Doctor reviews paperwork with senior patient

After a year of unprecedented health care price jumps and rampant inflation, Medicare beneficiaries are finally getting some good news. The Part B premium is set to decrease in 2023 from $170.10 to $164.90, the U.S. Centers for Medicare and Medicaid Services announced on Tuesday.

This is the first time since 2012 that the Part B premium has decreased from one year to the next, offering beneficiaries some much-needed relief following a year of dramatically increased expenses. Consumer prices were up more than 9% year-over-year in June 2022, according to the U.S. Bureau of Labor Statistics, as inflation took off throughout the year.

On top of that and rising health care costs, beneficiaries had also faced a historic leap in the Part B premium in 2022, due in large part to the uncertainty surrounding Biogen’s Alzheimer’s drug, Aduhelm.

While the 2023 decrease does not lower the premium to near its pre-2022 level, it will put about $62 back in each beneficiary’s pocket over the course of the year.

Why the Part B Premium Decrease is Happening

Any premium decrease is always a win for beneficiaries, especially since the Part B premium has not shrunk in a decade.

But the circumstances that led to this year’s drop may be less of a sign of things to come than a correction from last year, and beneficiaries may still be in a worse place financially than they were several years ago.

The 14.5% increase in 2022 was largely a preemptive move to set off the potential costs of Aduhelm. The Alzheimer’s drug had recently been approved by the FDA and was set to become a historically significant expense for the Medicare program.

According to an article from the New York Times, the drug was originally set to cost $56,000 per year for a single patient. With more than 6 million Americans living with Alzheimer’s according to the Alzheimer’s Association’s facts and figures, Aduhelm could have cost Medicare a staggering amount of money given that most people with Alzheimer’s are seniors and eligible for Medicare.

The premium increase was a way to potentially combat that cost. The 2021 Medicare Trustees Report projected a $10 increase to the Part B premium in 2022 when not considering Aduhelm, meaning that as much as $12 of the actual increase that year was set aside specifically to help pay for the drug.

But the dramatic cost burden that Medicare prepared for never came. Despite being approved by the FDA, questions surrounded Aduhelm after clinical trials raised safety concerns and showed unclear evidence of whether it was an effective treatment, according to the New York Times.

CMS eventually opted to not offer coverage for the drug, instead restricting coverage to those participating in clinical trials.

Due to these circumstances, a Part B premium decrease of some sort was widely expected this year since the dramatic rise in cost in 2022 was largely due to the anticipation that Aduhelm would be covered. Lower-than-projected spending on other Part B items and services played a role in the lower premium as well, according to CMS.

A New York Times article shares that Biogen is now working on a new Alzheimer’s drug which, just this month, showed that it may slow cognitive decline. It is unclear what the cost implications would be if this drug was eventually approved by the FDA and covered by Medicare.

Other Medicare Cost Changes

Along with the shrinking Part B premium, CMS released its other Part A and B cost updates for 2023. The Part B deductible is set to decrease as well, dropping from its 2022 figure of $233 to $226.

But elsewhere, costs are rising for beneficiaries. The Part A inpatient hospital deductible will rise from $1,556 to $1,600. Coinsurance for inpatient stays of varying lengths is also rising.

Type of Stay 2022 Part A Coinsurance 2023 Part A Coinsurance
61 to 90 Days $389 $400
Lifetime Reserve Days $778 $800
Skilled Nursing Facility $194.50 $200

The Part A premium will increase as well by $7 to $506 in 2023 for those who have less than 30 quarters of coverage. The premium will be $278 for those with 30 to 39 quarters of coverage. But most beneficiaries qualify for premium-free Part A and do not have to pay this.

CMS also released the updated Part D income-related monthly adjustments, which increase the Part D premium for those who are considered high-income beneficiaries. Only about 8% of beneficiaries are expected to be affected.

The adjustments begin for beneficiaries filing individual tax returns of more than $97,000 and those filing joint tax returns greater than $194,000.

Part D Income-Related Monthly Adjustments

Individual Tax Return Amount Joint Tax Return Amount Income-Related Monthly Adjustment
$97,000 to $123,000 $194,000 to $246,000 $12.20
$123,001 to $153,000 $246,001 to $306,000 $31.50
$153,001 to $183,000 $306,001 to $366,000 $50.70
$183,001 to $499,999 $366,001 to $749,999 $70.00
$500,000 or more $750,000 or more $76.40

CMS also announced that the projected average premium for Medicare Advantage plans in 2023 will be $18, down from $19.52 in 2022.

The 2023 deductible information for Medigap policies F, G and J was also announced. The deductible for those three plans will be set at $2,700, a slight rise from the 2022 figure of $2,490.

High deductible Plan F is only available to beneficiaries who became eligible for Medicare before 2020. High deductible Plan G is available to those who became eligible on or after Jan. 1, 2020.