We will talk about Medicare Part-B and how it provides benefits for Outpatient Costs. This will help you better understand how it works and what your options are.
If you are short on time, watch the 2-minute video explaining Part B, what it is, and how it works. You can continue reading to learn more details.
What are Medicare Part B benefits?
Medicare Part B is outpatient medical coverage for services such as:
- Doctor visits
- Routine and preventive screenings
- Annual wellness visits
- Lab tests
- Diagnostic tests
- Emergency room visits
- Visits to specialists
- Healthcare supplies
Part B is available to all United States legal residents if they meet the necessary eligibility requirements.
Qualifying for Part B
Turning 65 or losing group medical coverage when retiring are some of the most common ways to qualify for Part B.
You must be eligible for Part A to qualify for Part B.
If you are eligible for Part A at no cost, you can enroll in Part B.
We talked about qualifying for Part A in a different post. Click here to read.
What does Part B cover?
Part B does not cover everything.
It is essential to know how Part B works with Part A to cover some healthcare costs. Understanding what is covered helps minimize out-of-pocket exposure.
In most cases, Part B Pays 80% of your medical bills after you meet a deductible. We will talk about that later in this article.
Primary Care Doctors
Medicare Part B covers medically necessary services received in a doctor’s office.
These are outpatient medical services. They can come from other practitioners, such as nurse practitioners, physician assistants, or therapists.
If the provider accepts Medicare and the charges are approved, Medicare will cover your medical bills.
A physician who specializes in a specific area of medicine is considered a specialist.
Some of the most common are:
Part B only covers services that are medically necessary.
Durable Medical Equipment (DME)
Medically necessary pieces of equipment can include:
- Mobility aids
- Diabetic testing supplies
- Hospital beds
A prescription from a Medicare-approved provider that the equipment is necessary is required and the supplier must be Medicare-approved.
Emergency Room Visits
Medicare Part B covers emergency room visits when you are unexpectedly injured, suddenly become sick, or experience a rapid decline in an existing condition.
Medicare Part A kicks in if your visit results in an inpatient hospital admission.
Part B covers many preventive screenings and services.
Several of these include but are not limited to:
- One flu shot per year
- One mammogram per year
- Cardiovascular blood tests once every five years
- Colonoscopies once every ten years (more often if you are considered high risk)
- Two blood sugar tests per year
What is my Part B out-of-pocket?
Part B does not pay for everything and you are responsible for a portion of your medical bills.
First, you will have to meet your Part B deductible of $198 (in 2020).
Suppose you have only Medicare Parts A and B with no additional coverage. After meeting your Part B deductible, you can also expect to pay:
- 20% of your outpatient medical expenses (called coinsurance).
- 20% of the cost of the medical equipment mentioned above.
- A copayment for each emergency room visit as well as 20% of the Medicare-approved amount for services you may receive from doctors and specialists while in the emergency room.
- No cost for the preventive screenings listed above (but there may be some costs associated with other screening services not listed above).
You could end up paying more than 20% known as excess charges.
Excess charges allow the provider to bill more for services if they do not take Medicare assignment.
We will talk about this in further detail in another post.
Remember, if you have no additional coverage other than Medicare Part A and Part B, you would be responsible for 20% of your medical expenses (or more).
There is no cap on your out-of-pocket.
Don’t worry, we will talk about ways to limit your out-of-pocket expenses later in this article – keep reading.
Let’s Use an Example Showing Part B Coverage and Out-of-Pocket
Robert is on Medicare A and B.
He lives a very healthy lifestyle and takes good care of his health.
One day he develops pain in his lower back and goes to see a doctor about that pain.
It turns out he has a degenerative bone disease and needs extensive treatment and physical therapy.
6 weeks later, he receives his first bills from the doctor’s office. He notices that Medicare (Part B) covers 80% of the bill and he is responsible for the rest.
How Much Does Part B Cost?
You will pay a monthly premium for Part B.
Most people pay the standard Part B monthly premium, which is $144.60 (in 2020). This amount changes from year to year.
Suppose your modified adjusted gross income is higher than a certain amount. In that case, you will likely pay an Income Related Monthly Adjustment Amount (IRMAA).
