What You Need to Know About Medicare Part B

As a vital component of the Medicare program, Medicare Part B plays a crucial role in ensuring retired participants receive necessary medical services and supplies—but navigating it isn’t always so straightforward. That’s why today, we’ll delve into the depths of Medicare Part B: unraveling its benefits, eligibility criteria, coverage options, costs, enrollment process, and so much more to give you a clear and informed perspective on how Medicare Part B can fit into your retirement. Let’s dive in.

Medicare Part B: the essentials

We'll start with the basics. Medicare is health insurance the U.S. government provides for those age 65 and older or people with specific disabilities or medical conditions. While Medicare Part A primarily covers inpatient hospital stays and related services, Part B covers outpatient and preventative care.

Eligibility and enrollment

Those who receive Social Security benefits are typically automatically enrolled in both Medicare Part A and Part B when they turn 65; but if you do not receive or are delaying Social Security benefits, you’ll need to actively enroll in Medicare during the Initial Enrollment Period (IEP).

This seven-month period around your 65th birthday includes the three months before, month of, and three months after your birthday. Enrolling during this window ensures your coverage begins when you turn 65.

If you happen to miss your IEP, you can enroll during the General Enrollment Period (GEP) that runs from January 1 to March 31 each year. However, your coverage will begin on July 1 of that same year—potentially resulting in a coverage gap and late enrollment penalties.

Furthermore, some situations—such as losing employer-based coverage or moving out of your plan’s service area—will grant you a Special Enrollment Period that allows you to enroll outside of the afore-mentioned windows.

Also keep in mind that enrollment mistakes are costly. More specifically, late enrollment penalties can rise as high as 10% of your monthly premium for each 12-month period you were eligible for Part B but lacked coverage.

What Medicare Part B covers

Medicare Part B covers a variety of key services, including the following:

Preventive Services
Medicare Part B prioritizes prevention by covering related services at no cost. These typically include annual wellness visits, screenings for cancer/diabetes/cardiovascular diseases, flu shots, COVID-19 vaccines, and more.

Doctor Visits
Part B covers visits to physicians, specialists, and other healthcare providers. Coverage includes primary care physicians and specialists such as cardiologists, dermatologists, and orthopedists.

Outpatient Care
If you require outpatient services such as lab tests, X-rays, or outpatient surgery, Part B has you covered: ensuring you receive necessary medical attention without the need for hospitalization.

Durable Medical Equipment (DME)
Part B also covers durable medical equipment such as wheelchairs, walkers, oxygen equipment, and certain home healthcare services.

Ambulance Services
When transportation to a medical facility is necessary, Medicare Part B helps cover ambulance services.

Mental Health Services
Part B includes coverage for outpatient mental health services including therapy and counseling. If you require intensive outpatient care for mental health issues, Part B also covers partial hospitalization programs.

While Medicare Part B covers a significant portion of the services mentioned, you may still need to pay deductibles, copayments, and/or coinsurance—which brings us to our next topic!

Costs and expenses

Medicare Part B clearly covers a lot, which is great; but what does it cost? The answer to this question is a bit complicated. Before we get into the costs, however, know that Medicare Part B has similar components as any other health insurance plan including premiums, deductibles, and copays.

The monthly Medicare Part B premium is determined annually by the government, with a standard premium of $164.90 for 2023. Compared to many other health insurance options, this number feels quite reasonable at first blush; but don’t factor that premium into your monthly budget just yet.

Keep in mind that higher-income beneficiaries might need to pay extra—known as the Medicare income-related monthly adjusted amount (IRMAA)—in addition to the standard premium,

IRMAA applies to those whose modified adjusted gross income (MAGI) exceeds a specific threshold and is calculated based on tax returns reported from two years prior (meaning your 2023 income determines your IRMAA in 2025, your 2024 income determines your IRMAA in 2026, and so on).

As of 2023, IRMAA applies to anyone with an annual income exceeding $97,000 if filing individually (or $194,000 if filing jointly). The additional amount you pay depends on your income (including the standard premium, there are six possible premium tiers). The highest amount is currently $560.50, which applies to those with a 2021 annual income of at least $500,000 if filing individually (or $750,000 if filing jointly). Beyond the monthly premium, you must also keep in mind annual deductibles, copayments, and coinsurance.

Before Medicare starts paying its share, you'll need to meet an annual deductible. This amount is subject to change yearly but is currently $226. After meeting the deductible, you're still typically responsible for a percentage of the costs (coinsurance) or a fixed amount (copayment) for each service you receive; Medicare generally pays 80% of approved amounts and leaves you on the hook for the remaining 20%. There is also no cap on your out-of-pocket expenses for Medicare Part B, which why many beneficiaries therefore opt for supplemental insurance such as Medigap or Medicare Advantage plans.

Common questions, answered

Can I keep my doctor?
Yep! Medicare Part B gives you the green light to see any doctor or specialist who accepts Medicare: meaning you're not tied to a specific network and can typically continue visiting your favorite trusted healthcare providers.

Is Medicare Part B mandatory?
While Medicare Part B technically isn’t mandatory, you’ll be hard-pressed not to enroll if you lack “creditable health coverage” from another source (e.g., an employer). For example, if you aren’t eligible for (free) Part A and wish to buy it, you’ll need to enroll in Part B. Part B enrollment is also a prerequisite to join a Medigap or Medicare Advantage plan. Finally, you may be required to pay a 10% monthly premium fee for each 12-month period you could have had Part B but didn’t.

Can I delay enrolling in Medicare Part B if I have employer-sponsored health coverage?
If you're still working and have employer-sponsored health coverage, you can delay enrolling in Part B without penalties until your employment ends. After you retire, however, you only have eight months to sign up without incurring a penalty. Click here to read more about transitioning from private health insurance to Medicare.

Does Part B cover prescription drugs?
This is an excellent question because Part B in fact doesn't cover prescription drugs—although you do have options in this respect because Medicare Part D specifically covers these medications.

What if I travel a lot internationally?
While a handful of exceptions exist, Medicare typically does not cover care beyond U.S. borders. With this in mind and if you plan to travel overseas, you should purchase a Medigap plan that includes foreign travel emergency care.

What doesn’t Medicare Part B cover?
We've talked a lot about what exactly falls under the Medicare Part B umbrella, but it's just as helpful to know what doesn't. As mentioned, Part B doesn't cover prescription drugs or foreign medical care. While not a comprehensive list, other noteworthy costs coverage doesn’t extend to include nursing home care, most dental care, dentures, cosmetic surgery, routine eye exams, and hearing aids.

In sum: Medicare Part B

The better you understand Medicare and all its parts, the better you can navigate the intricate landscape of healthcare coverage over age 65. If you haven't already, talk to your financial advisor to learn how healthcare costs fit into your retirement plan. After all, your health is your most valuable asset; safeguard it with confidence.

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Vision Retirement is an independent registered advisor (RIA) firm headquartered in Ridgewood, New Jersey. Launched in 2006 to better help people prepare for retirement and feel more confident in their decision-making, our firm’s mission is to provide clients with clarity and guidance so they can enjoy a comfortable and stress-free retirement. To schedule a no-obligation consultation with one of our financial advisors, please click here.

Disclosures:
This document is a summary only and is not intended to provide specific advice or recommendations for any individual or business.