What is Medicare Part B, and What Does it Cover?

Medicare

Oct 6

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 precisely why we’re delving into the depths of Medicare Part B right now, unraveling its benefits, eligibility criteria, coverage options, costs, enrollment process, and so much more to give you a clear and informed perspective on how this program can fit into your retirement. Let’s dive in.

What is Medicare Part B?

Medicare Part B is the portion of Medicare that covers medical services and supplies necessary to treat health conditions including visits to doctors and other healthcare providers, medical equipment, ambulance services, and some preventive services we’ll cover next.

What does Medicare Part B cover?

Medicare Part B covers a variety of key services including…

Preventive services

Medicare Part B prioritizes prevention by covering related services at no cost such as annual wellness visits, cancer/diabetes/cardiovascular disease screenings, 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 need 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 need 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!

How much does Medicare Part B cost?

Medicare Part B clearly covers a lot, which is great; but what is the corresponding cost? The answer to this question is a bit complicated. Before we get into the details, know Part B components are similar to those of any other health insurance plan and include premiums, deductibles, and copays.

The government sets monthly Medicare Part B premiums on an annual basis, with a standard monthly premium of $185 for 2025 (expected to jump to $206.50 in 2026). Compared to many other health insurance options, this number feels quite reasonable at first blush—but don’t factor it into your monthly budget just yet.

Higher-income beneficiaries, for example, 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 2025 income determines your IRMAA in 2027, your 2026 income determines your IRMAA in 2028, and so on).

As of 2025, IRMAA applies to anyone with an annual income exceeding $103,000 if filing individually ($206,000 if filing jointly). These thresholds are projected to jump to $109,000 and $218,000, respectively, in 2026. The additional amount you pay depends on your income (with six possible premium tiers including the standard premium). The highest surcharge is currently $628.90, applying to those with a 2023 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 (currently $257 but subject to change yearly) but are then still typically responsible for a percentage of costs (coinsurance) or a fixed amount (copayment) for each service you receive; Medicare generally pays 80% of approved amounts, meaning you’re on the hook for the remaining 20%. Part B has no cap for out-of-pocket expenses, which is why many beneficiaries opt for supplemental insurance such as Medigap or Medicare Advantage plans.

Medicare Part B eligibility

Most people qualify for full Medicare benefits (including Part B) at age 65 based on their (or their spouse’s) employment record—earlier if qualifying disabilities are present. Here are some prerequisites…

· You must be a U.S. citizen or permanent legal resident who’s lived in the United States for at least five years.

· You or your spouse must have paid into Medicare payroll taxes while working for at least 10 years.

· You must be eligible to receive (or are currently receiving) Social Security or Railroad Retirement Board benefits.

If you fail to meet the above criteria but are a U.S. citizen or permanent legal resident who’s lived in the U.S. for at least five years, you can still receive full Medicare benefits but must instead buy into them.

How to enroll for Medicare Part B

Those who receive Social Security benefits are typically automatically enrolled in both Medicare Parts A and B upon turning 65. If you don’t receive or are delaying Social Security benefits, however, 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—with coverage beginning on July 1, potentially resulting in a coverage gap and late enrollment penalties. 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 aforementioned windows.

Medicare Part B late enrollment penalty

Enrollment mistakes can be costly, with late enrollment penalties climbing to as high as 10% of your monthly premium for each 12-month period you were eligible for Part B but lacked coverage. Even worse? You’ll pay this late enrollment penalty on a permanent basis.

How Medicare Part B works with employer insurance

Medicare typically serves as your primary insurance, meaning healthcare bills are first submitted to Medicare with secondary insurance then covering any remaining balance after Medicare processes the claim. If you’re on an employer group plan that covers 20+ employees or is part of a multi-employer group health plan (generally one jointly sponsored by two or more employers), however, your employer plan will act as the primary payer with Medicare kicking in secondarily—regardless of any employer coverage for you or your spouse. While Part B isn't mandatory, most people enroll only when they lack “creditable coverage” from another source (e.g., an employer) and won’t pay a penalty for delaying provided they enroll within eight months of losing creditable coverage or ceasing work (whichever occurs first). You’ll want to plan ahead and enroll in Part B at least a month before you stop working or your employer coverage ends to prevent a gap in coverage.

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 for those 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.

Have questions about Medicare? Schedule a FREE discovery call with one of our CFP® professionals to get them answered.

What people also ask

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.
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 for each 12-month period you could have had Part B but didn’t.
This is an excellent question because Part B in fact doesn't cover prescription drugs, though you do have options in this respect as Medicare Part D specifically covers these medications.
We've talked a lot about what 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.