Medicare Part B Costs Are Shrinking — But Some Enrollees Will Pay a Lot More

Medicare enrollees recently got a piece of good news from the Centers for Medicare & Medicaid Services. After years of continuous Part B premium hikes, the cost of Part B is dropping in 2023.

Right now, the standard monthly Medicare Part B premium is $170.10. Next year, it will be $164.90. And that $5.20 in monthly savings might make a world of a difference to seniors who are mostly living on Social Security benefits and are being squeezed financially due to inflation.

But while Medicare costs will drop for many seniors in 2023, some enrollees will end up having to pay a lot more for coverage. And that’s an expense they’ll need to plan for.

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Higher earners will face surcharges

When we talk about the standard monthly Medicare Part B premium, we’re referring to the amount most enrollees will pay. But once seniors’ income exceeds a certain threshold, income-related adjustment amounts, or IRMAAs, come into play.

IRMAAs are basically surcharges that drive the cost of Part B premiums up. To be clear, they’re not new to 2023. Rather, they’ve been around since 2007.

Here’s an overview of what your Medicare Part B costs might look like in 2023 based on your income:

Individual tax-filers with a modified adjusted gross income of:

Joint tax-filers with a modified adjusted gross income of:

Will have an IRMAA of:

And a total monthly Part B premium of:

Less than or equal to $97,000

Less than or equal to $194,000

$0.00

$164.90

Greater than $97,000 and less than or equal to $123,000

Greater than $194,000 and less than or equal to $246,000

$65.90

$230.80

Greater than $123,000 and less than or equal to $153,000

Greater than $246,000 and less than or equal to $306,000

$164.80

$329.70

Greater than $153,000 and less than or equal to $183,000

Greater than $306,000 and less than or equal to $366,000

$263.70

$428.60

Greater than $183,000 and less than $500,000

Greater than $366,000 and less than $750,000

$362.60

$527.50

Greater than or equal to $500,000

Greater than or equal to $750,000

$395.60

$560.50

Data source: Centers for Medicare & Medicaid Services.

Keep in mind that IRMAAs are based on your modified adjusted gross income from two years prior to your Medicare coverage year. So, for example, 2023 IRMAAs are based on reported income from 2021.

Not a problem for most seniors

The Centers for Medicare & Medicaid Services reports that only about 7% of Part B enrollees are affected by IRMAAs. However, if you reported a higher income in 2021, then you may be on the hook for more expensive Part B premiums in 2023, and that’s something you’ll want to plan for.

That said, if your income has gone down since 2021, you may be able to appeal your IRMAA decision. To do so, you’ll need to fill out Form SSA-44, which is available on the Social Security Administration’s website.

Generally, to have your IRMAA waived, you’ll need to provide proof of a life-changing event, such as the death of a spouse or a divorce. But if your income has dropped substantially over the past two years, it may be worth an appeal.

It’s also worth noting that IRMAAs don’t just apply to Medicare Part B. They also apply to Medicare Part D drug plans.

Unlike Part B, there’s no standard monthly premium for Part D, as that changes from plan to plan. But if you’re on the hook for higher Medicare Part B premiums, you should expect to pay more for Part D than what your plan’s standard monthly premium looks like.

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