Most of the buzz in recent months for retirees has centered on the next Social Security increase. And for good reason. The 8.7% increase announced earlier this month is the biggest adjustment in more than four decades.
However, Social Security isn't the only federal program that's important to seniors. Medicare has some key changes on the way, too. Here's Medicare's good news and bad news for retirees in 2023.
Image source: Getty Images.
The good news
Let's start with the best news of all. Standard Medicare Part B premiums will be reduced by $5.20 per month in 2023, from the current $170.10 to $164.90. This is an especially welcome change after retirees were slapped with one of the biggest Medicare Part B premium increases ever this year.
Medicare Part B premiums rose by 14.5% in 2022 due to anticipated higher costs related to Alzheimer's disease drug Aduhelm. However, the Centers for Medicare and Medicaid Services (CMS) decided in April not to cover Aduhelm in most cases. As a result, the 2023 Medicare Part B premiums will include a refund of sorts to beneficiaries.
This Medicare Part B premium reduction isn't the only good news for retirees, though. The maximum income allowed to qualify for the standard premium will also increase. In addition, the income-related monthly adjustment amounts charged for Medicare Part B will be lower in 2023 than in 2022. The following table shows these changes:
|
2022 Beneficiaries Who File Individual Tax Returns With Modified Adjusted Gross Income |
2022 Beneficiaries Who File Joint Tax Returns With Modified Adjusted Gross Income |
2022 Income-Related Monthly Adjustment Amount |
2023 Beneficiaries Who File Individual Tax Returns With Modified Adjusted Gross Income |
2023 Beneficiaries Who File Joint Tax Returns With Modified Adjusted Gross Income |
2023 Income-Related Monthly Adjustment Amount |
|---|---|---|---|---|---|
| Less than or equal to $91,000 | Less than or equal to $182,000 | $0.00 | Less than or equal to $97,000 | Less than or equal to $194,000 | $0.00 |
|
Greater than $91,000 and less than or equal to $114,000 |
Greater than $182,000 and less than or equal to $228,000 |
68.00 |
Greater than $97,000 and less than or equal to $123,000 | Greater than $194,000 and less than or equal to $246,000 | $65.90 |
|
Greater than $114,000 and less than or equal to $142,000 |
Greater than $228,000 and less than or equal to $284,000 |
170.10 |
Greater than $123,000 and less than or equal to $153,000 | Greater than $246,000 and less than or equal to $306,000 | $164.80 |
|
Greater than $142,000 and less than or equal to $170,000 |
Greater than $284,000 and less than or equal to $340,000 |
272.20 |
Greater than $153,000 and less than or equal to $183,000 | Greater than $306,000 and less than or equal to $366,000 | $263.70 |
|
Greater than $170,000 and less than $500,000 |
Greater than $340,000 and less than $750,000 |
374.20 |
Greater than $183,000 and less than $500,000 | Greater than $366,000 and less than $750,000 | $362.60 |
|
Greater than or equal to $500,000 |
Greater than or equal to $750,000 |
408.20 |
Greater than or equal to $500,000 | Greater than or equal to $750,000 | $395.60 |
Data source: Centers for Medicare and Medicaid Services.
Another plus for retirees is that the annual deductible for Medicare Part B will decrease to $226 in 2023 from $233 this year. Also, some Medicare enrollees who had a kidney transplant at least 36 months previously will have the option of continuing Part B coverage of immunosuppressive drugs by paying a premium. The standard monthly premium for this option will be $97.10.
The bad news
Unfortunately, not all of the 2023 Medicare changes will work to retirees' advantage. In particular, Medicare Part A costs will increase.
Most Medicare beneficiaries (around 99% of them) don't have to pay a Medicare Part A premium. But for those few that do, the monthly premium will jump to $1,600 in 2023 from $1,556 in 2022.
Some Medicare enrollees ages 65 and over have fewer than the required 40 quarters of Medicare-covered employment but have at least 30 quarters of such coverage or were married to someone who did. These individuals can buy into Medicare Part A at a reduced premium. This monthly premium will increase by $4 to $278 in 2023.
Also, the cost-sharing portion of Medicare Part A will increase across the board next year. The following table shows the specific changes.
| Type of Cost Sharing | 2022 | 2023 |
|---|---|---|
|
Inpatient hospital deductible |
$1,556 |
$1,600 |
|
Daily coinsurance for 61st-90th day |
$389 |
$400 |
|
Daily coinsurance for lifetime reserve days |
$778 |
$800 |
|
Skilled nursing facility coinsurance |
$194.50 |
$200.00 |
Data source: Centers for Medicare and Medicaid Services.
Positive overall
If we could put the good news and bad news on a scale, the good news would likely outweigh the bad news overall for most retirees. With the historic Social Security cost-of-living adjustment (COLA) combined with the positives for Medicare, many retirees could be in better shape financially next year.
