On September 27, the Centers for Medicare & Medicaid Services [CMS] announced Medicare premiums and coinsurance costs for 2023. The good news is Medicare Part B premiums will decrease for the first time in more than a decade. The bad news is these savings could be partially offset by increases in other Medicare related costs.
Changes to Medicare Part A Premiums and Deductibles in 2023
Medicare Part A covers inpatient hospital care, skilled nursing care, inpatient rehabilitation, and some health services. If you or your spouse worked more than 40 quarters at a Medicare-covered job during your lifetime, you would not pay a premium for Medicare Part A in retirement. In fact, the CMS estimates that 99% of Medicare beneficiaries do not pay a premium. While you may not owe a monthly premium for your Medicare Part A coverage, there are still costs that you should understand.
If you are admitted to the hospital, you could owe a deductible for your first 60 days. In 2023, that deductible will increase by $44 to $1,600.
If your hospital stay lasts longer than 60 days, you could owe a daily coinsurance amount for days 61 – 90. In 2023, the coinsurance amount will increase by $11 to $400 per day.
For hospital stays that last longer than 90 days, you are entitled to 60 lifetime reserve days which have a higher coinsurance amount. In 2023, the cost of each lifetime reserve day will increase by $22 to $800. After you use your lifetime reserve days, you would be responsible for all costs associated with a hospital stay.
Medicare Part A also provides some coverage for skilled nursing. In certain situations, Medicare covers all costs for the first 20 days of skilled nursing care. If you need to stay in a skilled nursing facility longer than 20 days, you will owe a daily coinsurance amount. For 2023, that coinsurance will increase by $5.50 to $200.00 per day. After day 101 in a skilled nursing facility, you would be responsible for all costs.
See the table below for a summary of the 2023 increases.
Medicare Part A Premium Changes for Those with Fewer Than 40 Quarters of Work
If you are over age 65 and you or your spouse have not worked 40 quarters, you can pay a monthly premium to voluntarily enroll in Medicare Part A. In 2023, that premium will increase by $7 per month to $506.
If you or your spouse worked more than 30 quarters but less than 40 quarters, you could be subject to a reduced premium. In 2023, this premium will increase by $4 per month to $278.
Changes to Medicare Part B Premiums and Deductibles in 2023
Medicare Part B covers some health services not covered by Part A like doctor visits, outpatient hospital services, and durable medical equipment. Unlike Medicare Part A, you must pay a monthly premium for Part B.
In 2022, Part B premiums increased dramatically due in part to the projected cost of a new Alzheimer’s drug. More recent estimates concluded that the spending for this drug will be lower than anticipated, leading to excess reserves in the Supplementary Medical Insurance [SMI] Trust Fund. The CMS was able to pass these reserves along to Medicare Part B beneficiaries by decreasing Part B premiums in 2023. As such, the Part B monthly premium will decrease by $5.20 to $164.90 per month in 2023.
In addition to monthly premiums, Part B is also subject to a deductible. This is the amount that you must pay out of pocket before Medicare begins to cover your costs. The Part B deductible will decrease by $7 to $226 in 2023.
Part B Income-Related Monthly Adjustment Amounts in 2023
About 7% of people will have to pay a higher monthly Part B premium based on their income. This is called the Income-Related Adjustment Amount [IRMAA].
IRMAA is calculated using your Modified Adjusted Gross Income [MAGI] from your tax return 2 years ago. However, if your income has been reduced in the past 2 years due to a life changing event, such as retirement, you can file an appeal using form SSA-44. For more information about appealing IRMAA, contact an experienced financial advisor.
See below for a summary of 2023’s monthly premiums adjusted for income.
Medicare Part D IRMAA
Like Medicare Part B, Medicare Part D is subject to IRMAAs. If you are one of the 8% of high-income beneficiaries subject to Part D IRMAA, your costs could increase according to the following schedule.
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