In 2023 Reduced Medicare Premiums Are Not The Whole Story

In 2023, many Medicare seniors will pay less for their coverage, but this is not the whole picture. There are two major Medicare components affected by the recent premium news.

Part B is the primary component of original Medicare that covers physician services and a variety of non-hospital care services. (Part A covers hospital services, and most Part A beneficiaries do not pay a premium.) Part B participants pay a premium, while lower-income participants may qualify for help.

The Part B premium increased by 14.5% from 2021 to 2022, rising to $170.10. Several causes contributed to the rise, but $10 of the $22 increase was to fund a reserve for prospective coverage of the then-new Alzheimer’s medicine, Adulhelm. The company lowered its prices in response to CMS ( Centers for Medicare and Medicaid Services) restrictions.

In 2023, the base monthly premium for Medicare Part B will decrease to $164.90 from $170.10 in 2022, a decrease of $5.20. According to CMS, the annual Part B deductible will decrease to $226 in 2023 from $233 in 2022.

In addition, if you are enrolled in a Medicare Advantage plan instead of traditional Medicare, you must pay the Part B payment. A Medicare Advantage plan requires enrollment in Part B and payment of its premium (also known as Part C). There may be an extra premium associated with the Medicare Advantage plan.

Because they decided to have the payments withdrawn from their Social Security earnings when they joined Medicare, many people are unaware they pay Part B or the amount of those premiums. Unless they study the yearly Form 1099 sent by the Social Security Administration at the beginning of each year, they are unaware of the premium payments.

In addition, many Medicare recipients will pay less for their Part D prescription drug coverage premiums. Private insurers sell Part D insurance and choose the terms and rates of the coverage. However, CMS oversees and monitors Part D policies.

CMS anticipated that the average Part D premium for prescription drugs in 2023 will be approximately 1.8% less than in 2022. In 2022, the average premium was projected to decrease from $32.08 to $31.50.

This does not imply that all Part D premiums will decrease. The rates for each insurance are determined by the insurers who provide the coverage. Some premiums will increase while the average premium is down. Beneficiaries should study the 2023 statement of plan modifications they should have received in September. Contact the insurance company or visit their website if you did not get it.

Also, evaluate other policy modifications. Some insurers lower or maintain premiums by increasing copayments, coinsurance, and deductibles.

Some insurers alter the categorization of some drugs. For instance, a drug in Tier 1 (the lowest-cost category) in 2022 may move to a higher tier in 2023. Other prescriptions may be changed between levels, or a medication covered in 2022 may no longer be covered in 2023.

Medicare & Medicaid Services (CMS) will release income bands and rates in 2023 for the Medicare premium surtax, commonly known as IRMAA (income-related monthly adjustment amount) and levied on higher-income beneficiaries. This is added to the Part B basic premium. There is also an increase in Part D rates for beneficiaries with a higher income.

In 2023, the maximum total Part B premium will be $560.50. It will be assessed to beneficiaries with modified adjusted gross incomes of at least $500,000 for individuals and $750,000 for married couples filing jointly. The largest monthly premium increase for Part D insurance is $76.40.

The top Medicare surtax level is not adjusted for inflation, although the lesser brackets are. The highest rates are paid by those with a modified adjusted gross income of at least $500,000, and married couples with a modified adjusted gross income of at least $750,000 pay the highest rates. Due to inflation, more and more beneficiaries will be at the highest tax rate over time.

A yearly Open Enrollment period allows you to switch Part D plans or between traditional Medicare and Medicare Advantage. Open Enrollment is between October 15 and December 7. All modifications made during this timeframe will take effect on January 1, 2023.

Check any changes to your Part D policy (or your Medicare Advantage plan’s prescription medication coverage) as soon as possible. If the modifications significantly raise your out-of-pocket costs or you are dissatisfied with your coverage, contact a local insurance agent and explore your options on the local market.