Medicare in 2023: What You Need to Know
The 2023 Medicare premiums, deductibles, and coinsurance amounts were released at the end of September, and for the first time in several years, some premiums are lower. Open enrollment started on October 15th and ends on December 7th, 2022. During enrollment, you can compare coverage options on the Medicare website, which was updated on October 1st with the 2023 Medicare health and prescription drug plan information.
Part B Changes
Part B covers two main services: medically necessary and preventative. This can include physician fees, ambulance services, medical equipment, outpatient services, and some medications and home health services.
This is the first time in a decade that monthly premiums have dropped. Here’s what you should know:
- The standard monthly premium will decrease by $5.20 and will be $164.90 in 2023.
- The annual deductible has also decreased, and will go down to $226; $7 less than last year
Income-Related Monthly Adjustment Amount (IRMAA) surcharges also dropped slightly. In 2023, these surcharges apply to individuals with an income of $97,000 or more, or joint filers with an income of $194,000 or more. The Centers for Medicare & Medicaid Services website has a comprehensive breakdown of the premium adjustments for next year.
Part A Changes
Part A covers inpatient hospital stays, nursing home care, hospice care, and home health care. Most Medicare participants don’t pay a monthly premium for Part A because they have 40 or more quarters of Medicare-covered employment. However, if you haven’t reached 40 quarters of coverage yet, here are the changes to be aware of:
- Hospital deductibles will increase to $1,600 in 2023; $44 more than last year
- If you are hospitalized for more than 60 days, but less than 90 days, you will need to pay a coinsurance amount of $400 per day for every day over 60. The lifetime reserve day amount is $800 per day, up from $778 in 2022.
- If you or your spouse have at least 30 quarters in coverage, you may buy into Part A at a reduced rate of $278 in 2023.
- If you have fewer than 30 quarters, you will pay the full premium of $506 per month. This is a $7 increase from 2022.
Medicare Parts C and D
Medicare Part C, also called Medicare Advantage, combines parts A and B, while Part D covers prescription drugs. Both of these plans are optional and covered through private insurance, so plans may vary depending on the provider. You can compare plans via the Medicare website.
Preemptive Planning Opportunities
While the slight decrease in the standard premium is certainly good news for individuals and joint filers reporting with a Modified Adjusted Gross Income (MAGI) level, between the above-mentioned income levels, many may not realize the Medicare IRMAA premium surcharges steeply increases across five income bands upon breaching the $97,000 and $194,000 bands by even $1! For example, in 2023, an individual with a MAGI of $97,001 and $123,000, the Medicare Monthly Premium increases by $65 or $780 per year, between $123,001 to $153,000 the Medicare Premium increases by $164.80 per month or $1,977 per year and at the Individual’s MAGI between $183,001 and $500,000, the monthly surcharge becomes $362.60 per month or $4,351 per year!
The potentially good news is knowing this information upfront allows for financial planning opportunities to manage MAGI impacted by IRA Distributions and other income flows to manage for not only Medicare, but Social Security taxation and qualifying for other income-based programs.
If you’d like to learn more about how Financial Planning can benefit your finances, please contact us for a Free Consultation.
Edward C. Goldstein, CFP®, MBA, President
CERTIFIED FINANCIAL PLANNER ™ Practitioner
Financial Life Planning, LLC
10,000 Lincoln Dr. East, Suite 201
Marlton, NJ 08053
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