Available Mon-Fri, 9am-6pm ET  |  Call 800-970-1964

Senior woman calculating healthcare expenses using a calculator | budgeting for Medicare Part A and Part B premiums.

5 Ways to Budget for Medicare Part A and Part B Premiums in 2023

How do you budget for Medicare Part A and Part B premiums? Like many people, you may likely forget budgeting for healthcare when estimating your retirement expenses. The Federal government manages both Medicare parts A and B – often referred to as original Medicare – as a form of health insurance. 

Hospitalization is covered by Part A, while Part B covers outpatient medical care and doctor visits. Although Part A is available at zero cost to you at age 65, it does come with scaling co-pays and deductibles for each benefit period. 

Part B premiums will run $164.90 (2023) monthly, at a minimum, and also come with an annual deductible. Part B also covers only 80% of medically necessary charges from a provider who accepts Medicare.

Premiums, deductibles, and out-of-pocket expenses are all still a part of paying for healthcare after 65. Therefore, it only makes sense to budget for your healthcare costs in retirement.

The Premiums and Deductibles for Medicare Part A and Part B Premiums in 2023

PART A

  • The deductible a patient will pay if admitted to the hospital in 2023 is $1600.
  • $400 will be paid daily as a co-insurance fee for the 61st through 90th day of hospitalization, and then $800 per day for days 91-150.
  • For beneficiaries in skilled nursing, the daily co-insurance will be $200 for 21 through 100 days of extended care services.
  • Most Medicare coverage beneficiaries do not have to pay Part A premiums if they have worked in the US for ten years.

PART B

  • According to the social security act, Medicare Part B enrollees will pay $164.90 for 2023 as their standard monthly premium.
  • The yearly deductible for all Medicare Part B recipients is $226.
  • In January 2023, patients with three years post-kidney transplant will no longer be eligible for full Part B health coverage.
  • Part B coverage for immunosuppressive drugs will total a premium of $97.10.

Medicare Supplements are one way to get additional coverage that will pay for costs that remain after Parts A and B payout. Medicare Advantage is offered by private insurance companies to replace Original Medicare Part A & B and becomes your primary insurance. All come with a variety of premiums, co-pays, and network requirements.

Consider your financial, medical, and personal needs before choosing a healthcare plan or service.

5 Ways to Help Budget for Medicare Part A and Part B Premiums in 2023

Here are ways to help you budget for your Medicare Part A and B premiums in 2023.

1.    Understand the Key Terms of Your Healthcare Insurance

A Medicare card on a table with coins on top of it - Understanding the terms of your health insurance.

Most of the healthcare insurance plans in the US are consistent when it comes to crucial terminology. Below are the primary healthcare insurance terms:

  • Premium – the total amount paid to the insurance company for your health insurance plan
  • Deductible – the amount you must pay for healthcare services before starting your insurance plan
  • Co-insurance – a fixed percentage of the money you must pay for your medical bills
  • Co-payment – a fixed rate that you often pay while visiting the doctor or for a particular medical service
  • Health savings account (HSA) – savings account often linked to low premium health insurance plans to pay for medical expenses that high deductible health plans don’t cover
  • Flexible spending account (FSA) – you will be eligible for specific tax advantages in the US if you have a flexible spending account

Those who paid Medicare taxes while working do not have to pay a Part A monthly premium. For Part B, you will have to pay your premiums monthly. Medicare Part A requires co-payments for Hospitalization days 61-150. Regarding HSA, both premiums apply, but FSAs do not cover Medicare premiums. Ensure you read your summary of benefits before you commit to any plan.

2.    Calculate Your Total Healthcare Expenses

A Kaiser Family Foundation study in 2016 found that the average Medicare beneficiary’s annual out-of-pocket costs were $5,460 (about $6,800 in 2022 dollars). An AARP Public Policy Institute Study backed that up with a reported $5,801 spent annually in 2017, which translates to $7,076 in 2022.

By 2030, this annual amount could likely increase by another $2,000 to $4,400. You will need to adjust these numbers up or down depending on your current health and expected longevity.

3.    Visit Your Physician Regularly

Close up mature woman wearing medical face mask listening to doctor during appointment in hospital office  consulting older patient about treatment, elderly healthcare

To avoid huge medical bills in the future, visit your doctor regularly. A physician can help identify any health issues early and prescribe treatment that can reduce your healthcare expenses in the future. Maintaining a healthy diet and exercise regimens can also keep you healthy and lower your medical costs.

4.    Don’t Be Caught Off Guard

As previously stated, healthcare costs are expected to increase going forward. To that end, ensure you make a category for healthcare costs in your budgeting process. Understand the different parts of Medicare and their premiums, deductibles, and co-pays.

Be honest regarding your current health, your family history, and any other factors that may influence your health and wellness in the future. Understand the intricacies of Medicare Supplement policies and drug plans and how they can add or decrease your total out-of-pocket expenses. 

5.    Manage Distribution Taxes Efficiently

Even though the Part B premium is voluntary, high-income earners pay a higher rate. If your annual income was more than $97,000 as an individual or $194,000 as a couple in 2021, a surcharge will be added to your Part B Premium in 2023. Consult a tax and retirement planner to determine if you could reduce your taxable income through investments like Roth IRAs.

Plan Effectively

Are you looking to understand your Medicare coverage, additional coverages available to you, and how much you need to plan for your healthcare costs? That’s why we are here. For over 40 years, we have been helping seniors navigate Medicare in all 50 states.

Contact us or connect with us on Facebook, Pinterest, YouTube, or Instagram so that we can save you money and time by providing you with the most comprehensive coverage options.

Medicare Mama Pink

ABOUT THE AUTHOR

Sylvia Gordon

Sylvia Gordon, also known as Medicare Mama, is an expert on all things Medicare and Social Security. She is the 2nd Generation here at The Medicare Family as well as a member of the Forbes Finance Council. Sylvia has served on the advisory boards of major insurance companies like United Healthcare, Cigna, Anthem, Globe Life, and Aetna Senior Supplemental Benefits. 

In her free time, she can be found answering questions on TikTok Live, taking care of her many animals (dogs, goats, peacocks, chickens), and reading a good book. Learn More.

Get Medicare Help Now