Retirees got some good news this year when the Centers for Medicare & Medicaid Services (CMS) announced that standard monthly Medicare Part B premiums would drop to $164.90 in 2023, a 3% decline from 2022.
Medicare is the federal health insurance program for people over the age of 65 and Medicare Part B covers certain necessary and preventative healthcare services.
The 3% drop may not sound like much, but this is the first time in over a decade that Medicare Part B premiums are moving down. It's also happening after Part B premiums rose by close to 15% in 2022, which is one of the largest increases ever. But the good news doesn't end there. Medicare Part B's first premium drop in over a decade will also come with three added bonuses next year. Let's take a look.
1. Higher Social Security benefits
Medicare and Social Security are different programs but the Social Security Agency (SSA) actually handles Medicare enrollment and Medicare Part B premiums are deducted from Social Security benefits.
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In addition to the 3% decline in Medicare Part B premiums, Social Security benefits are going up 8.7% in 2023, the largest raise to benefits in 41 years. This is due to the SSA's annual cost-of-living adjustment, which it does to account for inflation. With inflation soaring this year, it only makes sense that the 2023 COLA is going to be big as well.
In November, Social Security monthly checks for retirees were on average roughly $1,632. That means monthly benefits on average will go up about $142 per month in 2023, or about $1,704 for the year. But with the decline in Medicare Part B premiums, you can add another $5.20 (3% decline) to the checks. It's very rare to see a drop in Medicare Part B premiums with this big of a raise in Social Security benefits, so it's certainly a bonus.
2. Another Medicare premium is going down
There are several different parts of Medicare that have monthly premiums. One of those is Medicare Part D, which covers prescription drugs, a big part of many retirees' healthcare needs.
CMS this year announced that average Part D premiums in 2023 will drop from $32.08 per month in 2022 to $31.50 in 2023, a reduction of close to 2%. While it's not a mind-blowing number, many retirees elect to have Part D premiums deducted from Social Security checks as well so the decline means larger Social Security checks in 2023.
In another little perk for Medicare Part D enrollees, a provision from President Joe Biden's Inflation Reduction Act has made it so that people covered under Medicare Part D will pay no more than $35 per month for insulin medication covered under Medicare, which is relevant for those with diabetes.
3. A lower deductible
Going back to Medicare Part B, premiums aren't the only thing going down. Deductibles are also going to drop in 2023.
According to CMS, the yearly deductible for all Medicare Part B enrollees will fall from $233 in 2022 to $226 in 2023, a decrease of 3%. Deductibles are the amount that people pay for healthcare services before their plan takes over.
Now, keep in mind that this isn't the only deductible for Medicare, as Medicare Part A, which largely covers various types of inpatient care, also has a standard deductible, which will be $1,600 in 2023. But considering the higher Social Security benefits and lower Medicare Part B and D premiums this year, retirees are in for a much better year for their finances in 2023 than they had in 2022.
