Every year, Medicare updates the premiums that you pay for Medicare Parts A, B and D, as well as your deductibles, copays and coinsurance. Sometimes in years past, the Medicare Part B premium has increased considerably, and when this happens, it can almost feel like it nullifies the effect of that year’s Social Security Cost of Living Adjustment, or COLA.
Fortunately, this is not the case for 2023, so retirees can look forward to actually noticing the increase in their income benefits.
Your 2023 COLA
The Social Security Administration recently announced a 8.7% cost-of-living adjustment for 2023. The SSA estimated that benefits for the average retired worker will rise by around $140 per month, making this one of the largest cost of living increases since 1981.
Recipients will receive notice in early December of their new benefit amount for 2023, but you can also use Social Security’s online portal to review your new monthly benefits before then.
Original Medicare has two parts, which provide inpatient coverage and outpatient coverage. Most Medicare beneficiaries pay nothing for their Part A hospital benefits because they have usually pre-paid for these benefits via FICA payroll deductions throughout their working years. It takes 40 quarters, or 10 years, of these payroll taxes to earn premium-free Part A when you turn 65.
Individuals who do not have enough work history can qualify through their spouse’s work earnings, or they can purchase Part A. In 2023, the Part A premium for those individuals with less than 30 quarters will be $506/month. Individuals who worked at least 30 to 39 quarters will pay a prorated premium of $278.
Unlike Medicare Part A, Part B requires monthly premiums from the Medicare beneficiary. These premiums are deducted from your Social Security or Railroad Retirement Board income check, unless you are not yet taking retiree benefits. In this case, Social Security will invoice you quarterly for your Part B premiums.
Next year, most beneficiaries will pay $164.90/month for Part B. This is a decrease of $5.20 per month from the 20202 Part B premiums. There are some beneficiaries (around 2 million people) who pay less than this due to the hold harmless provision, which prevents the Medicare Part B premium from exceeding the COLA increases for certain beneficiaries.
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On the flip side, there are also some beneficiaries who pay more than the standard Part B premium due to higher incomes. Around 7% of Medicare beneficiaries pay an Income-Related Monthly Adjustment Amount (IRMAA).
Social Security determines your Part B premiums based on your modified, adjusted household gross income as reported to the IRS in the year two years prior to the current year. Individuals who earn more than $97,000 filing as an individual or $194,000 filing jointly are assessed this IRMAA. Beneficiaries can find a chart that details the 2023 IRMAA based on their 2020 income level on Medicare’s website.
Individuals in the highest income bracket — those who earned more than $500,000 individually or $750,000 filing jointly — will see an increase in their Part B premiums in 2023.
Beneficiaries can check their estimated 2023 Medicare premiums by logging into their MyMedicare.gov account.
Since these premiums are based on your income from two years ago, it sometimes happens that beneficiaries have now retired and are earning less than they were two years ago. In this scenario, they can file a reconsideration request with Social Security to appeal that higher Part B premium. Beneficiaries must provide proof of retirement and their new lower income.
2023 Medicare Deductibles And Copays
Just like insurance that you’ve participated in during your working years, Medicare has cost-sharing that you pay as you use your benefits. These come in the form of deductibles, copays and coinsurance.
The Medicare Part A deductible will increase by $44 for $1600 next year. This covers your first 60 days in the hospital. Afterward, beneficiaries pay a daily copay of $400 per day for Days 61–90 and $800/day for Days 91–150. If you have a stay in a skilled nursing facility, you’ll pay $200 per day for Days 21–100.
The Part B deductible will decreasing by $7. It will be $226 in 2023. Once that deductible is satisfied, Part B will pay 80% of your covered expenses. You are responsible for the other 20% unless you have supplemental coverage in place to cover that for you.
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If you have any questions, you can contact a Medicare Health Plan Specialist at 877-413-1556.