What is the Part D deductible for 2023?

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Medicare beneficiaries may see their premiums for prescription drug coverage dip in 2023, although their deductibles might rise.

The average basic monthly premium for Medicare Part D is projected to be about $31.50 next year, down 58 cents, from $32.08 in 2022, according to the Centers for Medicare & Medicaid Services.

Meanwhile, the maximum deductible next year for drug coverage is projected to rise to $505, up from $480 this year, according to information released by the agency several months ago. Not all plans come with a deductible, or they may have one that is much smaller than the maximum allowed.

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Roughly 49 million Medicare beneficiaries have prescription drug coverage. Some get it as a stand-alone Part D plan alongside original Medicare (Part A hospital insurance and Part B outpatient care coverage).

Other individuals enroll in Advantage Plans that come with drug benefits. And it's common to find such plans that come with either a small monthly payment or a low one (excluding your Part B premium).

"We should continue to see lots of zero- or low-premium Advantage Plans with enticing benefits next year," said Danielle Roberts, co-founder of insurance firm Boomer Benefits.

Be aware that deductibles and premiums can both vary widely from plan to plan, as can the specifics of what prescription drugs are covered and how much you'll pay for them. (Congressional Democrats are aiming to pass a bill that would allow Medicare to negotiate the price of some drugs, as well as cap your out-of-pocket cost for prescriptions at $2,000 per year.)

In addition, some Medicare beneficiaries pay more for Part D premiums because their income is high enough to generate so-called income-related monthly adjustment amounts, or IRMAAs. Those extra amounts also apply to Part B premiums.

In 2022, those monthly surcharges kick in for single tax filers at $91,000 and for married couples filing joint tax returns at $182,000. There are some strategies you can use to try avoiding IRMAAs or reducing them.

Medicare's open enrollment period — when you can sign up for an Advantage Plan and/or drug coverage for 2023 — opens Oct. 15 and runs through Dec. 7.

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If you're a Medicare beneficiary, now's the time to evaluate your prescription drug coverage for 2023.

In addition to checking during Medicare's annual fall open enrollment whether you can get a more cost-effective plan, you should be aware of some legislative changes taking effect next year that may reduce how much you pay out of pocket for your coverage.

"It's a quality-of-life issue," said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans. "Saving money on medications means there's more Social Security money left for other necessities in life."

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Medicare's enrollment period opened Oct. 15 and runs through Dec. 7. Beneficiaries can make changes to their coverage during this period.

Prescription drugs are generally delivered through Medicare Part D. Of the estimated 64.5 million people enrolled in Medicare, about 50 million have such coverage, through either a standalone Part D plan or an Advantage Plan — both of which are offered by private insurance companies. Advantage Plans deliver Part A (hospital coverage) and Part B (outpatient care) and usually Part D.

Here are some changes you may notice next year, as well as some tips for what to look for when evaluating your options for 2023.

Insulin costs will be capped

Some changes to prescription drug coverage, enacted as part of the Inflation Reduction Act, take effect next year. This includes a monthly $35 cap on cost-sharing for insulin under Part D, which will start on Jan. 1. Some plans may already offer a $35 cap.

Part D deductibles — which vary from plan to plan but cannot be more than $505 in 2023, up from $480 this year — also won't apply to the covered insulin product. For beneficiaries who take insulin through a traditional pump (which falls under Part B), the benefit starts July 1.

"Some of my clients had to choose between buying food and buying insulin [or] rationing the insulin to make it last longer, thereby taking much less than the prescribed amount," Gavino said. "This was dangerous, and now they can use the right amount they need to live."

100% coverage for recommended vaccines

Additionally, there will no longer be any cost-sharing for recommended inoculations under Part D beginning Jan. 1, including for the shingles vaccine. 

"In the past, many people paid quite a bit for the shingles vaccine because of Part D's rather high deductible," said Danielle Roberts, co-founder of insurance firm Boomer Benefits.

"The vaccine usually was a covered medication, but because they hadn't yet satisfied the deductible, they spent quite a bit for it," Roberts said.

Other provisions that are intended to reduce Part D spending take effect in later years. This includes eliminating an existing 5% coinsurance in the so-called catastrophic phase of coverage, which takes effect in 2024, and capping beneficiaries' annual out-of-pocket Part D spending at $2,000, which takes effect in 2025. Currently, there is no out-of-pocket limit, regardless of whether you get your coverage as a standalone Part D option or through an Advantage Plan.

Medicare also will be able to start negotiating the price of some drugs beginning in 2026.

Your plan could change its list of covered drugs

As for choosing your 2023 coverage: While you aren't required to take any action during open enrollment — your current coverage generally would continue into next year — plans often change their list of covered drugs and the price of them.

Additionally, each plan assigns individual drugs to different tiers, with the first tier generally being the least expensive and the fifth costing the most. From year to year, various drugs may move from one tier to another in any given plan — which makes it important to check where your prescriptions fall for 2023.

Also be sure to look at the pharmacies included in the plan. Some are "preferred" — meaning your medicine will be less expensive there than at a "standard" pharmacy.

"The pharmacy you use can really impact the price of what you pay for your prescriptions," said Ari Parker, a senior advisor at Chapter, a Medicare advisory firm.

Beneficiaries with higher income pay more for coverage

The average monthly premium for standard Part D coverage next year is projected to be $31.50, compared with $32.08 in 2022, according to the Centers for Medicare & Medicaid Services. However, be aware that if your income is above certain limits, you will be subject to so-called income-related monthly adjustment amounts, or IRMAAs, which are in addition to any premium you pay (see chart below). Part B also comes with those extra amounts.

Your tax return from 2021 is generally what would be used to determine whether you're subject to those surcharges in 2023. You can ask for a reconsideration if your income has dropped since then.

Getting prescription drug coverage through Medicare is optional. However, if you fail to sign up when you first qualify for coverage at age 65 and change your mind later, you'll face a lifelong penalty unless you meet certain exclusions, i.e., you receive acceptable coverage through an employer.

The penalty is 1% of the national base premium for each month you didn't have Part D or creditable coverage and should have.

Be aware that while you can change your Advantage Plan early next year — from Jan. 1 to March 31 — if you discover it's not a good fit, that's not the case for standalone Part D plans.

"Unless a special circumstance applies, you won't be able to change it," Parker said.

Also, sometimes you can find medicines at a cheaper cost than through your plan, such as with a free drug-discount card. However, if you go this route instead of through your insurance, your plan won't count the medicine's cost and your copay toward your deductible or other calculations it uses to determine your share.