It's hardly a secret that healthcare is a huge burden for many retirees. And the cost of Medicare plays into that.
While Medicare Part A, which covers hospital care, is generally free for enrollees, Part B, which covers diagnostic services and outpatient care, costs money. Part B premiums start at a base amount but can be higher for seniors with larger incomes. They can also rise from year to year.
But in 2023, the cost of Medicare Part B is actually dropping for the first time in years. And that should give seniors some relief at a time when living costs are soaring.
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Lower monthly premiums are coming
Right now, the standard Medicare Part B premium is $170.10 per month. And when that $170.10 premium was announced for 2022, it came as a bit of a shock, given that 2021's standard Part B premium was $148.50.
But next year, the standard Part B premium is dropping to $164.90, representing a $5.20 decrease per month. And that should help seniors stretch their incomes a bit further at a time when inflation is through the roof.
Why the drop in Part B premiums? Part of it has to do with a price reduction in a new drug for Alzheimer's disease that's now expected to cost Medicare less to cover. And the less Medicare has to spend, the more savings it can pass along to enrollees.
Also, this year, spending was lower than projected on various Part B expenses and services. That allowed Medicare to pump more money into its trust fund, thereby allowing for lower premium costs.
Not only are Part B premiums going down in 2023, but the annual deductible is dropping, too. Right now, it's $233. Next year, it will be $226.
Good news for Social Security benefits
The fact that Medicare should cost less in 2023 is great news all around. But seniors on Social Security may be even more inclined to celebrate.
The reason? Social Security benefits are expected to get a giant cost-of-living adjustment in 2023 due to recent inflation levels -- the largest in decades, in fact. When Medicare Part B premiums increase, they can eat into those Social Security raises. But since that's not happening next year, seniors can expect more robust Social Security payments.
Seniors should take advantage of open enrollment
The news that Medicare Part B premiums are decreasing in 2023 comes just weeks before the start of the program's annual open enrollment period. Each year, Medicare enrollees get an opportunity to make changes to their coverage starting on October 15 through December 7.
While seniors may not get much of a say in their Part B coverage, they can opt for a Medicare Advantage plan as an alternative to original Medicare. They can also make changes to their Part D drug coverage, as needed, to save money on premiums, copays, or both. Those who make smart choices during this year's open-enrollment window could really end up shaving down their healthcare costs for 2023.
