The Centers for Medicare & Medicaid Services (CMS) has announced that the standard monthly Part B premium will be $164.90 in 2023, a decrease of $5.20 from $170.10 in 2022. This follows an increase of $21.60 in the 2022 premium, largely due to the cost of a new Alzheimer’s drug. Changes in the drug’s use and price, along with other Part B items and services, led to larger financial services that resulted in the lowered premium for next year. Show
Certain beneficiaries will continue to pay higher premiums based on their modified adjusted gross income. The monthly Part B premiums that include income-related adjustments for 2023 will range from $230.80 to $560.50, depending on the extent to which an individual beneficiary’s modified adjusted gross income exceeds $97,000 (or $194,000 for a married couple). The highest rate applies to beneficiaries whose incomes exceed $500,000 (or $750,000 for a married couple). CMS estimates that about 7 percent of Medicare beneficiaries pay the income-adjusted premiums. Beneficiaries in Medicare Part D prescription drug coverage plans pay premiums that vary from plan to plan. Part D beneficiaries whose modified adjusted gross income exceeds the same income thresholds that apply to Part B premiums also pay a monthly adjustment amount. In 2023, the adjustment amount ranges from $12.20 to $76.40. The Railroad Retirement Board withholds Part B premiums, Part B income-related adjustments and Part D income-related adjustments from benefit payments it processes. The agency can also withhold Part C and D premiums from benefit payments if an individual submits a request to his or her Part C or D insurance plan. The following tables show the income-related Part B premium adjustments for 2023. The Social Security Administration (SSA) is responsible for all income-related monthly adjustment amount determinations. To make the determinations, SSA uses the most recent tax return information available from the Internal Revenue Service. For 2023, that will usually be the beneficiary’s 2021 tax return information. If that information is not available, SSA will use information from the 2020 tax return. Railroad retirement and social security Medicare beneficiaries affected by the 2023 Part B and D income-related premiums will receive a notice from SSA by the end of the year. The notice will include an explanation of the circumstances when a beneficiary may request a new determination. Persons who have questions or would like to request a new determination should contact SSA after receiving their notice. Additional information about Medicare coverage, including specific benefits and deductibles, can be found at Medicare.gov.
Medicare Part B costs: key takeaways
Q: How much does Medicare Part B cost the insured? Year-over-year decreases in Part B premiums are very rare (see a list of annual amounts below; the last time there was a decrease was 2012). But Part B costs in 2022 have been lower than expected, due in part to less spending on Aduhelm (the new Alzheimer’s drug) than CMS had expected when the 2022 premiums were being set. This left enough of a surplus that the government was able to decrease the Part B premium and deductible for 2023. For perspective, the standard Part B premium increase for 2022 amounted to nearly $22/month, and was higher than the premium that had been projected in the Medicare Trustees Report. CMS noted that the higher Part B premiums in 2022 were due to a variety of factors, including costs associated with the COVID pandemic, the 2020 legislation that kept 2021 Part B premiums lower than they would otherwise have been (so premiums are catching up to where they would have been), and potential costs related to new drugs that might be covered under Part B in the near future. (Most medications are covered under Part D, but infusion drugs that are administered in a clinic are covered under Part B instead; the potential for sharply higher costs due to Aduhelm was one of the reasons Part B premiums increased so much for 2022.) As described below, the Social Security cost-of-living adjustment can sometimes limit the increase in Part B premiums, but that was not the case for 2022. Although the premium increase was significant, the Social Security COLA was historically large for 2022, and adequate to cover the additional Part B premiums. The COLA for 2023 will be even larger — 8.7%, versus under 6% for 2022. And the decrease in Part B premiums will put even more money back into millions of beneficiaries’ monthly Social Security checks, giving them more money to cover other expenses. Standard Part B premiums in previous yearsThe Part B premium has generally increased over time, although there have been some years when it stayed the same or even decreased. Here’s an historical summary of Part premiums over the last several years (see Table V.E2):
Part B premium can be limited by Social Security COLA, but that hasn’t been an issue for most beneficiaries since 2019In 2023, most enrollees will pay $164.90/month for their Part B coverage, which is the standard amount. Most enrollees were also paying the standard amount in 2022 ($170.10/month), in 2021 ($148.50/month), in 2020 ($144.60/month), and in 2019 ($135.50/month). Some enrollees pay more than the standard premium, if they’re subject to a high-income surcharge (described below). But that’s in contrast with 2017 and 2018, when most enrollees paid a premium that was lower than the standard premium. The standard premium in 2018 was actually $134/month, but the cost of living adjustment for Social Security wasn’t quite large enough to cover all of the increase from 2017’s premium for most enrollees. That’s why most people paid about $130/month. The standard Part B premium increased by about $9/month in 2020. But the 1.6% Social Security COLA for 2020 increased the average beneficiary’s Social Security benefit by $24/month. Since the COLA for most beneficiaries exceeded the premium increase for Part B, most Part B enrollees paid the standard premium in 2020. And for 2021, the 1.3% COLA was adequate to cover the increase to the new standard premium ($148.50/month) for virtually all enrollees. The COLA for 2022 was the largest it had been in 30 years, and more than adequate to cover even the substantial increase in Part B premiums. The 8.7% COLA for 2023 is even larger, at a time when Part B premiums are declining. So the COLA that Social Security recipients will see in 2023 will not need to be used to cover any additional Part B premiums. But if the COLA is ever not sufficient to
