You’ve probably heard about Medicare cost increases for 2023. You might already be feeling the bite, but have you considered how they will impact your coverage choices? The premiums and deductibles for Original Medicare can leave you exposed to high out of pocket costs. Understanding these expenses will help you make the right decision for Medicare Insurance. Read this guide to see how increased Medicare deductibles for 2023 will impact you.
It’s important to keep in mind that Medicare was not designed to be a free program. There are certain costs that you’re expected to pay out of pocket; it’s how the program was intended to function. These costs can be broken down into two categories:
Both categories of costs have changed for 2023.
When we talk about the costs of coverage, we mean how much you have to pay in order to be covered by Medicare. As we said earlier, this isn’t free; you have to pay some costs just to get the basic coverage.
The costs for coverage also come in two groups:
If you work during your adulthood, you’ll be paying for Part A of Medicare through taxes on your wages. One of the “payroll” taxes you pay is earmarked for Medicare Part A. You’ve surely noticed these amounts on your paystub. If you look closely at your W2 each year, you’ll see how much you’ve paid into Medicare for the year. If you’re self-employed, you’re also responsible for paying these taxes.
If you work long enough, and pay enough payroll taxes (generally ten or more years, the same requirement as for Social Security), you’ll be entitled to receive Part A benefits without paying any monthly premium. This is called premium-free Part A. It’s definitely not free, because you’ve paid thousands, or tens of thousands, of dollars in Medicare taxes during your working career. Your spouse will also be able to qualify for premium-free Part A, even if they didn’t work enough on their own, if you do.
For those who never work enough or aren’t married to someone who did, it’s still possible to enroll in Part A and pay for it. For 2023, the monthly premium for Part A is $499 or $274, depending on how much work history you have.
Medicare Part B plans work differently from Part A. Instead of paying taxes all of your working life, you’ll have to pay a monthly premium when you actually enroll. For 2023, the standard Part B premium is $171.10 per month. If you are a high earner, you will be required to pay additional premiums if your earned income exceeds certain thresholds. For single tax filers, the additional Part B premium is triggered with incomes above $91,000 for. Joint tax filers will face the higher premiums if their income exceeds $182,000. On the other hand, if you qualify for Medicaid, you may not have to pay the Part B premium at all.
Now that we’ve covered the costs for simply having Medicare coverage, we can review the costs you’ll experience when you use your coverage. How much will you pay when you see the doctor or go to the hospital?
The two kinds of costs for services and procedures are:
Medicare deductibles are amounts you have to pay out of pocket before Medicare starts helping cover the cost of your care. There are separate deductibles for Parts A and B.
For Part A, the deductible for 2023 is $1,556. If you need care that’s covered by Part A (things like hospitalization, skilled nursing care, hospice care, or home health care), you’ll pay the deductible out of pocket.
The Part A deductible is unlike any other medical deductible you’ve had before: it is possible to pay it more than once in a year. Most other health insurance deductibles are annual: you pay them only once per year.
The Part A deductible, on the other hand, is based on “Benefit Periods.” Benefit Periods are a little complicated, but you can think of them as periods of time during which you used Part A benefits. For example, if you stayed in the hospital for three days in February, all the care you received over a period of weeks or months related to that hospitalization is considered one Benefit Period. Even if you go back to the hospital two weeks later, you’ve still only experienced one Benefit Period. Your Benefit Period will end when you have gone 60 days without treatment for your initial injury or illness.
This means that if you’re sent to the hospital again in September, you’ll be in a new Benefit Period. You’ll have to pay the Part A deductible again before Medicare will help pay for this stay.
Once you’ve paid your Part A deductible, Medicare will pay your costs for a set number of days before you have to pay anything for Part A services. Paying your deductible allows you to stay:
When you have stays lasting longer than that, you’ll be responsible for paying a daily co-payment according to this schedule:
If your health requires you to stay in a facility longer than that, you’ll then face these charges:
If you’ve used up all of your lifetime reserve days, but still need to stay in the hospital, you’ll be responsible for the full cash price.
Note that these are the costs for a specific benefit period. If you had a 65 day hospital stay, lasting from January into March, you’d pay the Part A deductible and five days of co-insurance. If you go back to the hospital in September, you’d pay the Part A deductible again, but you’d also get 60 more days; you wouldn’t pay co-insurance again unless you stayed longer than 60 days again.
Part B is much simpler. You pay the Part B deductible, $233 for 2023, once. As soon as you've paid the deductible, Medicare starts paying 80% of your Part B costs. You pay the remaining 20%. You’ll pay this share of cost for the rest of the year. The following year, you’ll pay the Part B deductible again.
