On September 27, the Centers for Medicare and Medicaid Services (CMS) released the 2023 Medicare costs. Of note, the standard monthly premium for Part B, medical insurance, will drop $5.20, from $170.10 to $164.90.
A drop in the premium is very unusual. The last time this happened was in 2012 when the premium decreased $15.50 a month, primarily due to historically low healthcare utilization rates. Because of COVID, we know the 2023 drop is not related to lower utilization. It’s happening because CMS has to make up for some miscalculations.
Almost one year ago, CMS released the 2022 Medicare costs. The Part B premium, was going up almost $22, from $148.50 to $170.10. This 14.5% increase was one of the largest in history.
One reason for the big increase: Medicare needs to maintain a contingency reserve for unanticipated increases in healthcare spending, particularly certain drug costs, such as, in this case, Adulhelm. The Food and Drug Administration (FDA) approved this “first-of-its-kind” treatment for Alzheimer’s disease in June 2021. About $10 of the Part B premium increase would help cover the cost for one year of treatment, $56,000.
After that announcement, a couple things happened that called into question the need for such a big increase.
- In December 2021, Biogen, the manufacturer of Adulhelm, cut the cost in half, to $28,000 a year.
- On April 7, CMS announced that Medicare would cover Adulhelm treatment only for participants in approved clinical trials. Even though the FDA had approved 1.5 million to receive this drug, the number who would qualify for Medicare coverage would drop considerably. For instance, a confirmatory trial for Adulhelm that started in May 2022 had 1,500 participants.
With those changes, there was pressure on CMS to reduce the premium. However, as many realized, that would not be “operationally feasible.” (In my opinion, Medicare tends to move forward at a snail’s pace, so going backwards is impossible.) The best course would be to incorporate the savings into the 2023 premium determination. So, even though CMS may have charged every beneficiary $10 a month to create a contingency fund that is not being used as planned, it’s giving back only $5.25. As my mother would have said, be grateful for small blessings.
Part B premium facts
Recently, a friend insisted that she is not paying the Part B premium because she doesn’t get invoices. Then at church, a couple said they don’t pay the premiums because they don’t have Part B; they elected Medicare Advantage. Since we are on the topic, perhaps a few quick facts can clarify Part B.
- Part B covers the outpatient side of Medicare and has two essential components. The first includes the medically necessary services to diagnose and treat a medical condition, such as doctors’ visits, diagnostic tests, and whatever care is provided in an outpatient setting. The second is preventive care.
- Medicare Advantage members do pay Part B premiums for two reasons. One, they must have Part B to get a Medicare Advantage plan. Two, even though Medicare Advantage plan members don’t have Part B per se, plans are responsible for providing the same medically necessary services that Part B covers.
- Beneficiaries who are receiving Social Security retirement benefits don’t get invoices, but they are still paying for Part B. Social Security deducts premiums from the monthly benefit amount.
Two more Part B costs
The 2023 Part B deductible will be $226, a decrease of $7. Once those who have Original Medicare pay this deductible, Medicare then pays its share. Those with Medicare Advantage do not pay this deductible. Each plan establishes its cost sharing.
And, we can’t forget about IRMAA, the income-related monthly adjustment amount. Higher-income beneficiaries pay more every month, in addition to the Part B premium. In 2023, the thresholds will be $97,000 for a single filer or a married individual filing a separate return and $194,000 for a married individual filing a joint return, compared to $91,000 and $182,000 in 2022. (Find the complete details here.)
Obviously, Medicare is a vast and complicated system. Nothing new there. But I can recommend two things: be patient, and—for your own peace of mind—learn all you can about the various parts of Medicare. We’re paying for it one way or another. And, after all, nothing is free.