modified adjusted gross incomes (MAGIs) are less than or equal to a specified threshold ($91,000, or $182,000 for couples, in 2022). Higher-income enrollees pay more (to cover a higher percentage of Part B costs), based on their MAGIs. And some lower-income beneficiaries may qualify for cost-sharing or premium assistance. In addition, if the Social Security benefit COLA is not enough to cover the Part B premiums, the Social Security law’s “hold harmless” provision prevents the premiums from increasing for some Social Security recipients.
The MAGI generally is based on an individual’s tax return from two years earlier (e.g., the 2022 premium is based on 2020 income). The following chart shows the 2022 Medicare Part B monthly premiums based on 2020 income tax filings:
|Individual income in 2020||Joint income in 2020||2022 Part B premium|
|$91,000 or less||$182,000 or less||$170.10|
|$91,001 – $114,000||$182,001 – $228,000||$238.10|
|$114,001 – $142,000||$228,001 – $284,000||$340.20|
|$142,001 – $170,000||$284,001 – $340,000||$442.30|
|$170,001 – $499,999||$340,001 – $749,999||$544.30|
|$500,000 and higher||$750,000 and higher||$578.30|
The 2022 and 2021 standard Part D drug benefits are:
|Part D Standard Benefit||2022||2021|
|Initial coverage limit||25% after deductible, up to a coverage limit of $4,430||25% after deductible, up to a coverage limit of $4,130|
|Coverage gap amount (“donut hole”)1||Between $4,430 and $10,012.50||Between $4,130 and $9,313.75|
|Maximum out-of-pocket threshold||$7,050||$6,550|
|Minimum copay in catastrophic coverage portion of benefit2|
|Generic/preferred multisource drugs||$3.95||$3.70|
|Retiree drug subsidy amounts|
|National monthly average (base beneficiary premium)3||$33.37||$33.06|
|1. A provision of the Patient Protection and Affordable Care Act (ACA) closed the gap by 2020 by providing decreasing participant coinsurance (from 100% to 25%) and discounts in covered drugs in the gap.
2. A beneficiary pays the greater of 5% or the minimum copay when the catastrophic coverage limit is reached (after the gap amount).
3. Actual Part D premiums paid by individual beneficiaries equal the base beneficiary premium adjusted by a number of factors and thus vary from one Part D plan to another.
Employers that sponsor retiree health programs coordinated with Medicare should take into account the adjusted figures and may have to modify their administrative and payroll systems to accommodate the new limits. Employers that pay retirees’ Part B premiums, for example, will have to determine how to administer their programs with the updated income-related premiums in mind. Communications that specify the various Medicare limits also should be reviewed for accuracy and modified, if necessary, before materials are given to participants.
For additional information about the 2022 Medicare COLAs, please contact your Milliman consultant.
This update is intended to provide information and analysis of a general nature and should not be interpreted as legal or other professional advice. Milliman recommends that readers of this update be aided by their own qualified professional for guidance on their specific circumstances.