The Medicare Part B deductible is the amount you must pay for covered services before Medicare begins paying its share. This deductible typically increases each year to account for rising healthcare costs. Understanding how often the Part B deductible goes up can help you plan for future healthcare expenses.
What is the Medicare Part B deductible?
The Medicare Part B deductible is the amount you pay out of pocket before Medicare begins covering Part B services. Part B covers doctor visits, outpatient care, durable medical equipment, and preventive services like screenings and lab tests.
Once you meet your deductible for the year, Medicare pays its share (usually 80%) of approved amounts for covered services. You pay 20% coinsurance for most services until you reach the out-of-pocket maximum.
The standard Part B deductible applies to Original Medicare. The deductible may be different with Medicare Advantage plans.
How much is the Medicare Part B deductible in 2023?
In 2023, the standard Medicare Part B deductible is $226 per year. This represents a $7 increase from 2022, when the deductible was $219.
How often does the Part B deductible increase?
The Medicare Part B deductible typically increases every year. By law, the deductible must be set to cover about 25% of annual Part B spending per enrollee.
Part B costs fluctuate each year due to:
- Increased utilization and billing rates for healthcare services
- New technology and treatment options
- General healthcare inflation
To keep pace, the Part B deductible is reevaluated and adjusted annually based on projected spending for the upcoming year.
Annual percentage increases
While the Part B deductible rises each year, the size of the increase can vary. Here are the percentage increases over the past decade:
| Year | Deductible | Increase |
|---|---|---|
| 2023 | $226 | 3.2% |
| 2022 | $219 | 3.8% |
| 2021 | $212 | 2.7% |
| 2020 | $206 | 7.9% |
| 2019 | $192 | 2.8% |
| 2018 | $187 | 3.2% |
| 2017 | $182 | 4.3% |
| 2016 | $175 | 15.7% |
| 2015 | $152 | 1.4% |
| 2014 | $150 | 8.7% |
As you can see, the yearly increases are generally moderate, ranging from 1-8% in most years. The deductible rose significantly in 2016 due to a major change in how Medicare pays physicians, but increases fell back to normal levels after that.
Are there limits on deductible increases?
There is no cap on how much the Part B deductible can increase each year. However, there are limits on how much costs for enrollees can grow overall:
- Medicare premiums – There are caps on how much standard premiums for Part B can increase annually for current enrollees. This helps limit cost spikes.
- Out-of-pocket limits – Once you hit the maximum yearly out-of-pocket costs under Original Medicare, you pay nothing for covered services. This provides financial protection.
While deductible spikes are possible in some years, these other cost-sharing limits help soften the impact for enrollees. Overall growth in Medicare expenses for beneficiaries has averaged around 1-2% annually in recent years, largely in line with Social Security cost-of-living increases.
Projected deductible increases
No one can predict exactly how much the Medicare Part B deductible will increase each year. But the Centers for Medicare & Medicaid Services (CMS) and the Medicare Trustees do make projections based on healthcare spending trends:
- Over the next 5 years, the standard Part B deductible is estimated to grow by about 4-7% per year on average.
- Over the next decade, average yearly growth is estimated around 4-6%.
This suggests we can continue to expect modest, low to mid-single digit percentage increases year to year. There may be occasional higher spikes when major Medicare changes occur.
Strategies for coping with rising deductibles
Since deductibles will continue rising every year, it’s wise to plan ahead. Some tips to help you budget for and manage increased deductibles over time:
- Save for healthcare – Put aside a portion of retirement savings specifically for medical expenses. Health savings accounts are a great deductible option.
- Consider Medigap – A Medigap policy can cover all or part of the Part B deductible for you.
- Compare Medicare Advantage – Many Advantage plans have lower or $0 deductibles compared to Original Medicare.
- Apply for assistance programs – Medicare Savings Programs can cover the Part B deductible for lower-income enrollees.
- Appeal denials – If Medicare denies coverage for care you think should be covered, appeal the decision.
- Maximize preventive services – Take advantage of Medicare’s free preventive benefits to avoid illnesses and costs.
Staying healthy is another good way to minimize your healthcare expenses. But even with preventive care, understand that deductibles will go up over time and have a plan to manage the costs.
Conclusion
The Medicare Part B deductible generally rises at a moderate pace each year to account for healthcare inflation. While there is no cap on the percentage increase, growth typically ranges from 1-8% annually. To cope with steadily rising deductibles, it helps to plan ahead by saving for healthcare, shopping for better coverage, and using preventive services. With smart preparation, you can manage the impact of deductible increases over your retirement years.