Each year, Medicare goes through changes. Whether it is updates to the traditional parts of original Medicare (Part A and Part B), or an evolution in Medicare Advantage plans, change is seemingly inevitable from year to year.
2023 is no different. There’s a mixed bag of positives and negatives of what’s in store for the people who are covered.
Part B premiums and deductible decrease
In 2022, the Medicare Part B deductible was $233. In 2023 it will decrease to $226, marking the first time the Part B deductible has decreased in over a decade.
Many enrollees carry supplemental coverage that covers their Part B deductible. This includes employer-sponsored plans, Medicaid, and Medigap plans C and F (for those who are eligible).
Since many Medicare Advantage plans already have low copays and deductibles, they don’t necessarily increase or decrease in lockstep with the Part B deductible. With Medicare Advantage enrollees paying the Part B premium plus their plan premium (if there is one), their out-of-pocket costs are different from Original Medicare. Those plan rates and designs have evolved as well over the past few years.
In 2022 the standard premium for Medicare Part B is $170.10 per month, it will decrease to $164.90 per month in 2023. This decrease is the first of its kind since 2012. Medicare Part B spending was lower than expected in 2022, which left a surplus that has been reallocated to drive down premiums for 2023.
Part A premiums, deductible, and coinsurance are increasing
Medicare Part A has out-of-pocket costs when an enrollee needs hospital care, although most enrollees do not pay a premium. If an enrollee doesn’t have 40 quarters of work history (or a spouse with 40 quarters of work history), they will have to pay a premium.
While most get Part A coverage for free, based on their work history (or a spouse’s work history), a small percentage will pay a premium. These premiums have been on an upward trend over the past few years and they will be increasing again in 2023.
The Part A premium for those who this applies to (those who have 30+, but less than 40 quarters of work history) will be $278 per month. For enrollees with fewer than 30 quarters of work history, the premium will be $506 per month.
The Part A deductible that applies to each benefit period (rather than a per-calendar-year deductible like Part B or private insurance) is increasing. Generally speaking, this deductible goes up each year, and for 2023 it will be $1,600. This deductible will apply to all Part A enrollees, though many carry supplemental coverage that pays for all or part of this deductible.
The deductible covers the Part A enrollee’s first 60 inpatient days (during a benefit period). If there is a need for additional inpatient coverage during the same benefit period, there’s also a daily coinsurance charge. In 2023, this charge will be $400 per day for the 61st through 90th day of inpatient care (an increase of $11 over 2022). The coinsurance for lifetime reserve days increases $22 per day to $800 in 2022.
For care received in a nursing home, the first 20 days are covered with the Part A deductible paid for the inpatient hospital stay that preceded the stay in the skilled nursing facility (the patient had to have a hospital stay of at least three days prior to being transferred to the nursing facility). The coinsurance that applies to days 21 through 100 in a skilled nursing facility will cost $200 per day in 2023.
Income brackets are changing
The premium that an enrollee will pay for Part B is decreasing, and that applies to people who pay the high-income surcharge, while the threshold for high-income surcharges (and each bracket) is going up in 2023.
Higher income enrollees pay more for Part B and Part D. These high-income brackets for Part B and Part D (introduced in 2007 and 2011 respectively) began at an annual income of $85,000 (or $170,000 for a married couple) and remained there for several years.
These income brackets were adjusted for inflation as of 2020. In 2023, the bracket where the surcharge kicks in is increasing to $97,000 per individual ($194,000 for a married couple), up from $91,000 ($184,000 per married couple) in 2022.
The high-income beneficiaries’ premiums range from $230.80 per month to $560.50 per month in 2023 for Part B, depending on annual income. This is a decrease from 2022’s premiums for high-income beneficiaries, which started at $238.10 per month and ran up to $578.30 per month.
In 2019, a new income bracket was added on the high end, further increasing Part B premiums for enrollees with incomes of $500,000 or more ($750,000 or more for a married couple). Enrollees in this bracket will pay the top rate of $560.30/month for Part B in 2023.
Out-of-pocket cap for Medicare Advantage plans is increasing
Unlike Original Medicare, which does not have a cap on out-of-pocket costs, Medicare Advantage (Part C) plans must cap out-of-pocket costs for Part A and Part B services. However, the cap does not cover the cost of prescription drugs because those costs are included under Medicare Part D.
In 2023, the cap will go up to $8,300, but most Medicare Advantage plans will maintain out-of-pocket caps well below the government’s maximum.
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