Are you creating your yearly budget and want to track your spending on Medicare for 2023? The amount you pay will depend on the coverage you have and the services you receive, so here’s a round-up of the Medicare premiums that will apply to all beneficiaries, as well as some additional costs.

Last September, the Centers for Medicare & Medicaid Services (CMS) released the 2023 Medicare Part A and B monthly premiums, deductibles, and copay amounts. Each year, CMS determines these rates based on The Social Security Act. You can also learn about these costs at https://boomerbenefits.com/new-to-medicare/medicare-cost/.

Part A premium, deductible, and coinsurance:

Medicare Part A helps cover hospital room and board, skilled nursing facility care, hospice care, and home healthcare.

Part A usually does not cost anything if you’ve worked 40 quarters (10 years) in the US, but if your work history does not qualify you for premium-free Part A in 2023, you can expect to pay a monthly premium of $278 or $506, depending on how long you or your spouse has worked and how much you have paid into Medicare taxes. 

If you were to have an in-patient stay at a hospital, the Part A deductible would be $1,600 for each benefit period. Enrolling in a Medicare supplement plan will more than likely cover the Part A deductible, copays, and coinsurances associated with hospital room and board.

Part B premium, deductible, and coinsurance:

Medicare Part B helps cover outpatient services, durable medical equipment (DME), and medically necessary tests and procedures. 

The monthly premium for Medicare Part B is based on your modified adjusted household gross income (MAGI). The 2023 standard monthly premium is $164.90, a $5.20 decrease from the 2022 standard premium of $170.10.

If your household income exceeds a certain amount, you may be subject to an income-related monthly adjustment amount known as IRMAA. Social Security looks at your tax return from 2 years prior to determine your Part B & Part D premiums and will add on a surcharge if you filed individually and made over $97k or if you filed jointly and made over $194k. 

If you’ve had a life-changing event that has reduced your household income, you can appeal directly to your local Social Security office for a request to lower the adjustment amount.

You can view the table below for the 2023 IRMAA prices:

The 2023 Medicare Part B deductible is $226, a $7 decrease from the 2022 deductible of $233. Some other Part B costs include a 20% coinsurance for most doctor visits, outpatient services, and DME after the Part B deductible has been met. If you are enrolled in a Medicare Supplement plan, it will more than likely cover all of these coinsurances.

Medicare Supplement (Medigap) Plans:

Medicare Supplement plans, sold by private carriers, help fill the “gap” of Medicare’s coverage and pick up the remaining costs like copays, coinsurances, and deductibles you would usually be responsible for. 

These plans often have a premium ranging from $100-$200 a month. Still, your premium depends on the type of Medicare Supplement plan you choose and your state’s pricing structure, including age, gender, and tobacco usage. 

You can shop your Medigap rates anytime, but you could be subject to medical underwriting in most states. Since most carriers apply rate changes on the anniversary date of your plan, it never hurts to shop your rates to see if there is a more cost-effective plan for you!

Part C (Medicare Advantage Plans):

Medicare Advantage Plans are plans offered by private carriers contracted by the federal government. These plans are required to cover, at the very least, the same amount of coverage as Original Medicare and will vary on pricing, copays, and maximum out-of-pocket costs based on service location and the type of plan. Most Medicare Advantage plans offer a $0 premium.

An important thing to remember is that you must continue paying your Part B premium if you choose to enroll in a Medicare Advantage Plan. Once you’ve met your maximum out-of-pocket, your health plan will pay 100% of all covered healthcare costs for the rest of the year.

Part D (Prescription Drug Plans):

Suppose you are a beneficiary who chooses to have Original Medicare and a Medigap plan. In that case, you can pair it with a standalone Prescription Drug plan (Part D) for your medication coverage. Like Medicare Advantage Plans (Part C), Prescription Drug plans are also offered by private carriers contracted by the Federal Government, so they will also vary on premiums, deductibles, and copays.

The 2023 standard deductible is $505; each carrier can decide on their plan’s deductible amount but can’t set it higher than $505. Combined drug costs of $4,660 will push you into the coverage gap or “donut hole” stage, where you will pay a 25% coinsurance for all your medications. Once your out-of-pocket costs have reached $7,400, you will enter the catastrophic stage where cost-sharing will be the greater of either a 5% coinsurance or $4.15 for generics and $10.35 for all other medications. And just like Part B, if you have Part B IRMAA, you will also have Part D IRMAA.

Final Thoughts

Overall, the coverage you choose and your state will play a major factor in your Medicare costs from year to year. Your income from 2 years ago also contributes to that number. Though it’s exciting to see the Part B premium and deductible decrease in 2023, it is best to anticipate an inevitable increase for the years to come to budget your Medicare coverage costs.