The process of enrolling in Medicare is full of pitfalls that must be navigated carefully. But here’s the good news: A series of important reforms kick in this year that will allow more people to access their Medicare coverage more easily, and without lifetime penalties or lengthy delays.
What other Medicare changes are coming in 2023? Several provisions of the Inflation Reduction Act, signed into law last summer by President Joe Biden, also take effect this year. Those changes will improve prescription drug coverage under Medicare Part D. There’s also a do-over opportunity that could be a money-saver for diabetics who receive their insulin through a Part D prescription drug plan.
Here’s a rundown of the key Medicare changes that take effect in 2023.
Reforms to the Medicare Enrollment Period
A streamlined Medicare enrollment process that becomes effective this year eliminates potentially long waits for coverage to begin. The changes were included in the Beneficiary Enrollment Notification and Eligibility Simplification Act, or Benes Act, a bill that consumer advocates had been pushing for some time and that finally became law as part of the $2.3 trillion federal coronavirus relief and spending bill signed into law at the end of 2020.
Medicare generally requires that you sign up during a seven-month initial enrollment period that includes the three months before, the month of, and the three months following your 65th birthday. Missing that window triggers late-enrollment penalties levied in the form of higher premiums that continue for life.
There are few exceptions to these rules: A special enrollment period for job-based insurance allows you to delay Medicare enrollment without penalty if you or your spouse are still working beyond age 65 and you receive insurance through that employment. But there are a couple important caveats to mention about this exception:
- The exception applies only if you are actively employed by the firm providing your health insurance; COBRA, for example, does not count.
- If your insurance is tied to work for an organization with 20 or fewer employees, Medicare becomes primary at 65, and you may face high out-of-pocket costs if you do not enroll at that age.
The premium penalty for late enrollment in Medicare Part B is equal to 10% of the standard Part B premium for each 12 months of delay. This is a lifetime penalty, and it escalates along with the cost of Medicare since it is levied as a percentage of the standard Part B premium. This disadvantage could saddle you with thousands of dollars of extra expenses over the course of retirement. The penalties would apply whether you choose Original Medicare or Medicare Advantage.
Until recently, late enrollment left you exposed to another risk—the possibility of significant gaps in health insurance coverage while waiting for Medicare to begin. But with the Benes Act reforms, coverage begins the month after enrollment for people who missed their designated Medicare enrollment periods. This is a significant improvement. Previously, if you failed to enroll on time, you had to wait for the general enrollment period that runs from Jan. 1 to March 31 each year, and Medicare coverage under Part B and (in some cases) Part A would not begin until July 1.
The delays were much longer in some cases. For example, let’s say you realized in April 2021 that you should have been enrolled earlier. Under the old system, your coverage would not have begun until July 2022.
Starting this year, if you enroll during the general enrollment period, your coverage will begin the first of the month following your Medicare enrollment. The same coverage timeline will apply should you enroll in the last three months of your initial enrollment period, which formerly carried a two to three month wait.
The Benes Act also creates special enrollment periods for Part B for certain exceptional circumstances. These include people who:
- were affected by an emergency or disaster,
- received certain types of misinformation about Medicare enrollment from an employer,
- are released from incarceration, or
- are nearing the end of Medicaid coverage.
An earlier version of the Benes legislation would have addressed the risk of the large lifetime penalties for late enrollment in Medicare. It contained a requirement that the Social Security Administration provide advance notice to people approaching the Medicare eligibility age about the basics of the program’s enrollment rules. That provision didn’t make it into the final law, but advocates now are pushing a Benes 2.0 bill that would add it.
“We continue to talk with people who are shocked when they learn that if you’re not already receiving Social Security retirement benefits, you don’t receive any notices from Medicare in advance of your Medicare eligibility, and it’s a huge problem,” says Lindsey Copeland, director of federal policy for the Medicare Rights Center, a consumer advocacy and policy organization that has been pushing for the Benes reforms.
Medicare Coverage Caps Insulin Costs
Seniors enrolled in Medicare Part D plans spent $1 billion out of pocket on insulin in 2020—more than 4 times the amount spent in 2007, according to the Kaiser Family Foundation. The problems with soaring insulin costs aren’t limited to Medicare, of course, but the Inflation Reduction Act, signed into law last summer, puts a hard cap of $35 per month on out-of-pocket spending by Medicare enrollees. Democrats tried to apply the same protection to users of other types of insurance, but that was blocked by Republicans who objected to including the change under the byzantine budget reconciliation rules used to pass the bill.
Still, there was a catch to all this. The revised insulin coverage became law too late in the year to be included in the Medicare Plan Finder that is used by seniors to shop for Part D plans during the fall enrollment period. That very likely produced skewed results in plan searches.
As a result, Medicare is offering a special one-time enrollment period that runs throughout this year. Insulin users can drop, add, or change their Part D plans. If you are affected, call 1-800-Medicare to discuss your options. You can also get help with this from your local State Health Insurance Assistance Program.
Vaccine Coverage Under Medicare
The Inflation Reduction Act also makes adult vaccines covered under Part D free, without deductibles or copays. Experts hope this will improve access, in particular, to the expensive vaccine for shingles, which is underutilized among Medicare beneficiaries.
This is an important change, since shingles can be not only a painful condition but a dangerous one as well. One in three people will get shingles during their lifetimes, according to the Centers for Disease Control, and in rare instances it can recur.
Medicare Drug Rebates
Another change taking effect this year under the Inflation Reduction Act that hasn’t received much attention: Drugmakers will pay “rebates” to the government if they impose price increases that exceed the rate of general inflation. Essentially, this is a penalty they will pay for large price hikes.
It’s not certain how big an impact this provision will have in the near term. KFF reports that half of all drugs covered by Medicare had prices above the general inflation rate from 2019 to 2020, but that was a period when inflation was far lower than it is now. When prices for drugs increase faster than the inflation rate, the Inflation Reduction Act now requires drug manufacturers to pay rebates or face stiff penalties. The rebates are paid to Medicare, but they should begin to have a moderating effect on prescription drug costs.