Shocking Medicare Changes That Are Coming Our Way In 2023
You may be wondering what surprises await us in 2023 regarding Medicare.
After a thorough investigation, we’ve managed to obtain some vital information that will definitely shed light on the matter.
Sources say that for 2023, the Social Security Administration, or SSA for short, announced the following:
A number of 70 million Social Security and Supplemental Security Income or SSI recipients will definitely witness a cost-of-living adjustment or COLA of 8.7%. The increase is quite significant, taking into consideration that last year, it was 5.9%.
Historically speaking, this is the biggest rise since all the way back in 1981.
41 years ago, the COLA was a whopping 11.2%.
A rough breakdown
So, the facts are clear. These abnormally large Social Security COLAS are definitely out of the ordinary.
As a comparison, before the year 2021, in the span of 10 years, the benefits averaged an increase of just 1.7%.
But let’s talk dollars. What does this mean? Well, the 2023 Social Security COLA indicates a $146 per month rise in benefits to the standard recipient.
Just like in past years, SSI beneficiaries will start getting their initial increase on December 30th, 2022.
Standard Social Security recipients will receive their first check in the month of January, 2023. Of course, the exact date depends on the date of birth of each person.
In December 2022, the Message Center of your “my Social Security account” will be where you will receive your personal Social Security COLA notice. But it can also arrive by regular mail.
Given the Consumer Price Index’s (CPI) projection of record-breaking inflation in 2022, this year’s increase is not entirely unexpected. Every year, the CPI, a measure of changes in consumer prices for a market basket of products, is used to determine the SS and SSI COLA.
According to recently released information from the Bureau of Labor Statistics (BLS), the Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.4% on a seasonally adjusted basis in September. The September all-items index climbed to 8.2% YOY before adjustment.
What role does Inflation play?
Since the Social Security COLA increased significantly this year, inflation the prior year also saw a notable rise. This is due to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), another indicator of inflation, from which the Social Security COLA is generated and linked.
More specifically, the COLA and inflation rates for the next year are equal to the difference between the CPI-W for the third quarter of the previous year and the third quarter of the current year.
As an example, the COLA for beneficiaries of Social Security in 2023 is 8.7%, which is the difference between the CPI-W for the third quarter of 2021 and the third quarter of 2022.
The costs of Medicare Part B and Part A in 2023
In contrast to the previous year, the 2023 Medicare Part B rates would be somewhat lower, as revealed on September 27, 2022.
The average Part B beneficiary’s payment will be $164.90 in 2023, down from $170.10 in 2022 by $5.20.
This is crucial because Social Security earnings are often used to pay Medicare premiums, which means that if those costs had increased, the COLA’s effects would have been lessened.
For Medicare Part A, hospital coverage, the majority of patients do not pay a premium, but they are still responsible for deductible and co-insurance fees. In 2023, the Part A deductible will increase by $44 to $1,600 from 2022. The Part A co-insurance has increased as well. For instance, the cost for the 61st through 90th day of hospitalization will be $400 per day, an increase of $11 over the rate in 2022. There are also more Medicare rate spikes.
What are the additional Social Security charges for 2023?
Social Security beneficiaries will experience the additional adjustments listed below starting in January 2023, in addition to the 8.7% benefit increase for 2023:
-In 2022, we will see an increase to $160,200 from $147,000 to the maximum earnings subject to the Social Security tax.
– Working claimants who are under full retirement age will be able to earn a maximum of $21,240 before their benefits are reduced, up from $19,560 in 2022.
– The maximum monthly Social Security payout for a worker reaching full retirement age in 2023 will rise to $3,627 from $3,345 currently.
– In 2023, the average Social Security payout will rise to $1,827 from $1,681.
-When it comes to disabled workers, they will witness a rise from $1,364 each month to $1,483.
-And finally, it will take up to $1,640 to earn one Social Security credit, an increase of $130 from 2022.
But it won’t be all about increases.
What will remain the same in 2023?
When it comes to the Social Security tax rates, they will not change in the upcoming year. For employees, it will remain at 6.2%, compared to the 12.4% that is aimed at self-employed citizens.
Those individuals that earn over $200,000 or married couples that earn over $250,000 filing jointly, will still pay the same amount of an additional 0.9% in Medicare taxes.
What’s the conclusion for all of these changes?
The goal of the Social Security COLA was never to give beneficiaries a raise. Its sole intent was (and still is) to partially offset the rise in prices for goods and services from the prior year.
Of course, the system is not perfect by any means. Especially when it doesn’t take into account the rise of prices in the future or even the costs that are linked to different government programs, such as Medicare.
Millions of beneficiaries will enjoy a boost in monthly payouts. If there is no rise, inflation results in a wage reduction. The Medicare Part B premium reduction for this year is an additional benefit. This will help people on SS and SSI even more to maintain their quality of life when combined with the COLA.
Now let’s take a look at what we’ve learned regarding what’s going to change in the upcoming year.
In 2023, we will witness the biggest increase when it comes to Social Security COLA, since 1981. A massive 8.7%.
The normal recipient will see an increase of over $146 per month, in comparison to 2022.
Because the sole intention of the SS and SSI COLA is to keep up with inflation, it is not a raise.
The value of the 2023 COLA might be further diminished by the rate of inflation in 2023.
In contrast to the moderate increase in Part A deductibles and coinsurance rates that was announced on September 27, 2022, Medicare Part B premiums have been reduced somewhat for 2023.
Now, what do you think about the upcoming changes? Are you ok with them, or are they not what you would have expected them to be?
Of course, depending on your perspective, you can see them as good news or bad news. It can all be subjective.
We’d love to hear your thoughts on the matter. And if you have any questions regarding the upcoming Medicare changes, feel free to fill out the contact form below to get access to a free, no-obligation consultation to get your questions answered today.
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