While inflation is pushing up prices for almost everything else, Medicare is about to be less expensive. Medicare Part B premiums will go down for 2023, according to an announcement Tuesday by the Centers for Medicare & Medicaid Services, or CMS.
The monthly premium for Medicare Part B will fall to $164.90 in 2023 for most beneficiaries. [A small number of beneficiaries with higher incomes pay higher premiums]. That’s a decrease of $5.20 per month from the $170.10 premium in 2022.
The Medicare Part B deductible is going down, too, from $233 in 2022 to $226 in 2023.
The premium decrease applies to nearly everyone with Medicare because both Original Medicare [Part A and Part B] beneficiaries and Medicare Advantage [Part C] members pay the Part B premium.
Why did prices drop for 2023?
The lower premiums for 2023 come just one year after a major price increase. Premiums went up by $21.60 from 2021 to 2022 — the largest-ever price increase for Medicare Part B premiums.
A single drug is a major factor in both the 2022 price increase and the 2023 price drop: Aduhelm, a very costly treatment for Alzheimer’s disease.
In a November 2021 fact sheet, CMS cited potential Medicare coverage for Aduhelm as one reason for the large Part B price increase for 2022. Even though CMS hadn’t yet determined whether Medicare would cover Aduhelm, CMS said that “we must plan for the possibility of coverage for this high cost Alzheimer’s drug which could, if covered, result in significantly higher expenditures for the Medicare program.”
That possibility didn’t come to pass. In April 2022, CMS announced that Medicare would cover Aduhelm only in the context of certain government-approved clinical trials. As a result, Department of Health and Human Services Secretary Xavier Becerra announced in May that “we have determined that we can put cost-savings directly back into the pockets of people enrolled in Medicare in 2023.”
What this means for Medicare beneficiaries
2023 will be only the fourth time Medicare Part B premiums have gone down year over year, according to a NerdWallet analysis of historical Medicare premium data. More than a decade has passed since the last decrease in 2012.
The Medicare Part B premium for 2023 is about 3% lower than 2022 — a smaller percentage than past decreases.
However, Social Security payments might grow by nearly 9% following the 2023 cost-of-living adjustment, according to analysis by The Senior Citizens League, a nonprofit advocacy group. Medicare Part B premiums, which are often deducted from Social Security, won’t eat up any of that increase because they will be lower, leaving beneficiaries with more money to cover other costs that have risen as a result of inflation.
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Medicare’s Part B standard monthly premium will fall to $164.90 in 2023, a $5.20 decrease from 2022, the Centers for Medicare & Medicaid Services [CMS] announced on Sept. 27. The open enrollment period to make any changes to next year’s Medicare coverage begins on Oct. 15 and goes through Dec. 7.
The premium drop comes in the wake of the big 2022 increase, the largest dollar increase in the history of the program. Part B covers doctor visits, diagnostic tests and other outpatient services. Most Medicare beneficiaries have Part B premiums deducted directly from their monthly Social Security payments.
Next year’s premium decrease makes good on statements this year by Health and Human Services Secretary Xavier Becerra that the money Medicare was saving because spending on Aduhelm, a new Alzheimer’s drug, was not going to be as high as expected would be passed on to beneficiaries in 2023. Spending on other Part B services is also projected to be less than anticipated.
AARP had called on CMS to lower the Part B premium for 2022 after Aduhelm's manufacturer lowered the price and the agency approved the medication on a limited basis.
“Today’s announcement of lower Part B premiums and deductibles is welcome news for seniors who are struggling with rising costs due to inflation,” said Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer. “Reducing their Medicare expenses, combined with the expected cost of living adjustment for Social Security, will provide much-needed financial relief for older Americans.”
CMS also announced the premiums for those Medicare enrollees who pay higher monthly charges because of their income. Those charges will also decline. Part B beneficiaries with annual individual incomes greater than $97,000 will pay more than the standard premium — how much more will depend upon income. For example, someone filing an individual tax return whose income is between $97,000 and $123,000 will pay $230 a month for Part B. CMS says about 7 percent of Medicare beneficiaries pay more than the standard monthly premium.
Most Medicare enrollees must pay the Part B premium whether they have original Medicare or a private Medicare Advantage plan. Some Advantage plans offer a “giveback” benefit where the insurer covers part or all of a member’s Part B monthly premium. Consumers can find those plans on the Medicare plan finder. Deductibles in Medicare Advantage vary by plan.
Part B deductible lower
The annual Part B deductible for 2023 is also decreasing, to $226, a $7 decline. And beginning July 1, Medicare enrollees who take their insulin through a pump as part of the Part B durable medical equipment benefit will not have to pay a deductible. Under the new Inflation Reduction Act of 2022 , cost sharing for insulin will be capped at $35 a month next year.
Part A costs increase
While most Medicare enrollees do not pay a monthly premium for Part A, which covers inpatient hospital, skilled nursing facility, hospice and some home health care services, there is a deductible charged for each hospital stay.
For 2023, the Part A deductible will be $1,600 per stay, an increase of $44 from this year. For those people who have not worked long enough to qualify for premium-free Part A, the monthly premium will also rise. The full Part A premium will be $506 a month in 2023, a $7 increase. Whether a beneficiary has to pay the full Part A premium depends on their or their spouse’s work history. Beneficiaries with Medicare Advantage plans should check with their plan for hospital charges.
Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the “Medicare Made Easy” column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for the Orange County Register and as a health policy and workplace writer for Newsday.