Understanding Medicare Part B

Medicare has four parts, or programs, that provide coverage for different health-related services. Together, Medicare Parts A and B are called Original (or Traditional) Medicare. Part C is Medicare Advantage, and Part D is prescription drug coverage. Parts C and D are offered by private insurance companies.

This article will explain what you need to know about Medicare Part B, also known as the Medical Insurance program. Part B coverage helps pay for medically necessary outpatient and physician services, such as:

• Physician services (including physician services that are provided while you're hospitalized)
• Outpatient care, including services such as stitches or outpatient surgery
• Some home health services, such as physical and occupational therapy
• Some preventive services
• X-rays and diagnostic testing
• Dialysis

Who's Eligible for Part B?

Most Medicare enrollees don't have to pay a premium for Part A because they (or their spouse) have worked at least 10 years in a job where they paid Medicare taxes. If you're eligible for premium-free Medicare Part A, you're also eligible for Medicare Part B.

Some people are eligible for Medicare Part A but have to pay a premium for it because they don't have enough work history (their own, or their spouse's) to receive it for free; those people can also enroll in Part B.

If you're turning 65 and already receiving benefits from Social Security or the Railroad Retirement Board, you'll be automatically enrolled in Medicare Part A and Part B.

You should receive your Medicare cards in the mail about three months before you turn 65. At that point, you'll have the option to decline Part B coverage if you want to.

If you're turning 65 and not yet receiving benefits from Social Security or the Railroad Retirement Board, you'll have a seven-month window during which you can enroll in Medicare (three months before you turn 65, the month you turn 65, and the three following months).

During this window, you can enroll in Part B or you can opt to delay it, as described above, with the same caveats about the late enrollment penalty.

If you're enrolling in Medicare Part A but with a premium (because your work history isn't sufficient to allow you access to premium-free Medicare Part A), you're eligible for Medicare Part B as well. Your premium for Part B will be the same as the premium everyone else pays.

If you're eligible for Medicare prior to age 65, you're eligible for Medicare Part B as well as Part A. For people under age 65, three different scenarios can trigger Medicare eligibility:

• You've been receiving Social Security Disability Insurance or Railroad Retirement Board disability benefits for 24 months. You'll automatically be enrolled in Medicare as of the 25th month of disability.
• You have permanent kidney failure requiring ongoing dialysis or a kidney transplant. Your Medicare coverage begins the first day of your fourth month of dialysis, or the first month of dialysis if you're participating in a home dialysis program.
• You've been diagnosed with amyotrophic lateral sclerosis (ALS). You get Part A the month your disability benefits begin. There used to be a five-month waiting period before a person with ALS could begin receiving Social Security disability benefits, but legislation enacted in late 2020 eliminated that waiting period.

Paying a Premium for Part B

You'll need to pay a monthly premium for Part B that will be deducted from your monthly Social Security check—or paid directly to Medicare if you're not receiving a Social Security check.

Most people pay a standard monthly premium for Part B, which is $148.50 in 2021. Your premiums will be higher if you make more than $87,000 a year.

For 2022, the standard premium for Part B is projected to be $158.50/month. And the income threshold for higher premiums is projected to increase to $91,000 in 2022 (this is always based on the income you earned two years earlier, so if your 2020 income, as a single individual, was more than $91,000, you can expect a higher Part B premium in 2022).

Although the Part B premium tends to increase over time—it was just $4 a month in 1970—there have been some years when the premium has declined or stayed the same.

You can decline Medicare Part B in order to avoid paying the monthly premium. If you're automatically enrolled, instructions for opting out will be included with your Medicare card. If you're enrolling during your initial enrollment period, you'll be able to enroll in Part A on its own.

Before you opt out of Part B, make sure you fully understand how the Part B late enrollment penalty works, and understand that your opportunity to enroll later on will be limited to the general enrollment period that runs from January through March.

Neither of these restrictions applies, though, if you're delaying Part B because you have coverage from your current employer or your spouse's current employer.

If your income is limited and you cannot afford the monthly premium Part B, your state may have a program to help. These resources can help you find out what's available:

• Get Help With Your Medicare Costs
• State Health Insurance Assistance Program (SHIP)

What Does Part B Cover and What Will I Pay?

