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2023 Medicare coverage costs at a glance
Here's a quick guide to what Medicare beneficiaries can expect in 2022 for each type of Medicare coverage.
How does the ‘hold harmless’ provision protect beneficiaries from Medicare Part B premium increases?
The "hold harmless" provision protects Medicare beneficiaries by essentially capping Part B premiums so increases aren't higher than Social Security's Cost of Living Adjustment (COLA).
Can I get a Medicare late-enrollment penalty removed?
If you were penalized for delayed Medicare Part B enrollment, you may have the penalty waived if you were advised to delay Part B, and now find you were given bad advice. Asking for the correction is known as requesting equitable relief.
The Medicare Part B special enrollment period
The Medicare Part B SEP allows people to delay Part B enrollment if they have health coverage through their own employer or a spouse’s current employer.
Four ways to save money on your Medicare Part B premiums
Here's how to save money on premiums for Medicare Part B – which covers doctor visits, diagnostics, and preventive care.
Medicare Part B provides coverage of services provided by doctors, outpatient hospital services and other healthcare providers, as well as some home health services and durable medical equipment.
Part B pays for a broad range of medically necessary services that aren’t picked up by inpatient coverage – even though they might be received while a person is hospitalized – including ambulance services, certain surgical procedures, dialysis, mental health care, physical therapy, transplants, chemotherapy and radiation, urgently needed care and more.
In addition, Part B covers diagnostic tests (such as MRIs, CT scans, EKGs, and x-rays) and a host of preventive medical services, such as pap tests, HIV screening, glaucoma tests, hearing tests, diabetes screening, and colorectal cancer screenings. Part B also pays the costs of durable medical equipment such as wheelchairs, hospital beds, and oxygen equipment, and for drugs that are taken by infusion (most drugs are covered under Medicare Part D, but drugs administered via infusion are covered under Part B instead).
The premium tends to increase from year to year, but for 2023, it declined for the first time in more than a decade. For most enrollees, the 2023 premium is $164.90/month. (See below for an overview of how Part B premiums have changed over the years.)
The reduction in premiums for 2023 was due to lower-than-anticipated Part B spending in 2022, leaving the government with a surplus that could be used to reduce Part B premiums for 2023. This was partly because of lower-than-expected spending on Aduhelm, the new Alzheimer’s drug that’s given by infusion in a doctor’s office. (Most medications are covered under Medicare Part D, rather than Part B. But drugs that are provided via in-office infusions are covered under Part B instead, which is why Aduhelm affected Part B premiums.)
Part B premiums can be covered by Medicaid if the beneficiary is eligible for both programs. And high-income enrollees pay more than the standard premiums for Part B.
Some enrollees can get Medicare Part B for free. There are essentially three ways this is possible, and although they aren’t applicable to most Medicare beneficiaries, it’s useful to know what options are available for covering the cost of the premiums. Here are the scenarios:
Part B premiums for most enrollees are deducted from their Social Security checks. But there’s a “hold harmless” rule that prevents net Social Security checks from declining from one year to the next, unless the person has an income of $97,000 or more. (That income limit is for 2023 coverage, and is based on 2021 tax returns.)
So if the Part B premium increases by more than an enrollee’s Social Security cost of living adjustment (COLA), the person’s premium will be adjusted, and will end up being less than the standard amount.
For most enrollees, the COLAs for 2020 and 2021 were more than sufficient to cover the Part B increases. So most enrollees were paying the standard Part B premium of $148.50/month in 2021. The 5.9% COLA for 2022 was the largest it had been in three decades. So despite the fact that the premium increase in 2022 was substantial, the COLA was more than adequate to cover the full increase in the standard premium for Part B. And fortunately for beneficiaries struggling with recent inflation, the Part B premium decrease in 2023 coincided with an even larger COLA for 2023 (8.7%), leaving Social Security recipients with more money to spend on other things.
But that wasn’t always the case in recent years. Due to fairly small COLAs, most beneficiaries paid less than the standard amount for Part B in 2017 (an average of $109/month, versus the standard premium of $134/month) and 2018 (an average of $130/month, versus the standard premium that remained at $134/month). By 2019, CMS estimated that only about 3.5% of Medicare beneficiaries were still paying a lower-than-standard amount for Part B, as COLAs had caught up with standard Part B premium increases by that point. amount in 2019, as their Social Security COLAs weren’t large enough to cover the full increase. By 2020, virtually all non-high-income Part B enrollees were paying the standard premium for Part B.
