Published by: AARP

Some of the biggest changes to Medicare in years take effect in 2023, with more than 65 million Americans paying lower premiums and deductibles and about to feel the effects of landmark legislation designed to bring down the runaway cost of prescription drugs.

Here’s a closer look at the biggest changes coming to Medicare in 2023.

For most Medicare beneficiaries, Part B premiums are deducted directly from their monthly Social Security payments. With Social Security’s cost-of-living adjustment (COLA) increasing benefits by 8.7 percent in 2023, Americans who are enrolled in both programs will see more money in their pockets each month.

The higher monthly charges paid by 7 percent of Medicare beneficiaries with high incomes also will decline in 2023. Part B beneficiaries with annual incomes greater than $97,000 will pay more than the standard premium — exactly how much more will depend on their income. For example, someone filing an individual tax return whose income is between $97,000 and $123,000 will pay $230.80 a month for Part B. Premiums for high-income beneficiaries start at $238.10 in 2022.

Enrollment in Medicare Advantage (MA), the private health insurance alternative to original Medicare, is likely to continue growing in 2023. Experts expect half of all Medicare enrollees to select an MA plan for the new year. Most Medicare enrollees must pay the Part B premium whether they have original Medicare or an MA plan. Some of these private plans do offer a “giveback” benefit in which the insurer covers part or all of a member’s Part B monthly premium.

Deductibles also going down

The annual Part B deductible for 2023 is decreasing to $226, a $7 decline from 2022 and the first drop in a decade.

Annual deductibles in Medicare Advantage plans and stand-alone Part D prescription drug plans vary by what plan you pick and where you live. The government does set a limit on Part D deductibles. That limit is $505 for 2023, compared with $480 in 2022.

Part A costs increasing

A fixed cost in Medicare that is going up is the Part A deductible. While most Medicare enrollees do not pay a monthly premium for Part A, which covers inpatient hospitals, skilled nursing facilities, hospice, and some home healthcare services, a deductible is charged for each hospital stay.

For 2023, the Part A deductible will be $1,600 per stay, an increase of $44 from 2022. For those people who have not worked long enough to qualify for premium-free Part A, the monthly premium will also rise. The full Part A premium will be $506 a month in 2023, a $7 increase. Whether a beneficiary must pay the full Part A premium depends on their or their spouse’s work history. Beneficiaries with Medicare Advantage plans should check with their plan for hospital charges.

Insulin copays capped

Under the Inflation Reduction Act of 2022, which includes several provisions to lower the prices of prescription drugs for Medicare beneficiaries, beginning in 2023 copays for a 30-day supply of any insulin that a Medicare drug plan covers will be capped at $35. Enrollees won’t have to pay more than $35 even if they have not yet met their annual Part D deductible. Note that not every plan covers every type of insulin.

Free vaccines

Also under the new law, vaccines recommended for adults by the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices (ACIP) will be available to Medicare recipients with prescription drug coverage free of charge.

Drugmakers face penalties for high price hikes

Another provision of the new law that will be fully effective in 2023 requires pharmaceutical manufacturers to pay a rebate to Medicare if they raise the prices of their drugs more than the rate of general inflation.

Beginnings of price negotiations

By Sept. 1, Medicare will announce the first 10 Part D drugs that under the new law will begin a first-ever process in which Medicare will negotiate prices with drugmakers, Seshamani said, and that “will have a huge impact for providing more affordability for drugs for people with Medicare.”

Enrollment access improved

Beginning in January, as long as people eligible for Medicare enroll during official enrollment periods, they won’t have to wait for their coverage to take effect. Also under a new federal regulation, more special enrollment windows have been established, including for people who, through no fault of their own, didn’t sign up when they were first eligible.

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It’s not always easy, but it’s certainly possible

If you enrolled in a Medigap policy during your initial six-month window, your plan is guaranteed renewable every year. And since Medigap policies provide standardized coverage regulated by the government, you don’t need to worry about surprise changes to your plan each year. However, if your healthcare needs or income change, you may want to switch plans at some point.

If you’re interested in changing Medigap plans, keep in mind:

• Unlike with Medicare Advantage plans, you aren’t guaranteed the right to enroll in a Medigap policy outside your initial six-month enrollment window. You can still be denied a new policy, even if you’re already enrolled in a Medigap plan.

• When you switch Medigap plans, your new insurer has the right to make you wait up to six months before providing you any benefits that weren’t covered by your old policy.