Medicare Part B has an annual deductible of $203 in 2021. This deductible is projected to be $217 in 2022.

You must pay all Medicare-approved Part B costs until you meet the deductible before Medicare starts to pay its share. After you meet your deductible, you'll generally be responsible for coinsurance of 20% of the Medicare-approved amount for the service. As described below, you can purchase a Medigap plan (Medicare Supplement insurance) that will cover some or most of these charges.

In general, Medicare Part B covers two types of services:

• Medical services: Healthcare services (and related supplies) that you may need to diagnose and treat a medical condition. These services are often provided on an outpatient basis, but can also be provided during an inpatient stay. Medicare will only pay for services that they define as being medically necessary.
• Preventive services: Healthcare services to prevent illness (such as a flu shot) or help detect an illness in an early stage so it can be managed before getting worse (such as screening for colon cancer).

Medical Services

Some examples of medical services that are covered by Part B include:

• Ambulance services: Only if necessary and only to the nearest appropriate medical facility
• Clinical laboratory services: Certain blood tests, urine tests, and some screening tests
• Diabetes supplies: Blood sugar monitors, test strips, and lancets
• Practitioner services: Care and prevention services in the office and some services in the hospital
• Durable medical equipment: Things your healthcare provider orders for use in the home, such as oxygen equipment, wheelchairs, walkers, and hospital beds
• Emergency room services: Treatment of a serious injury or sudden illness
• Mental health care: Diagnosis and treatment of mental health conditions such as depression, anxiety, or substance abuse
• Occupational therapy, physical therapy, and speech-pathology services: To help you return to normal function after an illness or injury
• Hospital outpatient services: Includes healthcare provider's services in a hospital outpatient department plus things like X-rays, EKGs, scans, a cast, or wound management
• Limited prescription drug coverage: Generally limited to injections in the healthcare provider's office, certain oral cancer drugs, and some drugs used with equipment like a nebulizer or infusion pump

Coverage for most other prescription drugs is provided under Medicare Part D, which is a separate program offered by private insurance companies.

Preventive Services

Some examples of covered preventive services include:

• Abdominal aortic aneurysm screening: A one-time screening for people at risk
• Bone density test: Osteoporosis screening to gauge fracture risk
• Cancer screening: Tests to help detect colorectal, breast, cervical, and prostate cancers
• Diabetes screening: For people at risk for diabetes
• Glaucoma tests: For people at high risk for glaucoma, a serious eye disease
• Heart disease screening: To help determine your risk of a heart attack
• Vaccinations: Flu, hepatitis B, and pneumococcal vaccines
• Smoking cessation: Counseling to help you stop smoking
• "Welcome to Medicare" visit: A comprehensive checkup during the first 12 months you're enrolled

Note: The above lists are only a partial outline of services covered under Medicare Part B. For a full list, plus annual deductible and coinsurance information, see the annual "Medicare and You" handbook.

Should I Enroll in Medigap?

While Medicare Part B will most likely pay for most of your outpatient medical expenses, you'll have to pay the deductible and coinsurance when you receive services that are covered under Part B, resulting in some out-of-pocket costs.

There is no cap on how high those costs can be; commercial insurance plans have caps on out-of-pocket costs, but Original Medicare does not.

Many Medicare beneficiaries have supplemental coverage from an employer or retiree plan, or from Medicaid. If you don't have access to one of these, you'll want to consider purchasing a Medigap plan to help pay these out-of-pocket costs. A Medigap plan will pay some or all of the deductible and coinsurance charges that go along with Medicare Part A and Part B, for services that are covered under Original Medicare.

If you became eligible for Medicare after January 1, 2020, you can't purchase Medigap plans that cover the Part B deductible. But it's still possible to purchase a Medigap plan that will cover all of the rest of your out-of-pocket charges for Part A and Part B (note that Medigap plans won't cover out-of-pocket costs for services that aren't covered under Original Medicare, such as dental care).

If you enroll in a Medicare Advantage plan, your out-of-pocket costs will be capped (except for prescription drug costs). Medigap plans cannot be used in conjunction with Medicare Advantage.