Part B enrollees with income above $97,000 (single) / $194,000 (married) pay higher premiums than the rest of the Medicare population in 2023. (This threshold was $85,000/$170,000 prior to 2020, but it was adjusted for inflation starting in 2020.) The 2023 Part B premiums for high-income beneficiaries range from $230.80/month to $560.50/month.
This income-related monthly adjustment amount (IRMAA) is based on your income tax return from two years ago. That’s the most recent tax return they have on file at the start of the plan year (eg. when the 2023 plan year begins, the most recent tax returns on file are for 2021, so 2021 income is used to determine IRMAAs for 2023). But if a life-change event has reduced your income since then, there’s an appeals process available. You can use it to request that the income-related premium adjustment be changed or eliminated without having to wait for it to reflect on a future tax return.
For those who are curious about how the inflation indexing works in terms of determining what income level counts as “high” each year, Harry Sit, of The Finance Buff, explains how it works.
Indexing the high-income threshold: The math
The indexing is based on the percentage by which the average of the Consumer Price Index for Urban consumers (CPI-U) for the 12-month period ending in the most recent August exceeds the average of the 12-month period that preceded that. So for 2021, for example, we can look at how the average CPI-U from September 2019-August 2020 exceeded the average CPI-I from September 2018-August 2019.
On this page, you can pull up the data for CPI-U (select the first box under “Price Indexes”) and manually calculate how the average CPI-U has changed. You’ll add up all the numbers from September 2019 through August 2020 (don’t include the “Half1” and “Half2” numbers), and divide by 12 to get the average (in this case, 257.72). Then you’ll do the same thing for September 2018 through August 2019 (you’ll get an average of 254.016). The difference between those two numbers is 3.705, which represents a 1.46% increase from the 254.016 average CPI-U for September 2018 to August 2019.
So as Sit explains here (for the 2020 increase, but the process is the same for 2021 and 2022, albeit with different numbers), we increase 87,000 by 1.46% — which results in 88,270 — and then round to the nearest $1,000. That gives us an income threshold of $88,000, which was the lower bound of “high-income” as of 2021.
This inflation indexing process has been repeated each year since then, resulting in the 2023 IRMAA thresholds being $97,000 for a single individual and $194,000 for a married couple.
Enrollees who receive treatment during the year must also pay a Part B deductible, which decreased to $226 in 2023 (down from $233 in 2022, but still higher than the $203 deductible that applied in 2021). After the deductible, enrollees also pay 20% of the Medicare-approved amount for care that’s covered under Part B. (See below for an overview of how the Part B deductible has changed over time.)
Learn how Medicare premiums, deductibles and coinsurance changed for 2023.
No, not everyone pays the Part B deductible. People who don’t receive services under Medicare Part B (or who only receive deductible-free services, such as vaccines), do not have the pay the deductible. And although most Medicare beneficiaries do receive services that are covered under Part B, some of them do not have to pay the Part B deductible:
But according to a Kaiser Family Foundation analysis, about 19% of Original Medicare beneficiaries only have Medicare Parts A and B. They don’t have Medigap coverage, employer-sponsored coverage, retiree health benefits from a former employer, or Medicaid. These enrollees — along with beneficiaries who have a Medigap plan other than C or F — have to pay the full Part B deductible if and when they need services that are covered under Medicare Part B.
[hio_question question="How do I enroll in Part B?"]If you are already receiving Social Security or Railroad Retirement benefits, you will be notified three months prior to your 65th birthday that you are about to become a Part A enrollee, and that Part B is an option. You’ll receive the Part B card at the same time as the Part A card.
If you choose not to enroll in Part B, you must return the card (which means you’re rejecting Part B coverage; more on that below) or the premium will automatically start to be deducted from your Social Security checks. If you keep the card, Part B coverage kicks in the month you turn 65.
If you’re not already receiving Social Security or Railroad Retirement benefits, you’ll have an opportunity to enroll in Medicare B (along with Part A) during a seven-month window that includes the three months before the month you turn 65, the month you turn 65, and the following three months. If you enroll in the three months prior to the month you turn 65, your coverage will be effective the month you turn 65.
It’s important to note that if you fail to enroll in Part B during your seven-month enrollment period, the program will offer you another opportunity to enroll each succeeding year (January 1 – March 31), with coverage effective the month after you enroll (note that the effective date used to be July 1, but this changed as of 2023, under the BENES Act). The catch? If and when you do eventually enroll in Part B, for each year that you were eligible for Part B but turned it down, your monthly premium will be increased by 10%, and the higher rate will be in place for as long as you have Part B.
