Understanding Medicare Part B: Eligibility, Costs, & More

• Medicare Part B (medical insurance) consists of coverage for outpatient services including medically necessary services such as doctor’s visits and preventive services such as some vaccinations, lab tests, and more.

• Other medical services may include DME coverage, clinical research, etc. 

• Part B requires a monthly premium payment.

Employer insurance is often simple to understand—if you qualify, you get one policy that covers all medical services. When someone enrolls in Medicare, they instead receive multiple plan parts. Each helps pay for different services and has separate deductibles, copays, and coinsurances. Part B specifically covers outpatient services. Continue reading to learn what Medicare considers preventative or medically necessary outpatient services and how to make the most of your Part B coverage.

In order to understand Part B, it is vital to first understand its place within the Federal Medicare Program.

Introduced by the United States government in 1965, Medicare is made up of government-run health insurance plans for Americans age 65 and up, as well as younger Americans with disabilities and those with end-stage renal disease (ESRD). Today, it’s run by the Centers for Medicare and Medicaid Services, an official government organization, and tax payments to the Social Security Administration help fund Medicare. While there are many Medicare options for health insurance, there are two primary ways to get Medicare coverage, either through an Original Medicare plan or a Medicare Advantage plan. 

While there are many Medicare options for health insurance, there are two primary ways to get Medicare coverage, either through an Original Medicare plan or a Medicare Advantage plan. 

What Is Original Medicare?

Original Medicare is the first iteration of Medicare, created by the federal government in 1965. Original Medicare benefits are divided into two Medicare Parts: Medicare Part A and Part B. Each of these portions covers specific types of health services. Medicare Part A is for inpatient expenses though it often has an inpatient hospital deductible. Part B covers preventative and medically necessary services in outpatient settings (i.e. someone doesn’t stay overnight).Original Medicare beneficiaries also have the option to add on a supplemental insurance policy known as Medigap or MedSupp. 

Neither Part A nor B includes coverage for prescription drugs. Medicare prescription drug coverage would fall under an additional Medicare Part D plan. 

Original Medicare beneficiaries also have the option to add on a supplemental insurance policy known as Medigap or MedSupp. 
 

Medicare Part B (medical insurance) covers outpatient care such as: 

• Medically-necessary doctor visits

• Preventive services

• Durable medical equipment (DME)

2025 costs for Part B coverage are provided below:

• Standard Monthly Premium: $185
• Part B Annual Deductible: $257
• Copayment and coinsurance: 20% of the Medicare-approved amount for the assignment after meeting the Part B annual deductible

Understanding Part B Premiums

Usually, beneficiaries pay the standard Part B premium amount.

However, if a beneficiary’s modified adjusted gross income reported on their tax return from two years ago is above a certain amount, they will need to pay both the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA), an extra charge added to the standard premium payment.

There are three different times someone can enroll in Medicare Part B:

• Initial Enrollment Period (IEP): A seven-month period that begins three months prior to someone’s 65^th birthday and ends three months after their 65^th birthday. If someone misses their IEP, they must wait for the GEP but may have to pay a late enrollment penalty.

• Special Enrollment Period (SEP): The SEP consists of an eight-month period following a specific circumstance that allows for later enrollment (without paying a late enrollment penalty).

• General Enrollment Period (GEP): January 1 through March 31^st every year. For those who enroll in Medicare during this time, their Medicare coverage begins July 1^st. There may be a monthly late enrollment penalty, however.

Note: Learn more about when Medicare enrollment begins at this resource.

Some Americans are automatically enrolled in Medicare Part A and B. This happens when someone applies for retirement or disability benefits from Social Security or RRB. This doubles as their application for Medicare.

Once someone is approved for Social Security benefits or Railroad Retirement Board benefits, they will automatically get Medicare Part A coverage (premium-free) and Medicare Part B as soon as they are eligible for Medicare, usually three months before age 65.

Eligible Americans will receive a ​“Welcome to Medicare” package in the mail three months before their 65^th birthday. This package includes their Medicare card and a ​“Welcome to Medicare” pamphlet. This should be reviewed in its entirety because it can help enrolled make informed decisions about their coverage, particularly regarding Part B, Medigap, and prescription drugs.

Note: Learn more about this process on page 13 of this resource.

Medicare Part A is Medicare’s hospital insurance. Medicare Part A covers hospital inpatient services such as:

• Inpatient hospital care
• Skilled nursing facility care
• Nursing home care (non-custodial or long-term care)
• Hospice care
• Home health care
• Costs associated with Hospital beds

Unlike Part B, Medicare Part A is often premium-free. Part A does not require a monthly premium payment if someone or their spouse paid at least 10 years of Medicare taxes. However, it does have a higher deductible ($1,676). This isn’t an annual one either, but applies to one benefit period. A Part A benefit period begins at hospital admission and ends when someone has been out of the hospital or a skilled care facility for 60 days. The deductible is considered one of Medicare’s out of pocket costs, though Medicare covers related to a diagnosed medical condition after.

Note: Learn more about Medicare Part A coverage at this resource.

Part D is Medicare prescription drug coverage. Medicare beneficiaries must either enroll in a separate Medicare drug plan to add on to their Original Medicare coverage or find a Medicare Advantage plan that includes Part D coverage. Do note that not all MA plans provide coverage for prescription medications.

Note: Learn more about enrolling in Medicare Part D at this resource.

Medicare Advantage plans, also known as Medicare Part C or MA plans, are a type of Medicare supplement insurance plan. Medicare Advantage plans bundle Medicare Part A and Part B into one health insurance plan. MA plans are offered through private insurance companies that are Medicare-approved.

Most Medicare Advantage plans also have additional benefits, including dental, hearing, and vision coverage. MA plans also often include Medicare Part D within its policies.

Beneficiaries should always check with the plan’s insurance company to confirm extra health care benefits. They should also understand the costs and expected out-of-pocket expenses will vary depending on the MA plan chosen.

Note: Learn more about Medicare Advantage at this resource.

• Research online: Visit The U.S. Centers for Medicare and Medicaid Services (CMS) official website for extensive information regarding Medicare benefits and coverage. The official federal government website for Medicare is also incredibly useful.

• Talk to family and friends: They understand your situation and healthcare needs, meaning they can help you navigate enrollment.

• Call State Health Insurance Assistance Program (SHIP): SHIP can provide free guidance in choosing a policy. Do note, not all states participate in SHIP. Learn more at this resource.

• Discuss options with a licensed insurance agent: Licensed insurance agents can help enrollees navigate their Medigap choices and help them make the best decision.

• Contact Medicare: Get the contact information for Medicare at this resource.

• Confirm Medicare coverage with health care providers: Talk to a primary care doctor or other health care provider about Medicare coverage.