In a historic move, Medicare costs have declined for the first time in years. Seniors on Medicare will enjoy a reduction in the cost of Medicare Part B by a few dollars.
The reason for the savings is that a drug called Aduhelm, which treats Alzheimer’s, was less expensive than was projected for 2022. Medicare saved more money than expected and is returning some of the savings to enrollees by discounting Part B.
Medicare Part B costs $170.10 in 2022. The premium for Part B in 2023 is about 3 percent lower—or $5.20 less. The new monthly cost will be $164.90.
Part B also has a deductible. It was $233 in 2022, but it also has been reduced for 2023. The annual deductible for next year is $7 less, or $226.
Social Security Adjustments
Overall, the cost reduction of Medicare Part B offers some help to many living on Social Security. Another boon for seniors that occurs around the same time is that Social Security will announce the cost-of-living adjustment (COLA) at the end of the year.Although the exact percentage increase that seniors will get has not been revealed yet, it is expected to be one of the largest increases in a long time. The increase is based on the inflation rate in the latter months of the year. CNET says the announcement should be made in mid-October and may be as large as 8.8–9.0 percent.
According to Kiplinger, a COLA increase of this size is bigger than any in the last 40 years. Since 2009, the largest increases occurred in 2009 (5.8 percent) and 2022 (5.9 percent). Most other years in between had an average increase of 1.37 percent. Three years between 2009 and 2022 had no COLA increase.
If the COLA is in the 8.8 percent to 9.0 percent range, it will increase monthly amounts by about $150. Over a year, this much of an increase will range from $1,657 to $1,800 on average. A couple will see an annual increase of $2,753 and more.
Part a Deductible Also Increased
Besides the decrease in Part B of Medicare, there has been an increase in Part A. Medicare Part A is free to most people. It covers hospital in-patient care. In 2022, the deductible was $1,556. This figure was raised by $44 for 2023, bringing it to $1,600. It applies to the first 60 days of the hospitalization.After the first 60 days, from the 61st day until the 90th day, the amount of coinsurance has also been raised. In 2022, the coinsurance was $389 per day. For 2023, CMS reveals that patients will have to pay a coinsurance of $400 per day.
Nursing Home Care
When you need a skilled nursing facility, Medicare Part A helps cover the cost. The amount of coinsurance you need for this service has also increased. For days 21 through 100, the daily coinsurance will be $200—an increase of $5.50 per day.Income-Related Monthly Adjustment Amount
When your income falls within specific brackets, you will pay more for your Medicare premiums. It is called an income-related monthly adjustment amount (IRMAA). Anyone making $91,000 or less in 2022 will pay the standard amount for Medicare—$170.10 in 2022.The amount you pay for Medicare premiums is not based on your adjusted gross income (AGI) but on your modified adjusted gross income (MAGI). Healthcare.gov says this figure does not come from any line on your tax return forms. It includes your AGI, any excluded foreign income, nontaxable benefits from Social Security, and tax-exempt interest.
MedicareInteractive lists the six income brackets and reveals how much each one will pay for Medicare in 2022. The second bracket for singles ($91,001–114,000) will pay $238.10 per month in 2022, and the highest bracket (for singles making $500,000 and more) will pay $578.30 per month in 2022. The highest income bracket is for couples making $750,000 or more.
If you want to, there are several ways to lower your Medicare payments if you need to reduce your IRMAA bracket. Forbes says you can donate directly to a charity from your retirement account. Although you cannot deduct it, you will not pay taxes on the amount donated.
Another way to reduce your MAGI, Forbes says, is to make contributions to your retirement accounts—if you have not already maxed them out. Kiplinger says that if you have an employer-sponsored 401(k), you can deposit up to $20,500 if you are single and younger than 50, or up to a maximum of $67,500 for married couples over 50 with employer contributions.
Medicare Advantage Plan
Another part of Medicare that will see a cost reduction is the Medicare Advantage plan. This kind of plan is called a Medicare Part C plan or an MA plan. It combines the benefits of Medicare parts A, B, and D.Medicare says that Medicare Advantage plans are an alternative to the original Medicare plans. Various companies offer these Medicare-approved plans, and they have similar services. Services are rendered through a network affiliated with the company offering the plan.
The advantage of getting Medicare Advantage plans is that they offer services not covered by original Medicare. Because of their competitiveness with Medicare, companies offering Medicare Advantage offer the same benefits as Medicare. They also provide additional services such as vision, dental, fitness programs, hearing, various supplements, and some medical support equipment—for free.
Be on the lookout in mid-October to learn how much of a COLA increase there will be in 2023. It is something you can look forward to in the new year as well as enjoying the discount on Medicare Part B.
The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
