Generally, Medicare is for individuals who are 65 years or older. However, some individuals with a disability, End-Stage Renal Disease, or Lou Gerig’s disease (ALS), may also be eligible. Medicare consists of four parts: Part A, Part B, Part C, and Part D. This article will discuss Part B – what it is; what it covers; how it works; how much it costs; and when to sign up.
If you’re interested in learning about the other Parts of Medicare, check out our video The A, B, C, & D’s of Medicare HERE.
What is Part B and what does it cover?
Part B is the Medical Insurance part of Medicare. Medical Insurance covers services like doctors’ services, inpatient and outpatient medical and surgical services and supplies, physical and speech therapy, diagnostic tests, durable medical equipment, and lab work.
How does it work?
There is an annual deductible that must be paid prior to Medicare paying their share of Part B covered services. In 2024, the annual deductible is $240. Each year, the Centers for Medicare and Medicaid Services (CMS), updates the deductible amount.
After the annual deductible is satisfied, Part B will cover 80% of the costs for medical services. Leaving individuals responsible for the remaining 20% of the costs – of any amount!
EXAMPLE:
Harry enrolled in Medicare on July 1st. The same month he turned 65. On July 15th, Harry sees his doctor and receives Part B covered services. The bill comes out to $300 for the entire visit.
Harry has not yet satisfied his annual Part B deductible and would be responsible for the first $240 of the $300 bill. But who is responsible for the remaining $60?
Well, Medicare pays $548 (80%) and Harry is left to pay the remaining $12 (20%).
In October, Harry goes back to the doctor. The bill comes out to $300 again. Harry has paid the annual deductible and is only responsible for 20% ($60) of the bill. Medicare will pick up the remaining 80% ($240).
Keep in mind, Harry is responsible for 20% of any bill amount. Come January 1st of the following year the annual deductible resets.
HEALTHFOCUS PARTNERS helps find a plan that fits your budget to supplement your Medicare coverage or replace it with a more affordable plan. This is where the difference between Medicare Supplement and Medicare Advantage comes in, which we talk about in other articles.
How much does Part B cost?
Part B is not free. The monthly premium is $174.70 for most individuals. However, it can vary based on income/tax filing status.
Each year, CMS issues the monthly Part B premium for the next year. Premiums can vary by income under your tax filing status (Single, Married Filing Jointly, or Married Filing Separately). This means higher income earners could pay more for their Part B insurance. This is called Income Related Monthly Adjustment Amount (IRMAA).
IRMAA is determined by the Social Security Administration (SSA) based on the income reported 2 years prior. For example, individuals paying IRMAA in 2024 is because of their income from 2022. IRMAA is calculated and changes each year.
If you owe $174.70 or IRMAA, you will pay SSA for your Part B premiums. Individuals who are collecting Social Security Retirement or Social Security Disability Insurance will automatically have premiums deducted from their checks. If you are not collecting from Social Security, you will be required to pay your Part B premiums quarterly.
There are also Medicare-Savings Programs administered by your States Department of Human Services (DHS) which may help cover costs of Medicare, potentially including the Medicare Part B premium. Contact HEALTHFOCUS PARTNERS to see if you may qualify for a Medicare-Savings Program or another Medicare-related product that may help lower your Part B premium costs.
When can/should I sign up for Medicare Part B?
You can sign up for Medicare Part B 3-months prior to your 65th birthday month, the month of, and 3 months after (7 months total). This is called your Initial Enrollment Period (IEP). You can also sign up for Medicare Part B after you are 65 because you left Employer Group Coverage or qualify for another Special Enrollment Period (SEP) giving you the right to enroll into Medicare Part B.
Additionally, Individuals can sign up during Medicare’s General Election Period (GEP) between January 1 to March 31 every year. Coverage will begin the 1st of the following month. The latest being April 1.
If you do not sign up for Medicare Part B when eligible to receive benefits and have no other form of creditable coverage, you may be assessed a Part B Late Enrollment Penalty (LEP). This penalty is an extra 10% for each full year you could have signed up for Part B but didn’t. It is a lifelong penalty. Meaning you will be required to pay the Part B premium + an extra 10% for each fullyear you did not have Medicare Part B.
If you did not sign up for Medicare Part B when first eligible to and you had another form of creditable coverage, you may avoid being assessed the LEP. This is a common question we receive, and we’d be happy to walk you through understanding ways to avoid the penalty.
Should someone get Part B if they are eligible?
This answer is different for every person. Whether you’re turning 65, are 65, or over 65, we encourage you to speak to a Licensed Insurance Agency who understands the complexity and rules of Medicare, like HEALTHFOCUS PARTNERS. We can help you determine if Medicare Part B is right for you, especially if you have other options, like employer coverage. If you do have an opportunity to elect other coverage besides Medicare Part B, we can do a full cost-versus-benefit analysis to determine which may be a better financial decision or expand coverage while lessening costs.
We can also help determine IRMAA and ways to avoid Medicare’s Late Enrollment Penalty. CONTACT US to get in touch with one of our local and reliable insurance agents.