One other charge you might encounter is Part B excess charges. These charges can be as much as 15% of the Medicare-approved cost of a service or procedure. Excess Charges are only imposed by providers who do not accept Medicare’s pricing (known as “assignment.”) Most doctors and facilities do accept Medicare’s prices, so these charges are fairly rare. You can always find out, in advance, whether a provider will charge you Excess Charges; you can avoid them entirely by only seeing providers who accept Medicare’s prices.
These Medicare deductibles and co-insurances can really add up, especially if you have a prolonged illness or hospitalization. Since there is no cap on how much you can spend in Original Medicare, most people elect to enroll in a private Medicare Insurance plan to limit their spending. There are two options for private coverage:
Both of these options will help you pay for the Medicare deductibles for 2023, but they do this in different ways.
Medicare Supplement Insurance (also called Medigap, because this coverage helps fill in the “gaps” in Medicare) is available in ten standardized plans. The plans are identified by letter: A, B, C, D, F, G, K, L, M, and N. Each one of these standardized Medigap plans covers the gaps in Original Medicare in different ways.
Nine of the standardized plans cover the Part A deductible in some way. Only Plan A, which is the least comprehensive plan available, provides no coverage for the Part A deductible. Plans K, L, and M cover this deductible in unique ways:
The remaining Medigap plans, B, C, D, F, G, and N, cover 100% of the Part A deductible for you.
Every one of the ten standardized plans will cover the daily co-insurance for hospital stays longer than 60 days, and all of them except for Plans A and B will cover your daily skilled nursing co-insurance.
When it comes to Part B expenses, only two plans will cover the Part B deductible for you: Plans C and F. You should know that these two plans are now only available to people who became eligible for Medicare before January 1, 2020.
Every one of the available Medigap plans will provide coverage for Part B co-insurance (the 20% you’re normally responsible for).
Medicare Supplement Insurance provides excellent coverage of Medicare deductibles for 2023, as well as protection from co-insurance and co-payments.
Medicare Advantage plans will also provide help with Medicare deducibles. The way they do this will vary from plan to plan.
For one thing, a Medicare Advantage plan may have its own deductible. It might be an overall deductible, or one specific to hospitalization. In either case, the deductible is likely to be lower than the Part A deductible.
Instead of having a large deductible, Medicare Advantage plans tend to assess daily co-payments for hospitalization. For instance, you might see daily co-payments of $200 to $400 for plans in your area. Typically, these co-payments are assessed for a set number of days, generally five to seven. For a longer hospitalization, you’d pay the daily co-payment up to five or seven days; beyond that, the plan would cover 100% of your hospitalization costs.
For Part B charges, like for doctor’s visits, lab work, physical therapy, and the like, you’d also likely pay fixed co-payments. You’ll have a co-payment for each service and procedure you receive during the year.
The biggest difference between a Medicare Advantage plan and Original Medicare is that a Medicare Advantage plan has a fixed Out of Pocket Maximum (OOMP) limitation. Original Medicare doesn’t provide this protection. Under Medicare Advantage, you are protected from catastrophic medical expenses.
It’s easy to get the private coverage you need to help cover the Medicare deductibles for 2023. There are two main times to implement coverage. The first is during your initial enrollment into Medicare. For most people, this happens at age 65. It could happen earlier if you’re disabled or diagnosed with certain medical conditions. It can also happen after age 65 if you decide to delay your enrollment into Part B because you’re still working.
When you enter Medicare for the first time, you’ll be able to enroll in the private plan of your choice, too. For both Medicare Advantage and Medigap plans, you must be actively enrolled in Parts A and B. Once you’re in Original Medicare, then you can choose either a Medigap plan or a Medicare Advantage plan. You’re not allowed to be enrolled in both at the same time.
Once you’re enrolled in the private plan of your choice, you will have the opportunity to change your coverage at least once per year. The Medicare Annual Election Period (AEP) runs from October 15th to December 7th of each year. During this enrollment window, you’ll have the opportunity to do any of the following:
For Medicare Supplement Insurance, you have the right to apply for it at any time of year. However, if you are outside of your initial Medigap Open Enrollment Period, you might be subject to health underwriting, which means that you might be declined for coverage, or charged higher premiums, based on your health history. Because of this, the best time to get Medigap coverage is during your initial enrollment window.
Regardless of which private health plan you choose to enroll in, you’ll want to monitor changes to the Medicare deductibles and cost-sharing amounts each year. Use your enrollment periods to make changes as necessary.
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