Retirees have been closely keeping an eye on the Social Security Administration’s official page, waiting for the big announcement: the projected substantial boost in Social Security benefits next year. But another thing they will want to know is the cost of Medicare premiums.
Medicare is a national program that provides health insurance for those 65 and older, and some people under 65 with certain conditions or disabilities. Medicare premiums are usually deducted from monthly Social Security checks, so their cost can have quite an impact on seniors’ retirement funds.
Its beneficiaries are enjoying a rare bit of exciting news as their Part B premiums as well as deductibles will be reduced next year after the federal health insurance plan spent less than expected in 2022.
Unluckily, the cost reductions beneficiaries will get in 2023 are significantly smaller than the increases they faced this year. However, costs for Medicare Part D and Medicare Advantage will also go down. At the same time, Part A deductibles for hospitalization costs will be going up.
Let’s see exactly how much the premiums for each part (A, B, C, and D) are expected to cost in 2023! Note: The Medicare open enrollment period ends on December 7.
Medicare Part A
Medicare Part A, also known as hospital insurance, helps cover inpatient care in hospitals, hospice care, skilled nursing facility care, and home health care.
Most seniors aged 65 and older don’t have to pay the Part A premium. That’s because the US government automatically charges workers Medicare taxes throughout their careers and uses the money to cover Medicare Part A costs.
This applies if you’ve worked for at least 10 years (or 40 quarters). If you haven’t accumulated enough working years but your spouse has, you may still benefit from a premium-free Part A. If you don’t have to pay a Part A premium, there are still costs you may have to cover.
According to an official statement made by the Centers for Medicare and Medicaid Services, the annual deductible — the money you pay for covered services before your health insurance plan benefits kick in — for inpatient hospital stays will increase from $1,566 in 2022 to $1,600 in 2023.
For patients who are hospitalized for more than 60 days, the coinsurance amount will go up next year from $389 per day to $400 per day. This is only valid from the 61st to the 90th day of hospitalization. What goes beyond the 90th day will also be more expensive: the daily coinsurance will increase in 2023 from $778 a day to $800 a day.
The coinsurance amount for beneficiaries in skilled nursing facilities will increase from $194.50 to $200 for the 21st to 100th day of extended care service.
Medicare Part B
Part B, also known as medical insurance, helps cover outpatient care, medical equipment such as walkers and wheelchairs, and a variety of preventive services such as vaccines, screenings, and yearly “wellness” visits, CMS says. Even though Part B is optional, CMS reports that most people have both Parts A and B.
Those who are enrolled in Part B have to pay a monthly premium, which is determined each year by the Social Security Act, according to CMS. This premium is automatically withdrawn from Social Security recipients’ monthly checks.
Those who earn up to $97,000 per year pay the standard premium (the same applies to couples with an income of up to $194,000). This means that higher-income recipients pay more for Medicare Part B.
The good news is that Part B premiums will drop by 3% in 2023. According to CMS, those who have Part B will pay a monthly premium of $164.90 next year, $5.20 less than in 2022.
“This means that most Social Security recipients will see more money after deducting their Medicare premiums,” says Mary Johnson, a Medicare and Social Security policy analyst.
If you have Part B, then you must know that the annual deductible will also decrease by $7 from $233 in 2022 to $226 next year. This comes after a 14.5% increase in 2022, one of the highest increases in Medicare history.
Johnson explained that this second boost is meant to cover estimated costs for a new Alzheimer’s drug called Adhuhelm. He also says that when CMS reassessed the 2022 premium, they determined it was higher than what they had projected and are now using the remaining funds to lower the 2023 premium.
Medicare Part C
Medicare Advantage Plans, also known as Part C, are health insurance plans offered by private companies that Medicare contracts with rather than the federal government. This plan will cover both your Part A hospital insurance and your Part B medical insurance.
Most Medicare Advantage plans also cover Part D prescription drug coverage. Click here for more information related to this type of health insurance. Monthly premiums for Part C vary depending on which plan you choose, and the amount can change from year to year.
One advantage of joining a Medical Advantage Plan is that you’ll end up paying less than if you were getting traditional Medicare. Another thing you should know is that you must still pay your Part B premium, although your Part C may also pay for part or all of the premium.
Another benefit of this health insurance plan is that there’s an annual threshold on what you can pay out of pocket, whereas traditional Medicare technically has no such limit.
Here’s the downside, though: there may be a limited number of options when choosing providers.
According to the official statement issued by the Department of Health and Human Services, the projected average premium for the next year is $18 per month, a nearly 8% decrease from $19.52 in 2022. However, this doesn’t mean that the premium for every policy will go down, since each one is different.
Medicare Part D
Part D, also known as Medicare drug coverage, is the optional prescription drug benefit. It’s available via private companies approved by Medicare and includes drugs to treat serious illnesses like AIDS and different types of cancer.
Part D premiums differ depending on the plan you have. Most drug plans charge a monthly premium that varies by plan. You should know that paying for Part B won’t qualify you for Part D, but if you’re in a Part C or Medicare Cost Plan with drug coverage, your monthly premium could also include an amount for drug coverage.
This summer, CMS announced that the average basic monthly premium for Part D is expected to fall by 1.8% from $32.08 in 2022 to $31.50 next year. Keep in mind that your premium may increase in 2023 since each policy is unique.
On top of this, about 8% of Medicare Part D beneficiaries who have an individual income over $97,000 or a joint income of more than $194,000 will have to pay more in monthly premiums.
But the good news is that lawmakers passed a new law this summer meant to allow Medicare to negotiate drug prices with pharmaceutical companies, these premiums may continue to fall in the coming years. According to analysts, these negotiations could lower prices by up to 25% for the 25 most expensive drugs covered by Medicare.
You may also want to read 6 Brilliant Ways To Reduce Your Taxes in Retirement.
2 thoughts on “Here’s How Much You’ll Save on Medicare in 2023!”
Thank You! This has been a very informative article……….
Im grateful for Medicare. The only thing I have a problem with is paying taxes on SS. I don’t think that is fair to Seniors 75 and older.