How Medicare Part B Works (Covering Outpatient Services)

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Medical Part B is a part of original Medicare (Part A + Part B) and typically covers outpatient medical and preventative services. 

What Services Will Medicare Part B Cover?

Here are some of the services that Part B will cover. 

• Outpatient medical services (visits to your primary care doctor)
• Preventive services 
• Durable medical equipment (DME)
• Mental health services like inpatient, outpatient, hospitalization
• Some prescription drugs
• Medicare will cover 80% of your treatment and you will have to pay the other 20%. You can potentially avoid paying the 20% by signing up for a Medicare Supplement Plan. 

This is not the complete list, however, to see if a treatment is covered by Medicare Part B use the Your Medicare Coverage search to find your service. 

Who qualifies for Medicare Part B?

If you fit into any of these categories you will likely qualify for Medicare Part B. 

• You are 65 years or older
• Have been disabled for 24 months in a row and are now receiving disability benefits
• Diagnosis of end-stage renal disease or ESRD
• Diagnosis of Lou Gerig’s Disease or ALS
• You are at least 65, a US citizen, and you have lived in the US for 5 straight years
• Individuals who qualify for premium-free Part A qualify for Part B

Do I Have to Pay A Monthly Premium for Medicare Part B

Whether you pay a monthly premium for Medicare Part B will depend on your income. If you are considered low-income then you could qualify for a Medicare Savings Plan, which may make your monthly premium $0. 

For anyone who is not considered low-income, you will pay a monthly Medicare Part B premium. The part B premium you pay each month will also be based on your income. The lower your income, the lower the Part B premium. 

Editor’s Note: Part B is a voluntary program that requires monthly premiums for coverage. 

Below is a list of 2020 monthly premiums according to income: 

• $144.60 per month – Individuals making $87,000 or less, filing joining making $174,000 or less, married filing separately making $85,000 or less
• $202.40 per month – Individuals making more than $87,000 but less than $109,000, filing joint making between $174,000 to $218,000
• $376.00 per month – Individuals making between $136,00 to $163,000, filing jointly from $272,000 to $326,000
• $462.70 per month – Individuals making between $163,000 to $500,000, filing jointly $326,000 to $750,000, married filing separate making $87,000 to $413,000
• $491.60 per month – Individuals making more than $500,000, filing jointly making more than $750,000, married filing separate making more than $413,000

Medicare Part B Deductible

Like Medicare Part A, Part B also has a deductible. You must pay this deductible before Medicare will cover any of the services covered under Part B. 

The Medicare Part B deductible was $198 in 2020.  This means in order for Medicare to cover your treatment, you will have to first pay the $198 deductible. 

When Do you enroll in Medicare Part B? 

Medicare Part B has 3 different enrollment periods, but the most important is the Initial Enrollment Period which we’ll talk about next. 

Initial Enrollment Period

Your first chance to enroll in Part B is during the Initial Enrollment Period (IEP). You are encouraged to enroll during this time because if you miss it you could potentially pay a lifetime penalty.

This enrollment window is available to you for a period of 7 months. This includes the 3 months prior to your 65th birthday. It includes the month of your birthday.  It also includes 3 months after your birthday month.

When your Medicare Part B benefits take effect will depend on your birthday. If your birthday is on the 1st of the month, say March 1st, then your benefits will begin one month before you turn 65 on February 1st. If you are born on any day ranging from March 2nd to 31st, your benefits will begin that same month on March 1st.

General Enrollment Period

The General Enrollment Period is the next way to enroll in Medicare Part B.

This enrollment window runs from January 1st to March 31st each year. If you sign up during the General Enrollment your benefits will begin on July 1st of that same year.

Your Medicare card will arrive 3 months prior to your coverage beginning.

Special Enrollment Period

The best way to describe a Special Enrollment Period (SEP) is if your income, employment status, insurance coverage or family size somehow changes you can potentially qualify to enroll during this time.

Here are situations that could qualify you for the Special Enrollment Period:

• You or your spouse lose their employment
• A loss of your current insurance coverage
• The insurance you have changed their plan with Medicare
• You move outside of your current insurance plan’s network
• Getting released from jail or a skilled nursing facility back into the community

You will find lots more reasons to qualify for the Special Enrollment Period on Medicare’s Special circumstances page.

Late Enrollment Penalty for Medicare Part B

Individuals who miss their first chance to enroll into Medicare Part B (Initial Enrollment Period or a Special Enrollment Period) could receive a late enrollment penalty. This is a penalty that will last as for the rest of your life or as long as you have Medicare. 

The late enrollment penalty is 10% of your monthly premium for each 12-month span that you could have been covered by Part B. Here is an example…

If someone was eligible for Medicare Part B in 2016 but waited until 2020 to enroll they would face a 40% enrollment penalty because they waited 4 years to enroll. 

Based on the 2020 monthly premium of $144 per month, this individual who waited 4 years to enroll and incurred a 40% penalty would pay $198 per month. For this reason, it is extremely important to enroll in Part B on time. 

Exceptions To The Late Enrollment Penalty 

There are some expectations to the late enrollment penalty that can save you from an extra charge on your monthly Medicare Part B premium. 

If you had sufficient health insurance when you first became eligible for Medicare Part B, you may not have to pay the late enrollment penalty. Here is another example…

If you were still working on your 65th birthday and still had your employer’s health insurance then you may be protected from the late enrollment penalty. The key is having a sufficient health insurance plan during your initial enrollment period. 

If you were to retire 2 years later at 67, then you can enroll into Medicare Part B during your Special Enrollment Period and potentially avoid the late enrollment penalty. 

How To Enroll In Medicare Part B

There are 3 ways to enroll in Medicare Part B. Regardless of the option you chose, you will go through the Social Security Administration because they manage this program. 

1. Visit the Social Security Administration website to complete an online application. This process takes less than 10 minutes. 
2. Visit a local Social Security office. 
3. Contact the Social Security Administration at 800.772.1213 any day Monday through Friday from 7 am to 7 pm

Conclusion 

While Medicare Part A covers inpatient hospital treatment, your Part B coverage will pay for outpatient services with your doctor, specialist, and other services providers.  

It’s important to sign up for Part B once you first become eligible, otherwise, you could become stuck with a late enrollment penalty that can last for life. 

Most people become eligible for Medicare Part B on their 65th birthday, however, there are other ways to qualify. 

If you have any questions regarding Medicare Part B, leave a comment below and I will help you out.

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