Author

Sharon O'Day

The costs and benefits of Medicare's health and drug plans can change annually. With healthcare costs consuming so much of your budget — and with your needs changing with age — it makes sense to check yearly to be sure you’re getting the most coverage for the least amount of money.
What changes in Medicare should you watch out for this Annual Enrollment Period (AEP)? Will Medicare premiums increase in 2023? Will new benefits become available? 
We'll cover what you need to know about new plans and benefit trends for this open enrollment season.

<ul>
<li>In 2023, premiums, deductibles, and coinsurance are all higher for Medicare Part A, but lower for Medicare Part B.</li>
<li>Medicare Advantage, or Medicare Part C, continues to grow in popularity thanks to expanding benefits and decreasing premiums.</li>
<li>Premium adjustments for high-income earners have increased for Part B and Part D.</li>
<li>Maximum out-of-pocket expenses have had a Medicare increase in 2023 for Part C and Part D.</li><li>The Inflation Reduction Act of 2022 has brought two significant benefits to Part D beneficiaries: insulin costs are capped at $35 per month for those with diabetes, and all Medicare-approved adult vaccines will be provided for free.</li>
<li>Part B coverage for kidney transplant recipients has been expanded from 36 months to "for life" to cover immunosuppressive drugs.</li>
</ul>

Medicare Part A covers inpatient hospital or skilled nursing facility stays, hospice care, and specific home health care. 
The Medicare Part A premium does not apply to about 99% of beneficiaries who will have met the requirements for free Part A coverage through 40 quarters of Medicare-covered work. For the others, the monthly premium in 2023 is between $278 and $506 — up $4 and $7 over 2022, respectively — based on the number of quarters worked.
The Medicare Part A deductible for 2023 is $1,600 — up $44 from 2022. This deductible is what you pay out-of-pocket before your coverage kicks in, but instead of being an annual deductible, it is applied to each benefit period. A benefit period starts the day you’re admitted "inpatient" to a hospital or skilled nursing facility and extends until you have gone 60 consecutive days without any inpatient care. You could have two or more benefit periods in a calendar year, and you would have to meet the deductible each time before accessing coverage. The deductible covers your share of costs for the first 60 days of an inpatient stay.
The Medicare Part A copayment for an inpatient hospital stay has also increased in 2023. The cost will be $400 per day — an $11 increase since last year — to cover your share of costs for days 61 to 90 of your stay. If your hospital stay extends beyond 90 days, you will have to use some of your 60 "lifetime reserve days," and the copayment will be $800 per day, a $22 increase in comparison with 2022.
The Medicare Part A copayment in an inpatient skilled nursing facility is $200 per day — a $5.50 increase from 2022 — for days 21 to 100 of extended care services per benefit period.

Under current rules for Medicare Part A (as well as Part B), your coverage becomes effective based on when you enroll, possibly leaving a several-month coverage gap. According to new 2023 rules, if you enroll during the last three months of your Initial Enrollment Period or during the annual General Enrollment Period between January 1 and March 31, your coverage now becomes effective the month after enrollment to reduce any gaps.

Medicare Part B covers doctors, outpatient hospital stays, preventive care, certain home health services, and durable medical equipment. The costs are defined yearly according to the Social Security Act.
Medicare Part B's premium and deductible have gone down for 2023, which rarely happens. The new lower prices make up for premiums that rose too high between 2021 and 2022 to cover the usage of an expensive Alzheimer's medication that never materialized.
While Social Security grants seniors cost-of-living adjustments to their retirement benefits annually to cover inflation, part of the increase is often absorbed by higher Part B premiums, which everyone must pay. But in 2023, that is not the case. The Part B premium and deductible have decreased so that seniors will be left with more money.
The monthly <a href="https://www.cms.gov/newsroom/fact-sheets/2023-medicare-parts-b-premiums-and-deductibles-2023-medicare-part-d-income-related-monthly" target="_blank" rel="noreferrer noopener">Medicare Part B premium for 2023</a> is $164.90, down $5.20 from 2022 for most beneficiaries. However, high-income earners will pay a monthly premium adjustment ranging from $230.80 to $560.50 as part of the Income-Related Monthly Adjustment Amount (IRMAA). Individual premiums can also vary based on marital status, tax filing status, and whether the beneficiary needs immunosuppressive drug coverage.
Lastly, the Medicare Part B deductible is $226 in 2023, down $7 from 2022.

