Medicare Part B Explained

Run by the federal government, Medicare is the largest health insurance program in the United States. It covers about 65 million individuals — a number that will continue to grow as people age into the program.

Medicare consists of Part A, Part B and Part D, and often works in conjunction with Medicare Advantage (Part C), Medigap, Medicaid and employer health plans.

Though Medicare itself is familiar, the details can be confusing and even overwhelming. To better understand this massive program, it helps to break it down into smaller components. Let’s take a look at premiums, enrollment and coverage under Medicare Part B.

Premiums and costs for Medicare Part B

Whereas most people receive Medicare Part A for free, a monthly premium applies to every individual with Medicare Part B. The Centers for Medicare & Medicaid Services sets a standard premium rate, which is adjusted annually. For 2023, the standard premium is $164.90 a month.

For anyone making more than $97,000 a year, premiums are based on gross income level and tax return status (individual or joint). The higher your income, the higher your monthly premium. These amounts are also adjusted each year.

The following table shows 2023 monthly premiums based on income for individual and joint tax returns.

Income for individual tax filers	Income for joint tax filers	Monthly Part B premium
$97,001 to $123,000	$194,001 to $246,000	$230.80
$123,001 to $153,000	$246,001 to $306,000	$329.70
$153,001 to $183,000	$306,001 to $366,000	$428.60
$183,001 to $499,000	$366,001 to $749,999	$527.50
$500,000 or more	$750,000 or more	$560.50

Medicare Part B also requires an annual deductible. Like employer health plans, Medicare requires you to pay the deductible before it starts to pay for your health coverage.

As with monthly premiums, deductibles are adjusted annually. For 2023, the deductible is $226.

To reduce your expenses under Medicare Part B, it’s essential to verify that your health care providers and suppliers accept assignment under Medicare. Accepting assignment means they have agreed to Medicare-approved pricing and will be paid directly by Medicare for their services. As part of assignment, they also agree not to charge you any additional costs beyond the Medicare deductible and coinsurance.

Always ask your health care provider about the medical necessity of items, services and supplies, and whether they will be covered by Medicare. If they are not covered, you may be responsible for the full cost.

Enrollment in Medicare Part B

If you are receiving Social Security or Railroad Retirement Board benefits, you will automatically be enrolled in Medicare Parts A and B on the first day of the month you turn 65. You will also be automatically enrolled if you are under age 65 and disabled for at least 24 months. In these cases, you will be mailed your Medicare card three months prior to your 65th birthday or in the 25th month of disability benefits.

If you are approaching 65, still working and not receiving Social Security benefits, you will need to apply for Medicare Parts A and B. You can also contact Social Security at 800-772-1213 and set up an in-person appointment. You can enroll as early as three months before your 65th birthday.

You will have the option of signing up for Medicare Part A and delaying Medicare Part B, but it’s important to understand the potential ramifications of delaying Part B.

Most individuals enroll in Part B when they reach age 65. You should postpone enrollment in Part B only if you are still working and have health insurance through your employer or your spouse’s employer. Otherwise, a late enrollment penalty can apply to your Part B monthly premium for the rest of your life. (See “Special enrollment period” below for more information.)

Wrongly delaying Medicare Part B triggers a 10% penalty on your monthly premium for each full year you could have signed up for Part B but did not. For example, you would pay a 10% penalty for signing up 12 to 23 months late, a 20% penalty for signing up 24 to 35 months late, a 30% penalty for 36 to 47 months late, and so on.

The potential for a penalty makes it critical to enroll during your initial or special enrollment period. If you miss those periods, you will need to apply during a general enrollment period and the late penalty may apply.

Initial enrollment period

You have a seven-month initial enrollment period for Medicare Parts A and B. It begins three months before you turn 65, includes your birth month and continues for three months after that. You should apply for Medicare three months before your birthday to ensure a smooth transition.

