A pair of articles on Medicare Part B caught our attention last week here at the AgingOptions blog, so rather than present each story separately, we’re combining these closely-linked reports into one article. Because Medicare covers nearly 62 million Americans, we know many of our readers and radio listeners pay close attention to policy changes that can affect premiums or coverage. In these twin stories, the news seems pretty positive for beneficiaries.
Reduced Part B Premiums for Seniors in 2023
Our first article comes from CNN (you’ll find the link here). It reveals something we’ve all been hoping for since last year when Medicare Part B premiums went through the roof. This past week, President Biden announced that, for 2023, Part B premiums are actually going down. It’s not a big reduction, says CNN, but it’s the first time this has happened in more than a decade.
“Medicare beneficiaries will see their Part B premiums decrease in 2023,” says CNN. The article revealed how President Joe Biden made the announcement last Tuesday afternoon in a Rose Garden event. As any political leader would do, Biden praised Democrats for working to “protect and strengthen Medicare and lower health care costs for seniors,” while chiding Republican lawmakers for allegedly threatening Medicare and “siding with big pharmaceutical manufacturers over seniors.”
Needless to say, news of the reduction was targeted squarely at what CNN calls “the key demographic of older voters – [coming] six weeks before the midterm elections.”
Premium Cut by $5.20 – About 3 Percent
According to the CNN report, the standard monthly Part B premium will be $164.90 in 2023, a decrease of $5.20 from 2022. This is a far cry from 2022 when premiums shot up by 14.5 percent – a jump to $170.10, up from $148.50 in 2021. “A key driver of the 2022 hike was a projected jump in spending due to a costly new drug for Alzheimer’s disease, Aduhelm,” says the article. “However, since then, Aduhelm’s manufacturer has cut the price and CMS limited coverage of the drug. The agency said it would factor the lower-than-forecast spending into the 2023 premium.”
There’s also good news on the expense front. CNN reports that overall Part B spending was lower than projected, “which resulted in much larger reserves in the Part B trust fund, allowing the agency to limit future premium increases.”
And as if all that weren’t enough good news, the annual Part B deductible is also down slightly, from $233 in 2022 to $226 next year. All this is great for seniors who are projected to see a significant inflation-driven boost in Social Security benefits in 2023. Until September inflation is known, the actual increase is only a guess. However, CNN quotes the Senior Citizens League with a projection of a 2023 increase projected at 8.7 percent.
Our Second Report: Millions Face Premium Surcharges
After the good news from CNN, this story from CNBC reporter Sarah O’Brien seems at first to be less positive. O’Brien writes that millions of higher income beneficiaries face annual Part B surcharges that can triple the cost of coverage for top earners. What’s more, depending on the income you were earning before you retired, you could face those whopping surcharges even if your income dropped significantly when you quit working.
The good news: Medicare allows beneficiaries to appeal surcharges based on pre-retirement income – and that is definitely a step worth taking.
Most Recent Tax Return Determines Part B Surcharge
Here’s how O’Brien explains the issue. “For some new retirees,” she writes, “there’s an extra step needed when it comes to signing up for Medicare. That is, you may need to appeal so-called income-related monthly adjustment amounts, or IRMAAs, if your income as a new retiree is lower than when you were working.” IRMAAs are the extra charges that kick in for higher-income Medicare beneficiaries, added on top of regular monthly Part B and Part D premiums.
The kicker, says the article, is how Medicare determines your income to gauge whether IRMAA applies. “The surcharge is based on income information from your most recent tax return available — typically from two years earlier.” Since your income as a new retiree has very likely dropped during those two years, you could be hit with a hefty surcharge that you can’t afford.
Part B Surcharges Can Triple Premiums
It doesn’t take much to get hit with a surcharge. O’Brien writes that, for 2022, any individual with modified adjusted gross income of more than $91,000 will come face to face with IRMAA. That figure doubles for married couples filing jointly, to $182,000. Those with higher incomes face progressively higher premiums, as this table shows:
2022 Medicare Part B Surcharge Amounts
This table is based on adjusted gross income (AGI).
|Individual AGI||Married file jointly||Surcharge||Payment|
|$91K or less||$182K or less||$0||$170.10|
|$91K up to $114K||$182K up to $228K||$68||$238.10|
|$114K up to $142K||$228K up to $284K||$170.10||$340.20|
|$142K up to $170K||$284K up to $340K||$272.20||$442.30|
|$170K up to $500K||$340K up to $750K||$374.20||$544.30|
|$500K or more||$750K or more||$408.20||$578.30|
CNBC explains that IRMAA also affects Part D premiums with surcharges ranging from $12.40 to $77.90 in 2022, on top of plan premiums. 2023 adjustments have not been announced.
If you do face IRMAA surcharges, you’re not alone. “This year, 5.3 million Medicare beneficiaries paid Part B IRMAAs,” says the article “and an estimated 6.8 million will do so in 2023, according to the latest Medicare trustees report.”
Before Appealing IRMAA, Wait for a Benefit Determination Letter
Fortunately, you do have the right to appeal a surcharge you consider unjustified. “If you think your new income would result in paying no surcharge or at least paying less, it’s worth appealing,” says O’Brien. “However, requesting the change is generally not something you can do ahead of your Medicare coverage kicking in or before the Social Security Administration sends you a ‘benefit determination letter.’”
O’Brien spoke to Danielle Roberts of the insurance firm Boomer Benefits who explained how Medicare Part B billing works. “Often we see beneficiaries get a bill for the standard premium just after the Part B enrollment, and then they get a second bill weeks later with the addition of the IRMAA,” said Roberts. “Since the Social Security Administration is not making that initial determination in time for the IRMAA to even make its way on the first premium bill, you don’t want to be trying to ask for reconsideration of a decision that has yet to be made.”
Retirement Qualifies as a “Life-Changing Event”
O’Brien writes in her CNBC article that it’s a fairly straightforward process to document the fact that your retirement income is lower, and to ask the Social Security Administration to reconsider their assessment. “ You have to fill out a form [here’s a link] and provide supporting documents” she says. “Suitable proof may include a more recent tax return (if one is available), a letter from your former employer stating that you retired, more recent pay stubs or something similar showing evidence that your income has dropped.”
O’Brien adds, “The required form has a list of ‘life-changing’ events that qualify as reasons for reducing or eliminating the IRMAAs, including marriage, death of a spouse, divorce, loss of pension or the fact that you stopped working or reduced your hours.” So, if IRMAA knocks at your door, and your retirement income is now well below what it had recently been, you should definitely appeal the surcharge – after you have that benefit determination letter. Remember, if you need advice on these and other retirement-related questions, AgingOptions is just a phone call or mouse click away.
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(originally reported at www.cnbc.com)