Your costs for Original Medicare in 2023 will depend on your income and which Parts (A, B, C, or D) you decide to purchase.
Medicare is broken down into parts and each of them provides different coverages. Not everyone will elect to enroll in Medicare at age 65 because they may have other insurance through an employer or union that provides better coverage and lower rates.
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Medicare Part A Cost
Most people think of Medicare Part A as their hospital coverage and that is basically correct, However, Part A also provides coverage for skilled nursing facility care, hospice care, lab tests in a covered facility, and some home health care.
In 2023, Medicare Part A has a zero premium for most individuals because they’ve paid into Medicare via social security and Medicare taxes deducted from their income. Individuals who have worked for at least 40 quarters (10 years) will be eligible for Medicare Part A and pay no premium.
The real cost of Medicare Part A in 2023 is the deductible. The Part A deductible is now $1,600 per benefit period (not per year). The increase in the Part A deductible is $44 for this year over last year. Additionally, there is a coinsurance requirement if hospitalized for more than 60 days (61-90 days: $400 per day and $800 per day for days 91 and beyond).
Moreover, individuals who worked less than 40 quarters will have to pay a monthly premium of up to $506 per month.
Medicare Part B Cost
Most seniors think of Part B as medical insurance for doctors’ care but Medicare Part B covers more than just doctor visits. Part B will cover any medically necessary services to diagnose and then treat a medical condition. Part B will also cover preventive care such as vaccines and other drugs administered in your doctor’s office or other medical facilities.
The Part B annual deductible decreased $7 in 2023. Once the deductible has been met, patients will pay 20% coinsurance of the Medicare-Approved amount charged by their doctor.
Your Medicare Part B premium of $164.90 is based on the beneficiary’s income and is regularly adjusted if your income goes up or down. This method of premium calculation is called IRMAA (Income-Related Monthly Adjustment Amounts) and can significantly impact your monthly premium.
|Individual Income||Married Filing Jointly||Monthly Premium|
|$91k or less||$182k or less||$164.90|
|>$91k – $114k||>$182k – $228k||$230.80|
|>$114k – $142k||>$228k – $284k||$329.70|
|>$142k – $170k||>$284k – $340k||$428.60|
|>$170k – $500k||>$340k – $750k||$527.50|
As you can see, Medicare Part B can become very expensive for high-income earners.
On the other hand, those seniors who have low incomes and are finding Part B unaffordable can get help to pay for Part B through various government programs.
Additionally, if you have Medicare Supplement plan C or F, your Part B deductible will be paid by your plan.
Medicare Part C Cost (Medicare Advantage)
How much you’ll pay for Medicare Part C (Medicare Advantage) will depend on the insurance company you choose and the plan you select.
Medicare Advantage plans are sold and administered by private insurance companies that have been approved by CMS and have various guidelines that must be adhered to.
Unlike a Medicare Supplement which works alongside Medicare Part A and Part B, Medicare Advantage replaces Parts A and B and often provides additional coverages.
Medicare Advantage plans also offer coverages not found in Original Medicare like dental, hearing, and vision coverage. Additionally, most companies offer additional benefits like free gym memberships, medical transportation, and home-delivered meals.
Moreover, many Medicare Advantage plans offer prescription drug coverage which eliminates a free-standing Part D plan.
Depending on your zip code and the companies available in your area, there are Medicare Advantage plans available with zero premium, however, with all plans, your Medicare Part B premium still has to be paid to Medicare.
Medicare Part D Cost
Similar to Part C, Medicare Part D is sold and administered by private insurance companies and other organizations approved by Medicare. The average premium varies by company with a national average in the U.S. of $42 per month.
Similar to Medicare Part B, your monthly premium can be impacted by your income once it’s over $91,000. This is the result of the IRMAA rule which also affects Part B premiums.
Part D also has four different phases (or stages) that must be dealt with so depending on your prescription drug expenditures, your cost for drugs can change during the year.
Most seniors are familiar with the term “donut hole” but many are not aware of how it will affect their prescription drug out-of-pocket expenses. Suffice it to say that if you reach the donut-hole you’ll be paying more out-of-pocket drug expenses until you reach the “catastrophic” phase where you’ll pay 25% of drug costs for the remainder of the year.
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Cost for Medicare Supplement Plans in 2023
Medicare Supplement plans which are offered by private insurance companies help fill the healthcare coverage gaps found in Medicare Part A and Part D.
Currently, there are 10 standardized plans that are offered in all but 3 states in the U.S. The word “standardized” has to do with the benefits that each of the plans offer. Since the plans are standardized, each plan offered by a company must have the same benefits that are approved by Medicare.
This means that a Plan G, for example, will have the same benefits no matter which company you purchase it from. The difference in Medicare Supplement (Medigap) plans from one company to the next is the premiums they charge and any additional benefits they offer outside of a plan’s standardized coverage.
Since Medicare Supplement companies are permitted to increase their rates because of inflation and other factors, most policyholders will experience rate increases year over year no matter who they purchased their plan from. Moreover, when Original Medicare increases rates, you can count on the Medicare Supplement industry to follow.
The good news about rate increases is that an independent health insurance broker who represents many of the highly-rated Medicare Supplement companies can provide a prospective client with data that demonstrates price increases taken by the carriers they represent.
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Frequently Asked Questions
For individuals, $170.10 will be taken out of your Social Security benefit to pay your Medicare Part B premium in 2022. This is regardless of purchasing a Medigap or Medicare Advantage plan.
Yes. Medicare Part B premiums are tax-deductible since they are considered medical expenses. Whether this will help you or not during tax time depends on if your total medical expenses are more than 10% of your Adjusted Gross Income (AGI). Be sure and check with your tax preparer to make certain the rules haven’t changed.
No. When you enroll in Original Medicare Part A and B but then elect to get coverage through a Medicare Advantage plan, your Medicare Advantage plan replaces your Original Medicare Part A and B.
There is no out-of-pocket limit under Medicare Part A and Part B. However, you can take advantage of an out-of-pocket limit with 2 Medicare Supplement plans and some Medicare Advantage plans.
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