For retirees, a new year means adjusting to changes in a variety of Medicare costs, including premiums, deductibles and copays.
For 2023, some of those costs will be higher than they were this year, while others are going down. Although each change doesn’t necessarily involve a huge dollar amount, experts advise considering how they may impact your health-care spending.
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“It’s important to always review the Medicare figures that are changing, so you can budget accordingly,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits.
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Overall, your coverage choices impact how much you pay in premiums, deductibles and copays or coinsurance. And, of course, how often you use the health-care system can contribute to your costs.
Income also is a determining factor. Beneficiaries with limited income may qualify for Medicaid or other programs that help defray out-of-pocket costs. On the other hand, higher-income beneficiaries pay more for certain parts of coverage (more on that farther down).
Basic Medicare consists of Part A (hospital coverage) and Part B (outpatient care). Many beneficiaries stick with basic Medicare and often pair it with a standalone Part D plan. Some also purchase a supplement plan — aka “Medigap” — which picks up some of the costs that come with basic Medicare, such as coinsurance or copays.
Other beneficiaries — about 45% of Medicare’s 64.5 million enrollees — choose to get their Parts A and B benefits delivered through Advantage Plans, which are offered by private insurers.
Those plans usually include Part D (prescription drug coverage), as well as extras such as dental, hearing or vision. Unlike basic Medicare, they also come with out-of-pocket maximums.
Hospital stays will cost more under Part A
Most Medicare beneficiaries pay no premium for Part A because they have enough of a work history — at least 10 years — of paying into the system through payroll taxes to qualify for it premium-free.
If you don’t meet the minimum requirement, however, monthly premiums could be as much as $506 a month next year, depending on whether you’ve paid any taxes into the Medicare system at all. That maximum is up from $499 in 2022.
Regardless of whether you pay a premium, there are cost-sharing aspects that go with Part A.
For those who don’t have additional coverage beyond basic Medicare, the amount you’d pay when admitted to the hospital will be $1,600 next year, up from $1,556 in 2022. That covers the first 60 days of inpatient hospital care in a benefit period.
For the 61st through 90th days of a hospitalization, those beneficiaries will pay $400 per day, up from $389 in 2022, and then $800 daily for “lifetime reserve” days, up from $778.
It’s worth noting that Advantage Plans come with their own cost structures, which means the amount you pay while in the hospital depends on the specifics of the plan.
Part B premium and deductible will be lower
The standard Part B premium will be lower in 2023 — $164.90, down from $170.10 in 2022.
While a decrease in the premium is unusual, the Medicare program had a surplus this year due to lower-than-anticipated spending on Aduhelm, a new Alzheimer’s drug, as well as other Part B items and services, according to the Centers for Medicare & Medicaid Services.
While most beneficiaries pay the standard premium, higher-income enrollees pay more due to income-related surcharges (see table below).
However, “they are calculated based on income two years prior,” said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans.
So for 2023, the determination would be based on your 2021 adjusted gross income. If your income has dropped since then, the Social Security Administration has a form you can fill out to request a reduction.
The deductible for Part B also is headed down. It will be $226 in 2023, down from $233 this year. Once you meet that deductible, you typically pay 20% of covered services. Keep in mind that beneficiaries in Advantage Plans might pay a different amount through copays, and Medigap policies either fully or partially cover that coinsurance.
Advantage Plan premiums tick down
Also, while Advantage Plan premiums vary among plans — the average for 2023 will be $18 monthly, down from $19.52 this year — any charge would be on top of your Part B premium. And, some of those options either have no monthly charge or will pay your Part B premium. (If you don’t like your Advantage Plan, you can switch or drop it in the first three months of the year.)
The maximum out-of-pocket limit for Advantage Plans will be $8,300 in 2023 for in-network services. For plans including out-of-network, that cap would be $12,450.
Part D has several cost changes that may make a difference
The average monthly premium for Part D coverage in 2023 will be an estimated $31.50, down slightly from $32.08 this year. And while not everyone pays a deductible for Part D — some plans don’t have one — the maximum it can be is $505 in 2023, up from $480.
Part D also comes with monthly income-related surcharges for higher-income beneficiaries.
Additionally, there are changes taking effect that will lower the cost of some drugs, due to the Inflation Reduction Act, which was enacted in August.
For starters, starting Jan. 1, there will be a monthly $35 cap on cost-sharing for insulin under Part D, and the deductible will not apply to the covered insulin product.
“Now many seniors won’t have to choose between groceries and their life-saving insulin,” Gavino said.
For beneficiaries who take insulin through a traditional pump — which falls under Part B — the benefit starts July 1.
Additionally, there will no longer be any cost-sharing for recommended inoculations under Part D beginning Jan. 1, including the shingles vaccine.