As explained under Part A, starting in 2023, Part B coverage becomes effective the month after enrollment.
Medicare also recently decided to <a href="https://www.beckershospitalreview.com/finance/cms-releases-final-payment-rules-for-2023-15-things-to-know.html" target="_blank" rel="noreferrer noopener">extend telehealth services</a> through 2023. Telehealth access to Part B medical services was expanded in early 2020 from underserved rural situations to all Medicare beneficiaries. The purpose was to facilitate treatment during the pandemic's Public Health Emergency (PHE).
<a href="https://www.cms.gov/newsroom/fact-sheets/2023-medicare-parts-b-premiums-and-deductibles-2023-medicare-part-d-income-related-monthly" target="_blank" rel="noreferrer noopener">As of 2023</a>, beneficiaries who undergo a kidney transplant and would typically lose their Medicare entitlement after 36 months can now pay $97.10 per month for limited access to Part B coverage of immunosuppressive drugs for life. Once they reach age 65, they can transition to full Medicare coverage.

Medicare Advantage, also called Part C, is a private alternative to the federal government's Original Medicare that almost always bundles the Part D prescription drug coverage. Plans offer low premiums and a wide range of supplemental benefits, including vision, hearing, dental, meal delivery, over-the-counter allowances, and fitness. 
Plan providers are allowed to change the costs and benefits of their plans yearly, so beneficiaries have the option of <a href="https://www.openmedicare.com/guide/medicare-101/medicare-fall-open-enrollment-guide" target="_blank" rel="noreferrer noopener">switching plans during the AEP</a> that runs from October 15 to December 7.
Today, nearly half of all eligible Medicare beneficiaries have chosen to replace their Original Medicare with a Medicare Advantage plan. Medicare Advantage's share has doubled since 2007 and is <a href="https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-enrollment-update-and-key-trends/" target="_blank" rel="noreferrer noopener">expected to reach 61% by 2032</a>. 
 
The Medicare Advantage premium is projected to average $18 per month in 2023, down $1.52 from 2022. In 2023, the Medicare-approved maximum is $8,300 — a $750 increase from 2022, although many plans have lower out-of-pocket limits.

One growing trend seen with Medicare Advantage plans is to increase the number of supplemental benefits offered — to attract or hold clients during the Annual Enrollment Period. According to a <a href="https://bettermedicarealliance.org/wp-content/uploads/2022/07/BMA-State-of-MA-2022-FIN.pdf" target="_blank" rel="noreferrer noopener">2022 study</a>, nearly 100% of Medicare Advantage plans offer supplemental benefits, with vision, hearing, fitness, and dental care being the most common. Other benefits include over-the-counter (OTC) allowances, televisits, and delivered meals. 
Because the marketplace is maturing, some larger plan providers are <a href="https://homehealthcarenews.com/2022/10/what-six-medicare-advantage-organizations-are-offering-seniors-at-home-in-2023/" target="_blank" rel="noreferrer noopener">increasing the in-home support services offered</a>. These include companionship programs to help with activities of daily living, caregiver support programs (respite care), house calls by a licensed physician or advanced practice clinician, and in-home palliative care. If any of these services are attractive, include them as you research your plan options for this next AEP.
Medicare Advantage's hearing aid coverage includes hearing tests, hearing aids, and the fitting process. However, coverage is usually linked to in-network audiologists and contracted hearing aid manufacturers whose products are unaffordable for many beneficiaries. The FDA recently approved lower-cost hearing aids for adults with mild-to-moderate hearing loss that are <a href="https://khn.org/news/article/hearing-aids-over-the-counter-without-prescription/" target="_blank" rel="noreferrer noopener">sold over the counter</a> and are self-fitting. With time, plan providers may include them or let beneficiaries buy them with their OTC allowances.

