Archived Insight | October 4, 2022
The Centers for Medicare & Medicaid Services (CMS) recently released the Medicare Part B premiums and deductible and the Part A deductible and coinsurance that will take effect on January 1, 2023. Both the standard Part B premium and the Part B deductible for all Medicare beneficiaries will decrease by just over 3 percent. In contrast, the Medicare Part A inpatient deductible and coinsurance for hospital stays and care in a skilled nursing facility will increase by nearly 3 percent.
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Sponsors of group health plans that cover retirees need to know this information when reviewing their coverage for Medicare-eligible retirees, including those enrolled in Medicare Advantage Plans.
Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items. According to the September 27, 2022 announcement, the standard monthly Part B premium will be $164.90 for 2023, a decrease of $5.20. In 2023, the annual deductible for Medicare Part B beneficiaries will be $226, a $7 decrease. The 2023 decrease is partly attributable to lower-than-projected spending for a new drug to treat Alzheimer's disease, Aduhelm®, which was ultimately only covered by Medicare for individuals participating in clinical trials.
| 2022 | 2023 | |
|---|---|---|
| Standard Monthly Part B Premium | $170.10 | $164.90 |
| Medicare Part B Deductible | $233.00 | $226.00 |
Since 2007, high-income Medicare-eligible individuals who enroll in the Part B program have been required to pay a monthly Part B premium that is higher than the standard premium on a sliding scale. The Part B premium for high-income Medicare-eligible individuals varies depending upon an enrollee’s modified adjusted gross income and income tax filing status. The income-adjusted premiums for 2023, which are shown in the table below, will be lower than they are for 2022.
The last column of the table shows the 2023 income-related monthly adjustments for the Part D premium. Those adjustments began in 2011. The ACA requires Part D enrollees whose incomes exceed the thresholds established for Part B to pay their regular Part D premium to their plan (that amount will vary based on the plan they choose) and also pay an income-related adjustment to Medicare. CMS projects the average basic monthly premium for standard Part D coverage will be $31.50 for 2023, down from $32.08 in 2022.
| Income Ranges for Individual Return Tax Filing Status* | Income Ranges for Joint Return Tax Filing Status | Monthly Adjustment Amounts for Part B Premium | Total Monthly Part B Premium | Part D Premium Monthly Adjustment Amounts |
|---|---|---|---|---|
| $97,001 to $123,000 | $194,001 to $246,000 | $65.90 | $230.80 | $12.20 |
| $123,001 to $153,000 | $246,001 to $306,000 | $164.80 | $329.70 | $31.50 |
| $153,001 to $183,000 | $306,001 to $366,000 | $263.70 | $428.60 | $50.70 |
| $183,001 to $499,999 | $366,001 to $749,999 | $362.60 | $527.50 | $70.00 |
| $500,000* | $750,000+* | $395.60 | $560.50 | $76.40 |
* Married beneficiaries with income of more than $97,000 but less than $403,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following Part B monthly premium adjustment in 2023: $362.60 (resulting in a total monthly premium of $527.50). (The Part D monthly adjustment for these couples will be $70.00.) Married beneficiaries with income of more $403,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following Part B monthly premium adjustment in 2023: $395.60 (resulting in a total monthly premium of $560.50). (The Part D monthly adjustment for these couples will be $76.40.)
Medicare enrollees who receive a kidney transplant lose eligibility for full Medicare coverage after 36 months. Beginning in 2023, those individuals can pay a premium to continue Part B coverage of immunosuppressive drugs. The 2023 immunosuppressive drug premium will be at least $97.10 per month. High-income beneficiaries will pay a higher premium for this coverage, as shown in the following table.
| Income Ranges for Individual Return Tax Filing Status* | Income Ranges for Joint Return Tax Filing Status | Monthly Adjustment Amounts | Total Monthly Premium |
|---|---|---|---|
| $97,001 to $123,000 | $194,001 to $246,000 | $64.70 | $161.80 |
| $123,001 to $153,000 | $246,001 to $306,000 | $161.80 | $258.90 |
| $153,001 to $183,000 | $306,001 to $366,000 | $258.90 | $356.00 |
| $183,001 to $499,999 | $366,001 to $749,999 | $356.00 | $453.10 |
| $500,000* | $750,000+* | $388.40 | $485.50 |
* Married beneficiaries with income of more than $97,000 but less than $403,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following premium adjustment in 2023 for Part B immunosuppressive drug coverage: $356.00 (resulting in a total monthly premium for that coverage of $453.10). Married beneficiaries with income of more $403,000 who file a separate return from their spouse and lived with their spouse at some time during the taxable year must pay the following premium adjustment in 2023 Part B immunosuppressive drug coverage: $388.40 (resulting in a total monthly premium for that coverage of $485.50).
Part A pays for inpatient hospital, skilled nursing facility, hospice and certain home healthcare services. The Part A deductible and coinsurance increases are noted in the following table.
| 2022 | 2023 | |
|---|---|---|
| First-day Part A hospital deductible | $1,556.00 | $1,600.00 |
| Daily Part A coinsurance for the 61st through 90th day of a hospital stay* | $389.00 | $400.00 |
| Daily Part A coinsurance for hospital stays longer than 90 days | $778.00 | $800.00 |
| Daily Part A coinsurance for the 21st through 100th day in a skilled nursing facility | $194.50 | $200.00 |
* There is no cost-sharing requirement for the second through 60th day of a hospital stay.
Many public plans and employers have current and future retirees that do not have, or will not qualify for, zero-premium Part A coverage. Alternative market opportunities and strategies exist to provide benefits to these retirees in a more effective manner.
Plan sponsors that reimburse Medicare-eligible retirees for Part B premium costs will likely want to revisit their payment policies to ensure that they accurately reflect the new premiums.
Plan sponsors should ensure that if they reimburse retirees for Part B costs, they do so in a clear manner that states the amount reimbursable, and do not merely state that Medicare premiums will be reimbursed.
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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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