Medicare Part B is the portion of Medicare best known for covering doctor visits and other outpatient medical services. In 2020, most people pay a monthly premium of $144.60. This premium is adjusted each year and can vary depending on your income.
You become eligible for Medicare Part B at age 65 and need to sign up during a seven-month period around your birthday. Hitting the deadline is important. If you delay, you may face an expensive penalty.
It’s important to remember that Medicare, including Medicare Part B, won’t take care of all of your health care costs. There are premiums, deductibles and copays. And some elements of health care, including long-term care, aren’t covered at all by Medicare. “Even people who have made the best plans for retirement don’t always consider health care costs — including costs associated with Medicare — in their retirement budget,” says Phil Moeller, author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs.”
Here’s what you need to know about Medicare Part B.
What it covers and doesn’t cover
What Part B covers
Original Medicare is made up of two parts: Part A and Part B.
While Part A generally covers hospital stays and some skilled nursing facilities, Part B generally covers the following:
Medicare Part B also covers ambulance service.
What Medicare Part B doesn’t cover:
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Eye exams related to prescribing glasses.
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Hearing aids and exams for fitting them.
What you’ll pay
Premiums
Premiums can vary depending on your income.
In 2020, the majority of people pay Medicare Part B monthly premiums of $144.60. (Premium amounts are adjusted each year.)
High-income seniors may pay more than that. Beneficiaries whose income exceeds $87,000 will pay what’s known as an income-related monthly adjustment amount, or IRMAA, in addition to the standard monthly Part B premium. Total premium payments for people whose income exceeds $87,000 range from $202.40 to $491.60, depending on income. For a full list of adjusted premium costs, visit Medicare.gov.
Deductibles and copays
Part B comes with an annual deductible. In 2020, it is $198.
After you meet the deductible for the year, you typically pay 20% of the Medicare-approved amount for doctor services and other Medicare benefits. This assumes your doctor or other provider “accepts assignment.” In other words, your provider will accept the amount Medicare agrees to pay for the treatment or service. Some providers who charge more than the Medicare-assigned amount will bill patients for the difference. Always check with a new physician or other health care provider that they accept the amount Medicare pays.
Many Original Medicare enrollees purchase Medicare Supplement Insurance, also called Medigap, to help pay the out-of-pocket costs associated with Medicare Part B.
The Medicare Part B penalty
It’s extremely important to sign up for Medicare Part B on time. If you decide not to sign up for Part B at age 65 when you become eligible and later change your mind, you’ll pay an extra 10% above the standard premium cost for every 12-month period you delayed. What’s more, you’ll pay extra for the entire time you are covered by Medicare. That extra premium can add up to a significant amount over the course of your retirement.
How Medicare Part B works with employer-sponsored insurance
You won’t pay the Medicare Part B penalty if you are covered by employer-sponsored insurance (yours or your spouse’s) from a company with more than 20 employees. In those cases, unless you are already receiving Social Security or Railroad Retirement Board benefits, you don’t have to do anything when you turn 65. (If you are receiving Social Security or those benefits, and you want to delay Medicare Part B, follow the instructions on the Medicare card you will receive near your 65th birthday.) If you decide to stick with employer-sponsored coverage, it’s always wise to confirm with your employer benefits manager that your coverage will continue past age 65.
IMPORTANT: You do need to take action when your employer-sponsored insurance ends. You have eight months to sign up for Part B before incurring the penalty.
When you should enroll
Again, if you’re already receiving Social Security or Railroad Retirement Board benefits, you’ll automatically start receiving Original Medicare, Part A and Part B, the month you turn 65.
Everyone else must choose among these enrollment period options:
Nerd tip: You still need to sign up for Medicare Part B if you are receiving health care continuation coverage under COBRA. Otherwise, you will pay the Part B penalty. COBRA beneficiaries aren’t eligible for the special enrollment period. In other words, COBRA isn’t the same as if you were covered under a large employer health plan.
That said, if you want to, you may be able to keep COBRA coverage to cover services that Medicare doesn’t, such as dental insurance. You’ll need to contact your COBRA group insurance plan for more information and to help calculate the costs involved. Also, your spouse and dependents may be able to keep their COBRA coverage when you enroll in Medicare.
If you choose Medicare Advantage
Many people who sign up for Medicare choose a Medicare Advantage plan, also known as Medicare Part C.
Medicare-approved private insurers administer Medicare Advantage plans. These policies must provide all of the same coverage in Original Medicare Part A and Part B. Often these policies include Medicare Part D prescription drug coverage and extra benefits not covered by Original Medicare, such as dental, vision, wellness and some home-care benefits.
In order to offer these extra benefits and keep costs down, Medicare Advantage plans often negotiate with a network of providers that plan members must use. This is different from Original Medicare in which beneficiaries may receive treatment from any Medicare provider.
If you choose Medicare Advantage, it’s important to compare total costs — including premiums, cost sharing and out-of-network charges — among plans and versus Original Medicare. Be aware that cost sharing and benefits of the plan you choose can change from year to year, so you need to evaluate coverage during every Medicare open enrollment period. Medicare.gov offers a tool to help compare Medicare Advantage Plans.
Keep in mind this important caveat: If you choose Medicare Advantage, then decide to move back to Original Medicare with Medicare Supplement Insurance, you may pay more than you expected. That’s because in all but four states, if you don’t sign up for a Medigap policy within six months of the time your Original Part B Medicare insurance begins, insurers can deny you coverage based on preexisting conditions, such as asthma, heart disease, diabetes or a pending surgery.
