For many retirees, your overall retirement plan addresses rising healthcare costs—and Medicare helps cover some of those expenses. Medicare coverage is complex, and with recent legislative updates and other changes, there are shifts to Medicare coverage for 2023 that are important to understand.

Let’s take a look at some of those changes, and what it means for you.

2023 Medicare Changes

Medicare coverage is divided into 4 parts, each with its own coverages and premium payments. Below is an overview of the 2023 Medicare changes broken down by each part.

Part A

Also known as hospital insurance, Medicare Part A covers inpatient hospital care and some nursing care coverage. Keep in mind that Medicare does not usually cover long-term care costs, so most retirees will have to plan for this expense separately.

In 2023, the deductible and coinsurance requirements for Part A services will increase to:

• $1,600 per benefit period for the first 60 days of inpatient hospital care
• $400 per day for days 61-90 spent in a hospital
• $800 for lifetime reserve days
• $200 per day for days 21-100 spent in a skilled nursing facility

Part B

Part B is medical insurance and covers things like preventative care, doctor visits, and other outpatient services. You must pay a monthly premium for Part B coverage. Together, Parts A and B are known as Original Medicare.

Thanks to lower-than-expected spending on Part B services in 2022, the premium for this coverage will be dropping by 3% in 2023. Beneficiaries enrolled in Medicare Part B can expect to see the standard monthly premium drop to $164.90, down from $170.10 in 2022. Annual deductibles will also drop to $226, down from $233.

Keep in mind that if your modified adjusted gross income (MAGI) from 2021 exceeds certain levels, you will be subject to an additional premium charge called the Income Related Monthly Adjustment Amount (IRMAA). For 2023, the IRMAA additional premiums are:

Part C

Part C is an alternative to Original Medicare that is offered through Medicare-approved private companies. It bundles coverages offered by Part A, Part B, and often includes Part D as well. There are no mandated changes to Part C coverage or costs for 2023.

Part D

This is an optional private insurance add-on that includes drug coverage. The 2023 deductible for Part D is $505, up from $480 in 2022.

The Inflation Reduction Act has created several important changes to Medicare Part D, some of which are slated to take effect in 2023. These include:

• Caps on insulin costs: As of January 1, 2023, all Medicare Part D plans will have a $35 monthly cap on what beneficiaries will pay for insulin. Additionally, deductibles will not be required for this cap to take effect.

• Improved vaccine coverage: Recommended vaccines will be fully covered under Medicare Part D starting in 2023.

• Catastrophic coverage coinsurance: Currently, there is a 5% coinsurance charge for catastrophic coverage. This charge will be eliminated starting in 2024.

• Capping out-of-pocket costs: In 2025, beneficiaries will have a $2,000 annual cap on Part D out-of-pocket expenses.

• Price negotiation: Starting in 2026, Medicare will be able to directly negotiate the price of some prescription drugs.

Lastly, the IRMAA additional premiums also apply to Part D coverage.

How We Can Help

At Cypress Wealth Services, we want to bring clarity and confidence to your financial life, especially when it comes to understanding Medicare, since it’s an important facet to your retirement financial plan. If you want to review these changes in more detail, or review any aspect of your financial plan, call us at 866.888.6563 or contact one of our offices today.

About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high-net-worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services serves a broad range of client needs using their experience and expertise to act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring the wealth and legacy a person has already built to their loved ones. With financial advisors in Palm Desert, CA, Tustin, CA, Athens, GA, and Anchorage, AK, the firm serves clients across the country with Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit www.CypressWS.com or call 760.834.7250.