When planning ahead for your healthcare expenses and how they align with your Medicare coverage, it’s very important to stay informed on the changes to Medicare each year.
Several aspects of Medicare - particularly related to out-of-pocket costs - can change on an annual basis. Beyond costs or plan changes, Congress also occasionally proposes and passes legislation that often impacts Medicare benefits.
In this article, we’ll review the recent changes, including the 2023 Medicare costs and an overall look at the state of Medicare in 2023.
The Medicare costs that change each year are the Part A deductible, the Part A daily coinsurance, and the Part B deductible.
The changes to Part A costs include:
Keep in mind that it is possible to pay the Part A deductible more than once in a year. This would only happen when you have multiple hospital stays in one year, and your stays are separated by more than 60 days. In this situation, you’d pay the Part A deductible each time.
When you pay the Part A deductible, that gets you 60 days in the hospital and 20 days in a skilled nursing facility. If your stay goes beyond those times, you’ll have to pay the updated daily co-insurance amounts indicated above.
The Part B deductible for 2023 decreased to $226. It was $233 for 2022. You have to pay the Part B deductible each year before Medicare starts paying its portion of your outpatient care. Unlike the Part A deductible, you’ll only be required to pay the Part B deductible once per year.
After you’ve met the Part B deductible, Medicare will pay the first 80% of the cost for your care; you’ll be responsible for the remaining 20%. Besides standard Part B coinsurance, you might encounter Part B excess charges, which can be as much as 15% of the Medicare-approved cost for your care.
There were no changes to these coinsurance costs for 2023.
The standard Part B premium for 2023 is $164.90, which is a decrease of $5.20 per month. This decrease takes some of the sting out of last year’s increase, which was one of the largest in history. You may pay a higher premium for Medicare if you have incomes exceeding $97,000 (single filers) or $194,000 (married filing jointly).
In addition to the costs for using your coverage, you’ll also have to consider the cost for getting your coverage. Most people don't have to pay a premium for Part A coverage (because it’s been pre-funded through payroll tax deductions), but you do have to pay a premium for Part B coverage.
Another major component of your Medicare coverage is Medicare Part D, also known as Prescription Drug Plans (PDPs). Part D is offered by private insurance carriers with a Medicare contract - not offered by the federal Medicare program.
There have been major changes to Part D in the past year as a result of the Inflation Reduction Act. Some of these changes won’t take effect until 2024 or later, but a few of them will be effective in 2023. The changes that will be applicable for 2023 include:
Each of these changes will have an impact on both standalone Part D Prescription Drug Plans (PDP) and Medicare Advantage Prescription Drug Plans (MAPD).
The Inflation Reduction Act has brought us the Insulin Savings Program, which was a temporary “test program” that began in 2020. The program is now permanent and mandatory. But previously, it was optional: Part D plans could choose to participate on a voluntary basis.
The Inflation Reduction Act limits monthly cost sharing for covered insulin products to no more than $35 for Medicare beneficiaries, as long as the insulin is on the plans formulary. No deductible will apply to these insulin prescriptions.
Cost increases on prescription drugs, which are set by the manufacturers, will be subject to a new tax beginning in 2023. Medicare will use 2022 drug prices as a baseline and will investigate the prices for 2023 prescription drugs. If the increases from 2022 to 2023 are larger than the official rate of inflation, the manufacturer will pay a tax equal to 100% of the amount that the increase exceeded inflation for the year.
Drug prices will be tracked each year in this way. The hope is that manufacturers will be less likely to increase prices aggressively since they won’t be able to keep any of the extra revenue that large cost increases used to bring them.
While this new policy doesn’t directly reduce or limit the prices you pay through your drug plan, over time, it may allow for smaller copayments and coinsurance for your prescriptions.
The Inflation Reduction Act is also impacting how much you’ll pay for vaccinations under Part D. Prior to 2023, most non-essential vaccines were subject to cost-sharing, which meant that you had to pay a copayment or coinsurance for them. For example, the shingles vaccine was famously expensive.
For 2023 and beyond, many Part D covered vaccines will be available at no cost. This brings the Part D vaccinations into alignment with the rules and cost structure for Part B vaccines (like the COVID-19 and flu shots). This includes the shingles shot, so protecting against this painful illness will be cheaper starting in 2023.
There are still vaccines that you’ll have to pay for under Medicare, even after these recent changes. Vaccines that are needed to treat injuries or exposure to certain diseases may still require cost-sharing.
The last major change to Medicare in 2023 relates to entering Medicare when you’ve missed your original enrollment window.
Most people get to enter Medicare when they turn 65-years-old. In that case, you have a seven-month enrollment period known as your Initial Election Period (IEP) during which you can enroll. If you miss this chance, you have to enroll during the General Enrollment Period (GEP). GEP runs from January 1st to March 31st each year. Previously, if you enrolled during the GEP, your Medicare coverage wasn’t effective until July 1, which left you with a significant gap in your medical coverage.
For 2023 and beyond, your coverage will be effective on the first day of the month after you sign up during the General Enrollment Period, eliminating the lengthy waiting period.
If you still have questions about 2023 Medicare costs and how they impact you, call 1-800-620-4519 (TTY 711) to speak to one of our licensed insurance agents. You can also view our Medicare resources online:
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