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:

• Doctors’ services (including doctors' services that are provided while you're hospitalized)
• Outpatient care
• Some home health services, such as physical and occupational therapy
• Some preventive services

Most Medicare enrollees do not 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 are eligible for premium-free Medicare Part A, you're also eligible for Medicare Part B. Some people age 65 or older are eligible for Medicare Part A but have to pay a premium for it; those individuals 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, and 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.

Part B has a monthly premium for everyone, so people who are continuing to work (or who have a spouse who is continuing to work) and have employer-sponsored coverage can opt to delay their enrollment in Part B, and sign up for it later on, once they're no longer working. [Note that delaying Part B when you don't have coverage under a current employer's plan will mean that you'll have to pay a late enrollment penalty once you do eventually enroll in Part B, and you'll only be able to enroll during the general enrollment period that runs from January through March each year, with coverage effective July 1.]

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, there are three different scenarios that trigger Medicare eligibility:

• You have 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 (end-stage renal disease, or ESRD) 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 have been diagnosed with amyotrophic lateral sclerosis (Lou Gehrig’s disease). If you have ALS, you get Part A the month your disability benefits begin.

You will 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 $144.60 in 2020 (premiums are higher for people with income above $87,000). Although the premium tends to increase over time—it was just $4/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, there will be instructions for opting out that you'll receive along with your Medicare card. And if you're enrolling during your initial enrollment period (ie, for people who aren't automatically enrolled) you'll be able to enroll in Part A on its own. But before you opt out of Part B, you'll want to 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 each year, with coverage effective July 1. But neither of these restrictions applies, however, if you're delaying Part B because you have coverage from your current employer or your spouse's current employer. Here's more about delaying Part B.

If your income is limited and you cannot afford the monthly premium Part B, your state may have a program to help. For information view the brochure Get Help With Your Medicare Costs and visit the State Health Insurance Assistance Program (SHIP) site for information about free counseling in your state.

Medicare Part B has an annual deductible, which is $198 in 2020. You must pay all Medicare-approved costs until you meet this yearly 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.

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
• Doctor Services – care and prevention services that you get from your doctors in their office and some services provided in the hospital
• Durable Medical Equipment – things your doctor 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 more normal function after an illness or injury
• Hospital Outpatient Services – includes doctor services in a hospital outpatient department and other services such as X-rays, EKGs, scans, a cast, or wound management)
• Prescription Drugs – generally limited to injections you get in your doctor’s office, certain oral cancer drugs, and some drugs used with equipment such as 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).

Prevention Services
Some examples of covered prevention services include:

• Abdominal Aortic Aneurysm Screening – a one-time screening for people at risk
• Bone Density Test – screens for osteoporosis to see if you are at risk for broken bones
• Cancer Screening – several tests are covered to help detect certain cancers, such as colorectal cancer, breast cancer, cervical cancer and prostate cancer
• Diabetes Screening – blood tests for people at risk for diabetes
• Glaucoma Tests – for people at high risk for glaucoma, a serious eye disease
• Heart Disease Screening – blood tests, such as cholesterol, to help determine your risk of a heart attack
• Shots – coverage includes the flu shot, hepatitis B shot, and pneumococcal shot
• Smoking Cessation – counseling to help you stop smoking
• "Welcome to Medicare" Visit during the first 12 months you're enrolled in Medicare.

Note: The above lists are only a partial outline of services covered under Medicare Part B. For a full list, that also includes which services are subject to the annual deductible and coinsurance, see Your Guide to Medicare Preventive Services, or the annual Medicare and You handbook, which you should have received in the mail. You also can view an updated version on the Medicare website.

While Medicare Part B will most likely pay for most of your outpatient medical expenses, you will have to pay the deductible and coinsurance when you receive services that are covered under Part B, resulting in some out-of-pocket costs. And 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. But 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 such as the annual Part B deductible, coinsurance charges and copayments (note that people who are newly-eligible for Medicare are not able to purchase Medigap plans that cover the Part B deductible).

If you enroll in a Medicare Advantage plan, your out-of-pocket costs will be capped (except for prescription drug costs), and Medigap plans cannot be used in conjunction with Medicare Advantage. Here's an overview of Medicare Advantage versus Original Medicare plus a Medigap plan.