Medicare will make this determination based on the reported amount on your tax return from two years prior to going on Part B.
If you are required to pay a higher amount, you will see it reflected in your Part B monthly premium.
Medicare updates the Part B monthly premium amount each year.
Click here to see the income guidelines used to determine what you may be required to pay each month for your Part B premium.
If you cannot afford Part B, you can read about different programs to lower your out of pocket here.
How do I pay my Part B premium?
Suppose you are drawing Social Security, Railroad Retirement Board (RRB), or Office of Personnel Management benefits. In that case, your Part B monthly premium will automatically deduct from this payment. Otherwise, you will pay quarterly.
Enrolling into Part B
You will be automatically enrolled in Part B and Part A if you are drawing Social Security or Railroad Retirement Board (RRB) benefits when you turn 65.
If you are not, you will have to enroll in Part B through your local Social Security office during certain enrollment periods.
You can enroll in Part B by visiting your local Social Security office, or online. Here is the link.
What if I am Still Working?
Many people work beyond age 65.
You can opt-out of Part B if you continue to have qualifying health insurance through an employer.
You can delay enrolling in Part B until you are ready to retire and drop your employer coverage by:
- disenrolling if you were automatically registered when turning 65 or
- not applying if your enrollment was not automatic.
Part B Enrollment Periods
There are certain times of the year that you may be eligible to enroll in Part B.
If you are not drawing Social Security or RRB benefits, you may only do so during these specific enrollment periods:
Initial Enrollment Period (IEP)
This seven month period begins three months before the month in which you turn 65, includes the month in which you turn 65, and ends three months after the month in which you turn 65.
Special Enrollment Period (SEP)
Is an eight-month window after your employment or group medical coverage ends, whichever comes first. You can enroll as early as two months prior.
General Enrollment Period (GEP)
Begins January 1 and ends March 31 of each year for a July 1 beginning date of coverage. Use this enrollment period if you miss your first two enrollment periods (IEP and SEP).
Suppose you miss both initial and special enrollment periods. Doing so results in a penalty if you do not have any other coverage in place.
Late Enrollment Penalty
If you do not enroll in Part B when you are eligible, you will likely be subject to a late enrollment penalty.
The late enrollment penalty is 10% of the Part B monthly premium for each 12-month period you went without Part B coverage. This penalty is added to your Part B monthly premium indefinitely.
What if I am on Disability?
If you receive disability benefits, you will be automatically enrolled in Part A and Part B 24 months after you are eligible.
Medicare Disability is for people who are under the age of 65 and approved for Social Security Benefits.
It is usually for people who have specific disabilities.
Read more about Medicare Disability here: (LINK)
How to Minimize Part B Out-of-Pocket Expenses
The best way to limit your Part B out-of-pocket expenses is with additional coverage that picks up where Medicare leaves off.
There are a couple of different ways to reduce out-of-pocket costs when on Medicare.
- Medicare supplements (often referred to as Medigap plans)
- Medicare Advantage Plans (often referred to as Part C)
- Indemnity Plans
- Employer coverage
- VA or Tricare
All of these can significantly reduce the healthcare costs that you are responsible for with Medicare.
A quick example of how to minimize out-of-pocket
Let’s go back to Robert, our example from earlier.
We mentioned that he has a bill for his physical therapy where Medicare paid 80% of his medical bills.
Thankfully, Robert has Supplement Plan G.
The additional coverage he took out when he first became eligible for Medicare helped pay the majority of his out-of-pocket.
His only bill was $198 (Part B deductible).
The supplement paid in addition to what Medicare paid.
We will talk more about the different Medicare Supplements and how they work in a different post.
As you can see, Part B (outpatient) works with Part A (inpatient) to cover a significant portion of your medical expenses.
There are a lot of ways to minimize out-of-pocket costs while getting the most benefit.
If you have any questions, use the search tool at the top of this page or on the home page.
Or if you would like further explanation of any of the topics we discussed, please fill out a contact form and submit your questions.
If you prefer to speak by phone, call us at 888-209-5049.