The spending patterns of older Americans show that healthcare expenses increase with age. Therefore, you may be worried about rising medical costs as you approach retirement.
The good news is that you are eligible for Original Medicare’s hospital (Part A) and medical (Part B) coverage upon turning 65.
This article takes a deep dive into Medicare Part B. We’ll answer questions like What is Medicare Part B? Are you qualified for medical care before reaching 65? How do you enroll, and what are its benefits?
What is Medicare Part B?
Original Medicare is made up of Parts A and B. Medicare Part A covers hospitalization, while Medicare Part B covers medical insurance.
Medicare Part B is a Government-run health insurance program available for adults over 65 and younger people with disabilities and certain serious diseases.
Next, we will review Medicare Part B’s eligibility rules.
Who qualifies for free Medicare B?
There are two groups of people that meet Medicare Part B eligibility:
- If you are a US citizen (or a permanent resident of the US for five continuous years) aged 65 and above
- If you are younger than 65 with and meet any of the following criteria:
- You have a disability and receive Social Security (SSA) or Railroad Retirement Board (RRB) disability payments. Some qualifying disabilities are sensory disorders, cardiovascular and blood disorders, and digestive system disorders.
- You have End-Stage Renal Disease (ESRD).
- You have Amyotrophic Lateral Sclerosis (ALS).
Medicare Part B is not free for most people. Your monthly premium will be deducted from your SSA or RRB benefit checks.
But if you are not receiving any of these payments, you will be billed by Medicare every three months.
If you have low-income, you may qualify for the Medicare Savings Program (MSP) that helps pay Part B costs.
We will be discussing the costs of Medicare Part B in the following sections below.
What does Medicare Part B cover?
Medicare Part B covers diagnosis, treatment, and disease prevention while in an outpatient setting.
What does Medicare B cover? Here are some examples of outpatient services that Medicare Part B covers:
- Ambulance services
- Visits to the doctor
- Health screening
- Diagnostic tests
- Some vaccinations
- Durable medical equipment (DME)
- Some prescription drugs
- Clinical research
In short, Medicare Part B is responsible for medically necessary services that are typically received by a patient outside of a hospital.
What does Medicare Part B NOT cover?
- Inpatient hospital visits
- Skilled nursing facility and nursing home care
- Hospice care
- Home health care
- Vision
- Hearing
- Dental
- Prescription drugs
- Fitness and wellness
If you need these additional benefits, you should consider also enrolling in a Medicare Advantage plan.
However, if you decide to stay with Original Medicare, you may still need to enroll in a standalone Part D plan to cover your prescription drugs.
What is the Medicare Part B enrollment process?
You may qualify for automatic enrollment:
- If you are receiving benefits from SSA or RRB when you reach 65.
- If you have a disability and have received SSA disability benefits for 24 months.
- If you have ALS, you are automatically enrolled when your disability benefits start. But if you have ESRD, enrollment starts three months after the dialysis treatment starts.
Otherwise, you need to enroll proactively. The best time to join is during your Initial Enrollment Period (IEP) – a seven-month period that starts three months before turning 65. Late-enrollment penalties will be added to your premium if you defer enrollment.
If you don’t sign up to Medicare Part B when you are first eligible, you will be penalized an additional 10% for every 12 months of missed enrollment.
However, there are some exceptions to this rule – for example, you will not be penalized if you have valid reasons for deferring enrollment.
One valid reason is having ‘creditable insurance coverage’ – meaning, you have the same level of coverage as Medicare, usually from job-sponsored insurance.
What is Medicare Part B’s total cost?
The Medicare Part B standard monthly premium is $170.10 (in 2022). However, your premium may be higher based on your income. The computation is based on the Income Related Monthly Adjustment Amount (IRMAA).
Some examples of Medicare Part B out-of-pocket costs include the following, for covered services under Part B:
- Initial deductible
- Copayments
- Co-insurance
- Excess charges
Fortunately, there are ways to manage your costs:
- A Medigap plan helps pay your Part B premiums and out-of-pocket costs under Original Medicare.
- Some Medicare Advantage plans pay for part or all of Part B premiums.
Final words
Medicare Part B is the Federal Government’s program to provide medical (i.e., non-hospital) healthcare insurance coverage to America’s eligible Medicare beneficiaries.
You should check with your Medicare advisor to confirm when you should be enrolling in Medicare Part B, to avoid late enrollment penalties. The CoverRight team are highly experienced in advising on Part B, and are ready to guide you on when you should enroll, and how to maximize your Part B benefits.
