The Social Security Administration and the Bureau of Labor Statistics has announced that the 2023 Social Security cost of living adjustment (COLA) has been set at 8.7%. This is the largest increase in more than four decades.
Each year the Social Security Administration and the Bureau of Labor Statistics calculate this COLA increase based on a specific consumer price index. In 2020, the increase was 1.6%, 2021 was 1.3%, and 2022 was 5.9%. However, in the past 3 years there was also an increase in the Part B Medicare premiums, set by the Centers for Medicare and Medicaid (CMS), which offset much of the Social Security increase. Part B increases were:
- 6.7% in 2020
- 2.7% in 2021
- 14.5% in 2022
2023 Medicare Premium Decrease
For 2023, the Medicare premiums for the standard Part B will be decreasing $5.20/month for Medicare enrollees. This is a win-win for Social Security and Medicare benefits. However, Part D premiums are not set by the CMS, so while the CMS estimates that Part D premiums will fall 1.8% in 2023, each policy should be reviewed for changes to premiums, copayments, coinsurance, deductibles, and medications covered. Some Part D enrollees will see an increase, so having you or your advisor carefully examine your policy should be part of your financial planning strategy.
IRMAA Income Limit Increase
Lastly, the Medicare Income-Related Monthly Adjustment Amount (IRMAA) income limits have increased:
- $97,000 for individuals
- $194,000 for married couples filing jointly
IRMAA is tied to your modified adjusted gross income (MAGI), so it is important for your financial advisor to closely monitor your financial plan and the impact the IRMAA has on your investments.
If you have any questions or would like to speak with one of our team members, please do not hesitate to reach out to the SC&H Financial Advisors team.