Medicare premiums will drop next year. Here's how much you'll save.
America's seniors are getting some good news about their health care expenses for 2023, with Medicare announcing that premiums for its Part B plan will drop next year by about 3%.
The drop in pricing for Medicare's Part B plan, which covers routine doctor visits and other outpatient care, comes after seniors grappled with a 14.5% increase for the current year, which ate up much of the cost-of-living adjustment they received in their Social Security checks.
The drop in Medicare premiums will lower the typical Part B premium by $5.20 a month, trimming the standard monthly premium to $164.90, the Centers for Medicare & Medicaid Services said on Tuesday. About 85% to 90% of Americans on the government health-insurance program pay the standard rate, according to Ari Parker, the head Medicare adviser at Chapter.
The rare 3% decrease in monthly premiums is likely to be coupled with a historically high cost-of-living increase in Social Security benefits — perhaps 9% or 10% — putting hundreds of dollars directly into the pockets of millions of people.
"That's something we may never see again in the rest of our lives," said Mary Johnson, the Social Security and Medicare policy analyst for The Senior Citizens League. "That can really be used to pay off credit cards, to restock pantries that have gotten low because people can't afford to buy as much today as they did a year ago and do some long-postponed repairs to homes and cars."
For seniors who are signed up for both Social Security and Medicare, the Social Security Administration automatically deducts the Medicare Part B premium from their monthly Social Security checks.
The Social Security Administration will announce its 2023 cost-of-living adjustment next month, with The Senior Citizens League projecting that benefits will rise 8.7%. That would mark the highest increase since 1981.
How much you'll save
The typical Part B savings will amount to $62.40 over the course of the year, or $5.20 a month, but seniors will receive another boost because Medicare is also lowering its Part B deductible.
Single Medicare enrollees who earn $97,000 or less are charged the standard premium, while couples who file jointly will pay the standard premium if they earn $194,000 or less.
Seniors who earn above that amount pay higher premiums. For example, a single taxpayer who earns more than $97,000 but up to $123,000 will pay $230.80 a month for Part B coverage in 2023, CMS said.
CMS said that the annual deductible for Part B will decline to $226 in 2023, down $7 from the 2022 deductible of $233.
That means seniors will be required to pay a lower out-of-pocket amount before Medicare coverage kicks in.
Overall, that will require $84 less in annual out-of-pocket spending from seniors.
Why is the deductible decreasing in 2023?
The decrease is linked to the Alzheimer's drug Aduhelm, which was also the cause of 2022's big increase in Part B premiums.
But Medicare this year set strict limitations on the drug's use, and its drugmaker has since cut the medication's cost in half.
Because of that, Medicare paid less for that drug than it expected to this year, helping shore up reserves that allowed the agency to set the Part B premiums lower for 2023, the Centers for Medicaid and Medicare said in a statement Tuesday.
Spending on other Medicare services and items was lower than expected, too.
President Joe Biden lauded the lower Medicare premiums during a Rose Garden speech Tuesday.
As the midterm elections near and as Biden's administration struggles to contain the painful side effects of inflation, the White House has increasingly trumpeted its work around curtailing health care costs.
"(To) millions of seniors and people with disabilities on Medicare, that means more money in their pockets while still getting the care they need," Biden said.
Inflation Reduction Act: Insulin cap
Biden pointed to more cost savings on the way for some Medicare recipients starting next year thanks to the Inflation Reduction Act, which will require Medicare to cover the cost of recommended vaccines for older Americans and will cap monthly insulin copayments at $35 per month. Other provisions in the legislation, including a rule that allows Medicare to negotiate directly with drug companies on the price of some medications, will take a few years to kick in.
The bill received no support from congressional Republicans, a talking point the White House has frequently pushed in speeches and across its social media accounts in recent weeks.
Republicans have a different slant on the subject.
"Desperation is setting in at the White House," the Republican National Committee said in response to Biden's speech Tuesday. "Voters have a clear choice in the midterms as they know Biden and the Democrats sent costs for groceries soaring, created a recession and increased taxes."