Q: How Will Part B Premium Costs Change In 2023?
A: Most healthcare costs are expected to continue to climb from 2022 - 2023, but there is some good news. The Medicare Part B premium is going down in 2023. Medicare Part B is the part that pays for doctor and hospital outpatient services and is automatically deducted from Social Security checks. The standard Part B premium in 2023 will be $164.90, a decrease of $5.20 per month, from $170.10 in 2022. The annual deductible for Part B will also decrease from $233 in 2022 to $226 in 2023.
Q: Can you give an example of how much more I would receive in Social Security benefits?
A: What you pay in Medicare premiums can be related to income. Here is a simple example that applies to most (but not all) Medicare beneficiaries. You will need to confirm the amount of your Social Security benefits in 2022 before deduction for Medicare Part B and any other withholdings, such as for income taxes. This example is based on a monthly Social Security benefit of $1,500 before deductions in 2022.
Step 1: Calculate the amount of the new benefit in 2023 by applying the 8.7% COLA to the 2022 monthly benefit, $1,500 x .087 = (130.50).
Step 2: Add the COLA amount to your 2022 benefit $1,500 + $130.50 = $1,630.50
Step 3: Subtract the Part B premium for 2023 from your new benefit amount $1,630.50-$164.90 = $1,465.60. Any deductions for income tax withholdings or additional Medicare health or drug plan premiums will adjust your monthly amount accordingly.
Q: How common is this? Have Part B premiums ever gone down before?
A: A drop in the Part B premium is rare. There were only three other times since Medicare was enacted in 1965 that premiums went down — in 1990, 1996, and ten years ago in 2012.
Q: What caused this drop in the Part B premium?
A: The federal government collected too much for Part B premiums in 2022. The 2022 Part B premium increase of 14.5% was one of the highest in the history of Medicare. The premium jumped that high to provide contingency funding for the new Alzheimer’s drug — Aduhelm. When the 2022 premium was announced last November, Aduhelm had a $56,000 per year price tag, but there was uncertainty over whether Medicare would cover the drug and how frequently it might be prescribed. Just weeks after the announcement of the 2022 premium increase, the manufacturer of Aduhelm cut the price in half, to $28,200 per year. Then, in early 2022, CMS announced that its pending coverage decision for Aduhelm was for very limited use —in clinical trials and only for certain types of Alzheimer’s patients. At the urging of TSCL, some Members of Congress, and other senior advocates, the Secretary of the Department of Health and Human Services instructed CMS to reassess the 2022 Medicare Part B premium. After re-assessment, CMS agreed that the 2022 Part B premium was higher than necessary, and that the excess would be used to reduce the 2023 premium. The assessment of a Part B premium was unprecedented, and we believe the only time that CMS has ever adjusted a Part B premium downward due to collecting more than was necessary. Usually when this has occurred in the past, there is no change in the Part B premium, it remains the same as the previous year.
Q: Do you think this sets a precedent? Will this happen more frequently in the future?
A: TSCL does not think so without continued vigilance by older voters and their insistence that our elected lawmakers take positive action. While the 2022 Inflation Reduction Act gives Medicare authority to negotiate prices of certain drugs, passage of that legislation came months after Biogen had already cut the price of Aduhelm, and the new legislation would not affect the price of Aduhelm any time soon. The legislation applies to drugs that have been on the market for 13 or more years. Aduhelm is brand new.
However, it does show the value of senior activism and how asking elected lawmakers and the Administration to make a reassessment when there is good cause to do so can have positive results in lowering Part B premiums for tens of millions of Medicare recipients. TSCL feels Congress can and should do more of this sort of reassessment when healthcare costs run amuck.