Why You Could Pay $4,747 Extra for Medicare in 2023
Tens of millions of Americans 65 and older take advantage of Medicare health coverage. For the majority of them, hospital insurance coverage under Medicare Part A comes at no monthly premium, as the payroll taxes that workers pay into the Medicare system during their careers are intended to cover that part of the program. However, most of those covered by Medicare do pay a premium each month for their Part B medical coverage.
For most people, the Medicare Part B monthly premium for 2023 will cost $164.90, which is actually down $5.20 per month from what it was in 2022. However, there are a significant number of Medicare participants who'll have to pay more than that -- and could end up spending as much as $4,747 extra for their coverage over the course of the year.
In 2003, the Medicare Modernization Act became law, and one of its provisions created what's known as the income-related monthly adjustment amount (IRMAA). The idea behind the IRMAA was that Medicare Part B premiums are intended to cover about 25% of the actual cost of the program, with the other 75% effectively representing a subsidy to retirees. Lawmakers believed that those with higher incomes didn't need as large of a subsidy, and so the IRMAA amount effectively raises the premium paid by high-income retirees.
Source Fool.com