cover the Part B increase, most enrollees — those who receive Social Security retirement benefits and do not have incomes above the high-income threshold — are charged a lower-than-standard premium for Part B. This is to avoid a year-over-year decrease in their net Social Security check after the Part B premium is subtracted each month. Higher premiums for enrollees with high-income (threshold indexed in 2020, and annually after that)Since 2007, people who earn more than $85,000 ($170,000 for a couple) have paid higher Part B premiums (and higher Part D premiums) based on their income. For the first time, the threshold for what counts as “high income” was adjusted for inflation as of 2020, increasing it to $87,000 for a single individual and $174,000 for a couple. It increased again for 2021, 2022, and 2023. Harry Sit, of The Finance Buff, explains how the inflation indexing works here. Indexing the high-income threshold: The math On this page, you can pull up the data for CPI-U (select the first box under “Price Indexes”) and manually calculate how the average CPI-U has changed. You’ll add up all the numbers from September 2019 through August 2020 (don’t include the “Half1” and “Half2” numbers), and divide by 12 to get the average (in this case, 257.72). Then you’ll do the same thing for September 2018 through August 2019 (you’ll get an average of 254.016). The difference between those two numbers is 3.705, which represents a 1.46% increase from the 254.016 average CPI-U for September 2018 to August 2019. So as Sit explains here (for the 2020 increase, but the process is the same for 2021 and 2022, albeit with different numbers), we increase 87,000 by 1.46% — which results in 88,270 — and then round to the nearest $1,000. That gives us an income threshold of $88,000, which was the lower bound of “high-income” as of 2021. For people with income above $87,000 ($174,000 for a couple) in 2020, Part B premiums for 2020 ranged from $202.40/month to $491.60/month. As explained by the math above, the high-income threshold increased to $88,000 for a single individual and $176,000 for a couple in 2021. And for 2022, the threshold grew again, to $91,000 and $182,000, respectively. The 2022 Part B premiums for people with income above those thresholds range from $238.10/month to $578.30/month. For 2023, the high-income threshold is increasing significantly, to $97,000 for an individual and $194,000 for a couple. The sharp increase is not unexpected, given the high rate of inflation we’ve seen in 2022. And just as standard Part B premiums are decreasing in 2023, so are the premiums that high-income beneficiaries pay. These will range from $230.80/month to $560.50/month, depending on income. 2023 premium surcharge is based on 2021 tax return; you can appeal it if your income has changedThe government determines whether you have to pay an income-related premium surcharge based on your income tax return from two years ago, since that is the most recent tax return they have on file at the start of the plan year. 2021 tax returns were filed in 2022, so those are the most current returns available when income-related premium adjustments are determined for 2023. But if a life-change event has subsequently reduced your income, there’s an appeals process you can use. In
the appeal, you can request that the income-related premium adjustment be changed or eliminated without having to wait for it to reflect on a future tax return. Part B deductible also decreased for 2023Medicare B also has a deductible, which is decreasing to $226 in 2023, down from $233 in 2022. As is the case for Part B premiums, this is the first time in a decade that the Part B deductible decreased. The Medicare Part B deductible only has to be paid once per year, unlike the Part A deductible, which has to be paid once per benefit period. After the Part B deductible is met, the enrollee is generally responsible for 20% of the Medicare-approved cost for Part B services for the remainder of the year. But supplemental coverage (from an employer-sponsored plan, Medigap, or Medicaid) often covers these coinsurance charges. For people who became eligible for Medicare before the start of 2020, there are Medigap plans available (Plans C and F) that cover the Part B deductible, in addition to coinsurance charges. But those plans are no longer available for Medicare beneficiaries who became eligible for Medicare after the end of 2019. Part B deductibles in previous yearsThe Part B deductible has generally increased over time, although there have been some years when it stayed the same or even decreased. The increase for 2022 was the largest year-over-year dollar increase in the program’s history. But the decrease for 2023 was the first time the deductible has declined in over a decade. Here’s an historical summary of Part deductibles over the last several years (see Table V.E2):
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts. Tags: Medicare Part B, premiums, Social Security |
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