Special enrollment period

You can delay your initial enrollment in Part B and sign up during the special enrollment period if you or your spouse have “current employment” coverage. This means you (or your spouse) are working and have eligible coverage through your (or your spouse’s) employer. Under those conditions, you can enroll for Medicare Part B during a special enrollment period that occurs:

At any point during which you or your spouse are working and covered by an eligible employer group health plan
During the eight months following the month you or your spouse retire or your group health coverage ends, whichever is first

You may also be eligible for a special enrollment period due to extenuating circumstances. These include emergency situations, natural disasters, inaccurate or misleading information from your employer or health plan, incarceration and loss of Medicaid.

To avoid a gap in coverage, enroll in Part B at least one month before your coverage ends or you stop working.

Important note: Health coverage received under a severance package, retiree health coverage or Consolidated Omnibus Budget Reconciliation Act (COBRA) health coverage is not considered current employment coverage. In those cases, you should sign up during your initial enrollment period or the eight-month eligibility period following the end of your active employment.

General enrollment

If you missed or delayed your initial enrollment period and don’t qualify for a special enrollment period, you can sign up during general enrollment. This takes place Jan. 1 through March 31 each year. Your coverage would begin the month after you sign up. For example, if you sign up on Feb. 9, your coverage will start on March 1. If applicable, a late penalty will apply to your Part B monthly premium.

Coverage under Medicare Part B

Preventive coverage

Medicare Part B covers many preventive services free of charge. These include annual wellness visits. In addition, Part B provides a variety of counseling options, screenings, shots and tests related to:

Alcohol use
Bone density
Cardiovascular disease
Cervical and vaginal cancer
Colorectal cancer
COVID-19, flu, hepatitis B and pneumonia
Depression
Diabetes
Glaucoma
Hepatitis B and C
HIV
Lung cancer
Mammograms
Nutrition
Obesity
Prostate cancer
Sexually transmitted infections
Tobacco use

As long as your health care provider accepts assignment under Medicare, you typically receive these services without additional costs under your Part B coverage.

Additional coverage

Medicare Part B also covers other services, tests and equipment deemed medically necessary. They just have to be provided by doctors and health care suppliers enrolled with Medicare.

However, you will likely have to pay your annual deductible before Medicare pays for this coverage. In most cases, you also will cover 20% of the cost.

This type of Part B coverage pays for:

Ambulance services — These include ground transportation to hospitals, critical access hospitals and skilled nursing facilities when medically necessary and when other forms of transportation would pose a health risk.
Durable medical equipment — Examples include blood sugar meters, canes and crutches, hospital beds, oxygen equipment and wheelchairs. Medicare Part B will help pay for the cost of renting or buying these items based on medical necessity. In addition, doctors and suppliers ordering and providing these items must be enrolled with Medicare and agree to Medicare-approved pricing and payments. It’s important to check with doctors and suppliers on their Medicare status. If they do not accept Medicare assignment, they can charge you more for these items.
Outpatient mental health care — Part B coverage helps pay for diagnostic testing, family counseling, psychiatric evaluations, medication management, individual and group psychotherapy, and partial hospitalization. In addition, you are eligible for an annual depression screening at no cost. Outpatient coverage differs from inpatient mental health care. Inpatient services are covered under Medicare Part A.
Outpatient prescription drugs — The list of eligible drugs is limited, so it’s important to verify Medicare coverage. In general, Part B helps pay for drugs that would be administered by a doctor or as part of outpatient treatment. Examples include drugs used with infusion pumps and nebulizers, injectable and infused drugs, oral cancer drugs and oral anti-nausea drugs.

Clinical research also falls under Medicare Part B. This may include new treatments, drugs, diagnostic tests and types of care. An example would be taking part in a study testing the efficacy of a new drug treating cancer. You may need to pay your deductible and 20% coinsurance to participate in clinical research, but not always. It depends on the treatment you receive. Check with medical staff before participating to verify your potential costs.

Medicare.gov allows you to search items, tests and services to see whether they are covered under Medicare. If an item, test or service isn’t listed, ask your health care provider to verify Medicare coverage and medical necessity.

Understanding your Medicare Part B coverage and options

If you’re enrolling in Medicare, you have a lot of information to digest. But it is also an essential factor in your retirement, health care and financial planning.

For more information, reach out to your employer or benefits adviser. They can explain Medicare Part B enrollment and all of your coverage options.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.

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