How Does Medicare Part B Work?

Medicare Made Simple

Medicare Part B

 

Medicare Part B (which is medical insurance) is part of Original Medicare and covers medical services and supplies that are medically necessary for treating your health condition. This may include outpatient care, preventive services, ambulance services, and durable medical equipment (DME). It will also cover part-time or intermittent home health and rehabilitative services, like physical therapy, if they are prescribed by a doctor for treating your condition.

Some preventive services are also covered by Medicare Part B including a one-time “Welcome to Medicare” preventive visit, flu and hepatitis B shots, cardiovascular screenings, cancer screenings, diabetes screenings, and more. For a full list of the preventive services covered under Medicare Part B, please refer to the Medicare handbook, “Medicare and You.”

If you are in a Medicare Advantage plan, you would get both your Medicare Part A and Part B coverage through a private health insurance company contracted with Medicare. By law, Medicare Advantage plans must offer at least the same level of coverage as Original Medicare, and some plans include additional coverage not included with Original Medicare such as routine dental and/or vision, hearing, a health club membership, and even prescription drug coverage.

Eligibility for Medicare Part B

 

Whoever is eligible for premium-free Medicare Part A is eligible for Medicare Part B by enrolling and paying a monthly premium. If you are not eligible for premium-free Medicare Part A, you can qualify for Medicare Part B by meeting these following requirements:

  • You must be 65 years or older.
  • You must be a U.S. citizen, or a permanent resident lawfully residing in the United States for at least five consecutive years.

You can also qualify for automatic Medicare Part B enrollment through disability. If you are under 65 and receiving Social Security or Railroad Retirement Board (RRB) disability benefits, you will automatically be enrolled in Medicare Part A and Part B after 24 months of disability benefits. You may also be eligible for Medicare Part B enrollment before 65 if you have end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (also known as ALS, or Lou Gehrig’s disease).

When to enroll in Medicare Part B

 

If you are receiving retirement benefits before age 65 or qualify for Medicare through disability, generally you’re automatically enrolled in Medicare Part A and Part B as soon as you become eligible.

If you do not enroll during your initial enrollment period and do not qualify for a special enrollment period, you can also sign up during the annual General Enrollment Period, which runs from January 1 to March 31, with coverage starting on July 1. You may have to pay a late enrollment penalty for not signing up when you were first eligible.

If you’re not automatically enrolled, you can apply for Medicare through Social Security, either in person at a local Social Security office, through the Social Security website, or by calling 1-800-772-1213 (TTY users 1-800-325-0778) from 7AM to 7PM, Mon through Fri.

Keep in mind that once you are both 65 years or older and have Medicare Part B, your six-month Medigap Open Enrollment Period will begin. This is the best time to purchase a Medicare Supplement (Medigap) insurance plan because during open enrollment, you will have a “guaranteed-issue right” to buy any Medigap plan without medical underwriting or paying a higher premium due to a pre-existing conditions*. Once you are enrolled in Medicare Part B, be careful not to miss this one-time initial guaranteed-issue enrollment period for a Medicare Supplement.

Delaying Medicare Part B enrollment

 

Some people may get Medicare Part A “premium-free,” but most folks have to pay a monthly premium for their Medicare Part B. Because Medicare Part B comes with a monthly premium, some people may choose not to sign up during their initial enrollment period if they are currently covered under either their own, or through their spouse’s employer, an employer health group plan (EGHP).

If you are still employed, you should check with your health benefits administrator to see how your insurance would work with Medicare. If you delay enrollment in Medicare Part B because you already have current employer health group coverage, you may sign up later during a Special Enrollment Period (SEP) without paying a late penalty. You can enroll in Medicare Part B at any time that you are still covered by a group plan based on your current employment. After your employer health coverage ends or your employment ends (whichever comes first), you have an eight-month SEP to sign up for Part B without incurring a late enrollment penalty.

Keep in mind that retiree coverage and COBRA are not considered health coverage based on current employment and would not qualify you for a SEP. If you have COBRA after your employer coverage ends, you should not wait until your COBRA coverage ends to sign up for Medicare Part B. Your eight-month Part B special enrollment period begins immediately following when your current employment or group plan ends (whichever comes first). This is regardless of whether you get COBRA.

Part B premiums

You pay a premium each month for Part B. Your Part B premium will be automatically deducted from your benefit payment if you get benefits from one of these:

Social Security
Railroad Retirement Board
Office of Personnel Management

If you don’t get these benefit payments, you’ll get a bill.

Most people will pay the standard premium amount. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. This is the most recent tax return information provided to Social Security by the IRS.

The standard Part B premium amount in 2021 is $148.50. Most people pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

If your yearly income in 2019 (for what you pay in 2021) wasYou pay each month (in 2021)
File individual tax returnFile joint tax returnFile married & separate tax return
$88,000 or less$176,000 or less$88,000 or less$148.50
above $88,000 up to $111,000above $176,000 up to $222,000Not applicable$207.90
above $111,000 up to $138,000above $222,000 up to $276,000Not applicable$297.00
above $138,000 up to $165,000above $276,000 up to $330,000Not applicable$386.10
above $165,000 and less than $500,000above $330,000 and less than $750,000above $88,000 and less than $412,000$475.20
$500,000 or above$750,000 and above$412,000 and above$504.90

Part B deductible & coinsurance

 

In 2021, you pay $203 for your Part B Deductible. After you meet your deductible for the year, you typically pay 20% of the Medicare-approved amount for these:

Most doctor services (including most doctor services while you’re a hospital inpatient)
Outpatient therapy
Durable Medical Equipment (DME)

 

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