Recently, Medicare enrollees got some good news about their Part B premiums. After years of increases, the cost of the standard monthly Part B premium is going down in 2023. It will shrink from $170.10 to $164.90. Not only will that save seniors money, but it will also allow those on Social Security to keep their upcoming cost-of-living adjustment (COLA) in full.
The Social Security Administration recently announced that benefits will be rising by 8.7% in 2023. Since seniors on Social Security and Medicare have their Part B costs deducted from their benefits, Part B hikes can eat away at COLAs — but that’s not a concern for next year.
Even though the standard monthly Part B premium is going down, you might still end up paying more for Medicare in 2023. Here’s why.
1. Part A costs are going up
Medicare Part A covers hospital care, and while most enrollees aren’t subject to a monthly premium for it, there are other out-of-pocket costs that can come into play, like coinsurance and deductibles. And those costs are rising in 2023.
Right now, the standard inpatient hospital deductible under Medicare Part A is $1,556. In 2023, the cost of that deductible will rise to $1,600.
Meanwhile, that deductible covers your first 60 days of hospital care. Stays beyond that point are subject to a daily coinsurance rate. This year, that rate is $389 for days 61 through 90. In 2023, that rate is rising to $400 a day. If you end up with an extended hospital stay next year, you might pay a lot more for it.
2. Your Part D or Advantage plan is getting more expensive
If you’re on original Medicare, you’ll need a Part D drug plan to accompany Parts A and B, since those won’t cover the cost of prescriptions. If you’re on Medicare Advantage instead of original Medicare, it will generally be an all-in-one plan that covers prescriptions.
Either way, if the cost of your specific Part D or Advantage plan is going up in 2023 and you decide to keep that plan, you’ll end up spending more for Medicare coverage. Similarly, you might spend more if your copays are increasing next year under your Part D or Advantage plan.
3. You’re subject to an IRMAA
Although Medicare Part B’s standard monthly premium will be $164.90 in 2023, higher earners could get stuck paying more. Both Part B and Part D premiums are subject to what are known as IRMAAs — income-related monthly adjustment amounts.
IRMAAs are based on your income from two years prior to a given Medicare coverage year. As such, 2023 IRMAAs are based on income from 2021. And if your income went up a lot that year, Medicare might cost you more.
In 2023, you’ll be subject to an IRMAA if you’re single and have an income from 2021 above $97,000. If you’re married, IRMAAs will apply if your 2021 income exceeded $194,000.
Know what costs you’re in for
Healthcare tends to be a substantial expense for seniors. While some Medicare costs are shrinking, you could be in for higher expenses, depending on your medical needs, coverage, and income. Be mindful of that as you work Medicare expenses into your budget.
The $18,984 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.