• Just because the government discontinues your Medigap plan doesn’t mean you need to find a new one. Generally, your plan is still guaranteed renewable without any changes to your coverage, even if it isn’t available to new enrollees.

• You can attempt to switch Medigap plans at any time—you don’t need to wait for open enrollment.

• When you switch Medigap plans, you can take advantage of a 30-day “free look” period. For the first month, you’ll pay premiums for both your old and new Medigap policies. If you find the new plan isn’t for you, you’ll be able to cancel it and go back to your old plan.

For the most part, you’ll have an easier time downgrading Medigap plans—going from a plan with more benefits to one with fewer—than the other way around. It’s also worth checking your local regulations around Medigap. Some states enforce stricter protections for people trying to switch Medigap plans.

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WHAT TO THINK ABOUT at RENEWAL TIME

What to consider when holiday shopping includes searching for new health coverage

Open enrollment happens every year from October 15 to December 7. And while you may be pleased with your Medicare coverage. It’s still important to take time to review your benefits and consider whether you want to change plans for the coming year. While you may not like the idea of having to compare plans annually (shouldn’t once be enough?), doing so could save money–and more than a few headaches.

As renewal time draws near, focus on the three C’s: coverage, costs, and care. That is, make sure your healthcare needs (including drugs) are covered, at a price you can afford, from providers you trust. Simple, right?

What’s Not Changing

The benefits you receive from Original Medicare won’t generally change from year to year because they’re determined by the government.  Likewise, if you have a Medigap policy, your benefits won’t change, either. Medigap plans themselves are also standardized by the government, even though they’re provided by private insurers. Your premiums for Original Medicare and Medigap won’t go up beyond the rate of inflation unless:

• Your income Goes Up

A higher-income could affect whether you pay an income-related monthly adjustment amount for Part B.

• Your Medigap Policy Premium Is Based on Attained-Age

If so, your premium will go up each year on your birthday—but if you did your homework, this increase shouldn’t come as a surprise.

Original Medicare and Medigap policies can be used anywhere in the country. This means that you’ll still be covered if you move or you’re a winter traveler, no matter where you are. There’s no need to renew your Original Medicare and Medigap plan each year. Your coverage will continue unchanged as long as you pay your premiums.

What Can Change

Part D plans and Medicare Advantage plans make changes reasonably frequently. Any changes for the coming year must be detailed in your plan’s Annual Notice of Change (ANOC), which you’ll receive by the end of September. If you haven’t received it by the beginning of October, call your plan and request one immediately, so you’ll have plenty of time to review it.

There may be changes to:

• Your Part D formulary
• Your Part D pharmacy network
• Your MA plan’s provider network
• Your MA plan’s policies
• Your premiums of deductibles for MA or Part D

Your plan willingness to grant you an exception for specific drug coverage can also change.

CHANGING YOUR COVERAGE

Just because your plan made an exception to cover a drug outside of its formulary this year doesn’t mean it has to do so next year. Call your plan to ask whether or not you’ll need to reapply for the exception. Suppose plan administrators are going to make it difficult to get the drugs you need. In that case, you may be better off switching plans while you have the opportunity.

Back to the Plan Finder

Using Medicare’s Plan Finder (medicare.gov/find-a-plan)—the online tool provided by the government that helps you find a private insurer—can seem tedious at first. However, you’ll likely find that the process gets easier as you get used to it. Even if it doesn’t, using it is still worth the time and effort cause even if your plan’s ANOC doesn’t detail any changes that could affect you. Other plans may have made changes that could make them a better option. For example, a new insurance company could have entered your area, offering a comparable plan to yours but with a much lower premium or deductible. If you don’t bother to check the Plan Finder, you may never hear about new, more attractive options.

Switching from Medigap to Medicare Advantage

Suppose until now you’ve had Original Medicare with a Medigap plan. In that case, you may be considering switching to a Medicare Advantage plan for additional benefits or to limit your out-of-pocket expenses. Be careful if you decide to take this step because you may not be able to get it back once you leave Medigap.

Here is what happens when you drop a Medigap policy:

• Your first 12 months in your new MA plan are considered a “trial period.” You can still switch back to your original Medigap plan with the same benefits and the same government protections that you had previously during this trial period.
• This special protection only applies the first time that you switch from Medigap to Medicare Advantage. And it only applies if you already had a Medigap policy. You can’t take advantage of the trial period if you’re simply going from Original Medicare (with no Medigap) to MA.
• After a 12-month trial period, you no longer have the guaranteed right to a Medigap plan and maybe denied one in the future. However, you’ll still be able to switch between MA plans.

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