So if you wait three full years to enroll after your initial enrollment period, you’ll pay premiums that are 30% higher than the normal price, for as long as you have Part B coverage (generally, for life). The penalty does not apply, however, if you delay your Part B enrollment because you have other coverage in place from a current employer or your spouse’s current employer.
If you have health insurance through your current employer, or through your spouse’s current employer, you may want to delay enrollment in Part B. You’ll need to check with your employer or HR department to make sure that your employer-sponsored coverage will pick up where Part A leaves off, but assuming it does, you may want to delay enrolling in Part B, since it has a premium.
This article explains more about what you need to know before making the decision to delay Part B.
As long as you enroll in Part B either while you (or your spouse, if your coverage is through your spouse’s employer) are still employed, or within eight months of the end of employment, you’ll be able to enroll without any penalty. This is regardless of what time of year it is, and regardless of how long ago you turned 65.
If your employment ends, you may be eligible to continue your employer-sponsored coverage via COBRA. But coverage under COBRA does not have the same protections as far as access to Part B and the ability to enroll without a penalty.
Once your employment ends, you’ve got eight months to sign up for Part B (regardless of what time of year it is, and without a penalty). You can have COBRA coverage during those eight months if you wish. But once it’s been more than eight months since your employment ended, you no longer have open access to Part B, even if you’re still covered under COBRA.
Once it’s been more than eight months since your employment ended, the details above about late enrollment in Part B apply. You’ll only be able to sign up between January 1 and March 31, and late enrollment penalties can be applied to your premium.
This is something to keep in mind if you elect COBRA once your employment ends. If your COBRA runs out in the middle of the year (and you haven’t yet enrolled in Part B) you won’t have access to Part B at that point. You’ll have to wait until the following January – March enrollment period, and depending on how long it’s been since your employment ended, you could also face a late-enrollment penalty that will apply to your Part B premium for the rest of your life.
Read more about the ins and outs of delaying enrollment in Part B.
Part B is optional. You can choose to skip it altogether and avoid the premiums. But that means you’re on the hook for the full cost of any services that would otherwise be covered under Part B. For healthy enrollees, that might amount to the occasional office visit and nothing more. But if you end up needing extensive outpatient care — such as kidney dialysis, chemotherapy, radiation, physical therapy, etc. — your bills could add up quickly.
As noted above in the discussion about late enrollments, you will have a chance to sign up for Part B each year, regardless of how long you’ve delayed enrollment. But the late-enrollment penalty could become substantial, depending on how long you’ve been without Part B coverage. And if and when you do decide to enroll, you’ll have to wait until the January-March general enrollment period. So going without Part B when you don’t have other coverage from an employer’s plan is an option, but it’s a fairly risky option.
The Part B premium has generally increased over time, although there have been some years when it stayed the same or even decreased. Here’s an historical summary of Part premiums over the last several years (see Table V.E2):
The Part B deductible has generally increased over time, although there have been some years when it stayed the same or even decreased. The increase for 2022 was the largest year-over-year dollar increase in the program’s history. But the decrease for 2023 was the first time the deductible has declined in over a decade. Here’s an historical summary of Part deductibles over the last several years (see Table V.E2):
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
Here's a quick guide to what Medicare beneficiaries can expect in 2022 for each type of Medicare coverage.
The "hold harmless" provision protects Medicare beneficiaries by essentially capping Part B premiums so increases aren't higher than Social Security's Cost of Living Adjustment (COLA).
If you were penalized for delayed Medicare Part B enrollment, you may have the penalty waived if you were advised to delay Part B, and now find you were given bad advice. Asking for the correction is known as requesting equitable relief.
The Medicare Part B SEP allows people to delay Part B enrollment if they have health coverage through their own employer or a spouse’s current employer.
Here's how to save money on premiums for Medicare Part B – which covers doctor visits, diagnostics, and preventive care.
Here's a quick guide to what Medicare beneficiaries can expect in 2022 for each type of Medicare coverage.
The "hold harmless" provision protects Medicare beneficiaries by essentially capping Part B premiums so increases aren't higher than Social Security's Cost of Living Adjustment (COLA).
If you were penalized for delayed Medicare Part B enrollment, you may have the penalty waived if you were advised to delay Part B, and now find you were given bad advice. Asking for the correction is known as requesting equitable relief.
The Medicare Part B SEP allows people to delay Part B enrollment if they have health coverage through their own employer or a spouse’s current employer.
Here's how to save money on premiums for Medicare Part B – which covers doctor visits, diagnostics, and preventive care.