Medicare Part D consists of private prescription drug coverage that’s usually bundled into Medicare Advantage plans, or an option that Original Medicare beneficiaries can purchase as standalone insurance. Beneficiaries can switch plans during the AEP because plan providers are allowed to change the premiums, deductibles, cost-sharing limits, and covered drugs each year. 
The Medicare Part D premium averages $31.50 per month in <a href="https://www.cms.gov/newsroom/fact-sheets/2023-medicare-parts-b-premiums-and-deductibles-2023-medicare-part-d-income-related-monthly" target="_blank" rel="noreferrer noopener">2023</a>, down $0.58 from 2022, but your actual premium will vary by insurer, deductible, copayments, and coinsurance. High-income earners will pay an IRMAA premium adjustment ranging from $12.20 to $76.40.
The maximum allowable deductible for Part D in 2023 is $505, up $25 from 2022, although the deductibles on many plans are below the maximum.
The Medicare Part D "coverage gap" is one of the various spending levels of your plan. First, you will pay your portion of <a href="https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage" target="_blank" rel="noreferrer noopener">covered drug costs</a> until you and your plan spend $4,660 in 2023, a $230 increase from 2022. Then you enter the coverage gap, during which you pay no more than 25% of the costs of branded and generic drugs. Once you and your plan pay $7,400 in 2023 for covered drugs — up $350 from 2022 — you’re in the "catastrophic" coverage level, and your copayments and coinsurance will be minimal for the rest of the year.

The Inflation Reduction Act of 2022 introduced two changes in Medicare Part D coverage effective in January 2023: 
<ul>
<li>First, the monthly <a href="https://www.kff.org/medicare/issue-brief/insulin-out-of-pocket-costs-in-medicare-part-d/" target="_blank" rel="noreferrer noopener">out-of-pocket insulin costs</a> for all Part D plans are capped, following a four-times growth of total insulin costs between 2007 and 2020. This change expands the Senior Savings Model program found in certain Medicare Advantage plans to all Medicare beneficiaries. Insulin users will pay no more than $35 for a 30-day supply of insulin, including insulin products covered under Medicare Part B as "durable medical equipment."</li>
<li>Second, all adult vaccines recommended by the CDC will be covered by Medicare Part D and will no longer have copayments starting in 2023. Flu, pneumonia, hepatitis B, and Covid-19 vaccines are usually free, but shingles and Tdap — covering tetanus, diphtheria, and pertussis — were not previously.</li>
</ul>

Medicare supplement insurance plans, also known as Medigap, are private add-ons that complement Original Medicare, covering the 20% of approved expenditures that Original Medicare does not. The ten types of standard plans rarely change in coverage year-to-year, but premiums vary widely from insurer to insurer and state to state. 
However, occasionally some plans change. Medigap Plan F — which still exists, but is no longer open to new enrollment — and Plan G have high-deductible versions that allow beneficiaries to pay lower monthly premiums. Medigap Plan K and Plan L each have a maximum out-of-pocket limit.
The Medicare supplement deductible for Plan F and Plan G has increased by $210 to $2,700 in 2023, while the Medicare supplement maximum out-of-pocket limit has increased to $6,940 for Plan K and $3,470 for Plan L — up $320 and $160 from 2022, respectively.

Beneficiaries with Medicare Advantage and Medicare Part D plans will receive an "Annual Notice of Change" from plan providers by the end of September. The notice clearly defines plan changes that will take effect in January of the following year. 
You will want to review the Medicare changes in 2023 and how they may affect: 
<ul>
<li>The doctors, hospitals, and pharmacies in your network</li>
<li>The medications on your plan's drug formulary</li>
<li>Your share of the costs, such as deductibles, copayments, coinsurance, and out-of-pocket maximums</li>
</ul>
This will help you determine if you want to stay with the same plan — in which case you do nothing — or shop for a new one during the AEP.

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