Learn about Medicare Part B benefits, costs, and late enrollment penalties.
Original Medicare is the United States’ federally funded health care plan which includes hospital insurance through Part A and medical insurance through Part B. Part B covers outpatient services, such as certain doctors’ services, preventive services, and medical supplies. Unlike Medicare Part A, you must pay a premium for Part B. For this reason, some people choose to delay Part B coverage.
“There are several misconceptions that can cost you,” explains Jesse Slome, director of the American Association for Medicare Supplement Insurance. For instance, when you first become eligible for Original Medicare, you’ll likely be enrolled automatically in Medicare Part A, which usually comes at no cost. However, you have the option of delaying Part B medical insurance.
“If you fail to enroll in Medicare Part B during your initial seven-month window and don’t have equivalent health insurance through an employer or spouse, you can be subject to penalties in the form of increased premiums when you do enroll in Medicare,” Slome says.
Make sure you understand what you’d be giving up by not getting Part B coverage and how much that health care coverage can cost based on when you enroll.
The main differences between Medicare Part A and Medicare Part B are what they cover and how much they cost. Medicare Part A is hospital insurance whereas Part B is medical insurance. Part A covers treatments, such as when you recieve care in a hospital, if you need skilled nursing, or eligible home health care. Part B helps cover medically necessary and preventative services, such as certain doctors’ services, outpatient care, durable medical equipment, and other medical supplies. It can also offer outpatient prescription drug coverage under certain circumstances.
Medicare Part A generally comes with no premium for most people. As long as you or your spouse paid Medicare taxes for a certain amount of time while working, you can qualify for premium-free Part A. If you don’t qualify for premium-free Part A, you can purchase it with a monthly premium. In 2022, the premium for Part A was either $274 or $499. Meanwhile, Part B always has a premium. The amount you pay for Part B coverage will vary based on the income you reported to the IRS two years prior.
You are not required to get Medicare Part B coverage. Since Part B requires beneficiaries to pay a premium, you have the option of not enrolling. If you choose not to get Medicare Part B during your initial enrollment period (when you turn age 65) and later decide to add it, you could pay a late enrollment penalty.
Your Part B premium rises by 10% for every 12-month period you are eligible for Part B but don’t sign up for it unless you qualify for a Special Enrollment Period.
“Most people when they are eligible for Medicare should enroll in Part A and B to avoid the late enrollment penalty,” says Esther Sulistio, an independent broker specializing in Medicare insurance at SDInsured.com. “However, in some situations, someone can just have Part A, especially if she qualifies for premium-free Part A, and delay Part B without penalty.”
Individuals who are on a group health plan through their (or their spouse’s) current employer may be able to delay enrolling in Part B without paying a penalty.
“With that being said, it’s always a good idea to compare the employer health plan costs and benefits to those of Medicare cost and benefits to see which one gives you better benefits and costs,” Sulistio says.
Medicare Part B covers two types of services: medically necessary services and preventative services. Medically necessary services include the services and supplies necessary to diagnose or treat a medical condition. Preventative services are health care services to prevent illnesses or detect them in the early stages when treatment has the greatest chance of success.
Part B will generally cover 80% of the Medicare-approved amount of the bill after you reach your deductible.
Medicare Part B covered services include:
Medicare determines what services it covers based on federal and state laws, national coverage decisions by Medicare, and local coverage decisions by companies in each state that determine if a service is medically necessary. You can find out if Part B covers a particular test, item, or health care service at Medicare.gov.
“On the search box, just enter in the name and hit enter,” Sulistio says. The results will tell you if the service or procedure is covered or not.
“Medicare eligibles often think that with just Original Medicare Part A and B, it will cover all their health care needs,” Sulistio says. “Although it covers many health care-related services, it does not provide coverage for all items, such as prescription drugs, routine dental, routine vision, hearing (and) cosmetic surgery.” For those benefits, you’d need a Medicare prescription drug coverage (Part D) or a Medicare Advantage Plan.
You pay a monthly premium for Part B. If you are receiving Social Security benefits, United States Railroad Retirement Board (RRB), or U.S. Office of Personnel Management (OPM), this premium will be automatically deducted from your benefit payment. If you don’t receive any of these benefits, you’ll get a “Medicare Premium Bill” every three months.
In 2022, the standard Part B premium is $170.10 per month. Most people pay the standard amount, but individuals with modified adjusted gross income above a certain amount may pay an extra Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income on your IRS tax return from two years ago to determine your current year’s Part B premium. So, for 2022, Medicare looks at your income from 2020 to determine how much you pay for Part B.
Individuals who earned $91,000 or more in 2020 paid an IRMAA in 2022 ranging from $68 to $408.20. The highest premium paid for Part B in 2022 is $578.93 for individuals who earned $500,000 or more in 2019 or married couples filing jointly who earned $750,000 or above.
You can pay your Medicare bill online through your Medicare account, directly from your bank account using bill pay, through Medicare Easy Pay, or by mail.
Medicare Part B also has a deductible that you must meet before coverage begins. In 2022, the Part B deductible is $233. Once you meet this deductible, Medicare will typically cover 80% of the Medicare-approved amount for doctor’s services, outpatient therapy, and DME.
“One of the disadvantages to Original Medicare is there is no limit or cap on the amount you could pay in a calendar year,” Sulistio says. To protect yourself financially, she recommends enrolling in a Medicare Advantage Plan or Medicare Supplement Plan.
“This will minimize your health care expenses,” she says.
Roseann Birch has worked in the insurance industry for more than 35 years. In 2006, she moved to selling insurance and, by 2009, Birch made Medicare her area of expertise after observing the struggles of older adults to understand Medicare. Although many adults age 65 and older are eligible for Medicare, nearly just as many don’t understand how it works.
Birch has learned the ins and outs of Medicare and its variations and supplements to help beneficiaries and their families understand benefits. She finds there is often misinformation and makes it her mission to clear up the confusion so that everyone can enjoy the full extent of Medicare benefits.