The annual Medicare open enrollment period for the roughly 64 million Americans enrolled in the program begins Saturday. The usual barrage of advertising heralded the arrival of this nearly two-month stretch, which runs every year from Oct. 15 through Dec. 7. Any coverage changes made during this period will go into effect Jan. 1, 2023.
During the annual open enrollment period participants enrolled in traditional Medicare can switch to a Medicare Advantage plan, and Advantage members can switch to a different plan or back to original Medicare.
Surveys show that only about three in 10 people switch plans during the open enrollment period. But just assuming you should stick with your current plan could prove costly, since benefits can and do change every year, particularly for people enrolled in a Medicare Advantage plan.
When you receive the annual “notice of change” for your plan in the mail in the fall, you should pay attention, says Lori Gross, lead financial advisor at Outlook Financial Center.
“One thing I remind my clientele is to make sure their doctor is still on [their plan], and that all their drugs are still covered,” she says. Medicare’s Plan Finder tool lets you compare options and their respective costs. “The pharmaceutical industry changes every year, and pricing changes. They need to verify that everything’s still covered,” Gross says.
If you’d like assistance, you can call Medicare at 1-800-Medicare or contact your local State Health Insurance Assistance Program (SHIP) for unbiased advice.
New changes from the Inflation Reduction Act
The Inflation Reduction Act passed by Congress includes a number of provisions to lower the cost of healthcare for Medicare recipients. While some of these don’t kick in until 2024 or later — such as a new $2,000 out-of-pocket cap on prescription drugs that begins in 2025 — there are a few notable changes beneficiaries will see in 2023.
Most diabetics taking insulin have coverage through Medicare’s Part D program, which covers prescription drugs. Their cost will be capped at $35 a month beginning Jan. 1, and they won’t have to pay a deductible. (For Medicare beneficiaries who use an insulin pump categorized as durable medical equipment and covered under Medicare Part B, this change kicks in July 1.) There is also increased coverage for kidney transplant patients more than 36 months after their transplant who have to take immunosuppressants.
There are new start dates for Medicare enrollees beginning Jan. 1, 2023. Your initial enrollment period can be the three months before you turn 65, the month you turn 65, or the three months afterwards. If you sign up during the month you turn 65 or in the following three months, your coverage starts the first day of the month after you sign up.
What’s new for Medicare Part A
The deductible for Medicare Part A — the part that provides coverage for hospital visits — is going up for 2023. The new deductible for hospital admissions will rise to $1,600 in 2023, up from $1,556 this year. While most people don’t pay premiums for Medicare Part A, those who do will also see those premiums rise based on their work history.
What’s new for Medicare Part B
Notably, the standard monthly premium for Medicare Part B will drop to $164.90 in 2023, a decrease from this year’s $170.10.
“The fact that Part B premiums are decreasing — that affects everybody. That will stand out for people,” says Louise Norris, a health policy analyst for medicareresources.org. This is the first year-over-year decrease since 2012 the monthly premium has gone down, Norris adds. “This is the first time in over a decade — that’s good news.” The annual Part B deductible is also going down by a small amount, dropping by $7 to $226, from $233.
The brackets for assessing surcharges — formally called income-related monthly adjustment amounts or IRMAA — for high-income beneficiaries are going up.
Those surcharges apply for single tax filers with modified adjusted gross income of more than $97,000, or for couples with more than $194,000 of joint income. These figures are being increased from $91,000 and $182,000, respectively.
These surcharges affect only about 7% of Medicare Part B beneficiaries, but Gross says they can sometimes catch people unawares. “IRMAA completely, completely confuses people," she says, because it uses the income you reported on your IRS tax return two years prior. Not being aware of this nuance means an unpleasant financial surprise for new retirees just making the transition from a high salary to a lower fixed income.
What’s new for Medicare Advantage Plans
Medicare Advantage — also called Part C — plans are also seeing average premiums decline. According to the Centers for Medicare & Medicaid Services, the projected average premium will drop by nearly 8% to $18 per month next year.
These private-sector plans, which are approved by the government but administered by for-profit health insurance companies like Aetna, UnitedHealthcare and Humana, pair traditional Medicare-style benefits along with drug benefits (Part D in traditional Medicare parlance) into a single product.
It’s common to see advertising for no-premium Medicare Advantage plans, but participants enrolled in Medicare Advantage still have to have Part A and Part B — and pay the Plan B premium — to join a Medicare Advantage plan.
Medicare Advantage plans are becoming more popular, with nearly 32 million estimated enrollees as of next year. People find this alternative to traditional Medicare appealing because plans may offer additional benefits not covered by original Medicare, such as vision and dental coverage, and some cap out-of-pocket costs.
The drawback of Medicare Advantage plans is that you generally have to go through your chosen plan’s network of providers for treatment, with out-of-network coverage limited or unavailable. Different plans cover different prescription drugs as well, so experts advise people trying to sort through the options to see if the medications they take and the doctors — particularly specialists — are in a particular plan’s coverage network. (And, as Gross pointed out, this is why it’s important to check your plan’s coverage every year.)