Medicare Premiums and Social Security COLA for 2023 Javascript must be enabled to use this site. Please enable Javascript in your browser and try again. × Search search POPULAR SEARCHES SUGGESTED LINKS Join AARP for just $9 per year when you sign up for a 5-year term. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. Leaving AARP.org Website You are now leaving AARP.org and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply. Close
What Medicare Premiums Mean for the Social Security COLA
Rate hikes can offset gains from cost-of-living adjustment but limited impact is expected in 2023
suravikin/Getty Images Editor’s Note: The Centers for Medicare & Medicaid Services announced Sept. 27 that the standard Part B premium will go down in 2023, to $164.90 a month, and on Oct. 13 the Social Security Administration set an 8.7 percent cost-of-living increase for benefits. Read more about and the for 2023. Social Security recipients in line for the (COLA) in more than 40 years may get an additional hedge against inflation in 2023 — a smaller-than-usual change in the Medicare Part B premiums that are from millions of older Americans’ monthly benefits. Or, perhaps, no change at all. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. “I’m betting on zero,” says Alicia Munnell, director of the Center for Retirement Research at Boston College, of the prospective 2023 Part B premium rate increase. Next year’s premium won’t be known for certain until the fall, when the Centers for Medicare & Medicaid Services (CMS) will announce the 2023 rates. Munnell’s prediction is based on assessments CMS issued in the wake of 2022’s record-high hike in the Part B premium. That increase, from $148.50 a month to $170.10, was the largest ever in dollar terms. It was largely driven by CMS factoring in the expected cost of covering the new Alzheimer's drug . The rate hike had already taken effect when Biogen, the maker of Aduhelm, and CMS decided to , sharply reducing its anticipated costs. In a , CMS said that without the assumptions about Aduhelm, this year’s premium would have been about $10 a month lower. After exploring the feasibility of a rebate or midyear reduction in Part B rates, the agency said it would instead to Medicare beneficiaries in 2023. As a result, “I think this year we’re probably going to see a negligible increase, and I wouldn't be surprised if it could be zero,” says Richard Johnson, a senior fellow at the Urban Institute’s Income and Benefits Policy Center. “That’s not unprecedented.” Net benefit lags
Pet Up to 10% off pet insurance premiums for life See more Pet offers > Over the past two decades, premiums for Part B have risen by an average of about 6 percent a year, nearly three times the average annual COLA, according to a Center for Retirement Research analysis published last year. That disparity rarely erases the COLA, which is typically larger in dollar terms than the premium hike. (If the premium increase is bigger, which can occur in years with very low inflation, the of Social Security law prevents benefit amounts from going down as a result; affected beneficiaries would pay less for Part B instead.) But it does mean that what the Center for Retirement Research paper terms the Social Security “net benefit” can lag a bit behind inflation. That effect was magnified this year due to an “unfortunate confluence of events,” Munnell says — the big Medicare rate hike on one hand and galloping inflation on the other. Almost as soon as it took effect in January, this year’s 5.9 percent Social Security COLA, on the basis of inflation in the third quarter of 2021, was outstripped by for gas, food and other goods. Inflation has been running at around 8 percent to 9 percent for most of this year, cutting into beneficiaries’ buying power. “The combination of the two has just focused everybody’s mind on this issue,” Munnell says. “I’m hoping that the confluence of a very low or zero Medicare Part B premium [increase] and a huge COLA [next year] will make people feel comfortable again.” COLA outlook
The COLA is based on annual changes in the CPI-W, a subset of the broader consumer price index, during July, August and September of each year. The CPI-W tracks prices for a market basket of consumer goods and services, including energy, food and health care. Want to get more from your membership? See what you’ve been missing in just a few minutes! Andy Markowitz covers Social Security and retirement for AARP. He is a former editor of the Prague Post and Baltimore City Paper. MORE FROM AARP AARP NEWSLETTERS %{ newsLetterPromoText }% %{ description }% Subscribe AARP VALUE & MEMBER BENEFITS See more Health & Wellness offers > See more Technology & Wireless offers > See more Restaurants offers > See more Home & Real Estate offers > SAVE MONEY WITH THESE LIMITED-TIME OFFERS