What to Know About Changes to Medicare in 2023

If you’re enrolled in Medicare or will be eligible to enroll this year, you need to know about changes to this health insurance program for people 65 and older. Changes to Medicare premiums and deductibles happen annually. However, there are some new savings Medicare beneficiaries can expect in 2023 and beyond as a result of the Inflation Reduction Act.

Here’s what to know about the costs and coverage associated with Medicare this year.

Medicare Part B premium for 2023 is lower

Medicare Part B medical insurance helps cover services from doctors and other medical providers, outpatient care, preventive services, medical equipment and home health care. There is a monthly premium for Medicare Part B that is either deducted from monthly Social Security benefits or billed directly to enrollees.

Typically, the Part B premium increases each year, but the premium is dropping to $164.90 in 2023 from $170.10 in 2022. “It’s good for this year, but potentially not good for next year,” says Danielle Roberts, co-founder of Boomer Benefits, a health insurance agency specializing in Medicare plans.

The Part B premium jumped from $148.50 in 2021 to $170.10 in 2022, in part because of the high cost of a new Alzheimer’s drug. Rather than lower the premium halfway through 2022 when the price of the drug dropped dramatically, Roberts says the premium was lowered for 2023. Because the lower premium this year is essentially a credit for overpayment in 2022, Roberts says she’s worried there could be a big rate hike in 2024. So the premium savings could be short-lived.

Medicare deductibles in 2023 are changing

• Medicare Part A: Although there is no monthly premium for Medicare Part A hospital coverage for most people, there are deductibles and copayments. The Medicare Part A deductible for inpatient care at a hospital rises to $1,600 in 2023 from $1,556 in 2022.

• Medicare Part B: The annual deductible for Medicare Part B beneficiaries drops to $226 in 2023 from $233 in 2022.

• Medicare Part D: Medicare Part D prescription drug coverage is provided by private insurance companies rather than the federal government, so deductibles vary by plan. However, the federal government sets a limit on Part D deductibles. The Part D deductible limit is $505 in 2023, up from $480 in 2022.

Lower drug prices and expanded Part D coverage

As a result of the Inflation Reduction Act, there’s a lower cap on out-of-pocket drug costs and better access to vaccines.

• Diabetes medications: The cost of a month’s supply of insulin is now capped at $35. And there is no deductible for insulin. “This change applies not only to insulin you inject yourself, but also an insulin pump,” Roberts says. “There won’t be any more thousands of dollars a year spent on insulin.”

Be aware, though, that Part D plans have until March to update their systems, according to the Centers for Medicare and Medicaid Services. So you might pay more than $35 in January and February.

• Lower drug prices: Medicare will now be able to negotiate with manufacturers to lower the price of certain brand-name Medicare Part B and Part D drugs that don’t have competition. It will announce the first 10 drugs selected for negotiation this year, and prices will be effective in 2026. It will continue to announce more drugs selected for negotiation every year.

• Vaccines: If you have Part D coverage, you now will have access to more vaccines at no cost. Vaccines that are covered are those recommended by the Advisory Committee on Immunization Practices, including the shingles vaccine.

• Out-of-pocket costs: Starting in 2024, you won’t have to pay coinsurance or a copayment for drugs once you reach the catastrophic coverage level that kicks in after the Part D coverage gap. For 2023, there’s a small coinsurance percentage or copayment once you’ve spent $7,400 and are out of the coverage gap and eligible for catastrophic coverage.

Starting in 2025, annual Part D out-of-pocket costs will be capped at $2,000. “That’s a huge change for someone taking expensive medications,” Roberts says. “That’s why people should be most excited about.”

A shorter coverage gap after enrollment

For people who missed enrolling in Medicare Parts A and B during the seven-month Initial Enrollment Period at age 65, they have an opportunity to enroll during a three-month General Enrollment Period from January 1 to March 31. In the past, benefits wouldn’t start for those who signed up during general enrollment until July. Starting in 2023, coverage will kick in the month after you sign up—leaving less of a gap in coverage.

Cameron Huddleston

Cameron Huddleston is an editor-at-large at Carefull and the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. You can learn more about her at CameronHuddleston.com or follow her on Instagram at @cameronkhuddleston _.