Medicare Part B Basics

For the remainder of the summer, we will be reposting educational material about Medicare with edits and updates as appropriate. If you didn’t watch these videos, please do, and/or share the information with someone who will benefit. Please tune back in after Labor Day for new material. Thanks, and have a wonderful summer.

Today’s video introduces Medicare Part B, what Part B covers, how it works, and how people on Part B pay for it.

Like Part A, Part B started in 1966 and Parts A and B are referred to as original Medicare because original Medicare was implemented before Part C which formalized Advantage Plans and Part D, outpatient prescription drug coverage, which took effect in 2006. Unlike Part A which you may not use for years if you are in good health, you are likely to use Part B services frequently. Part B covers most outpatient services, physician services whether they are inpatient or outpatient, durable medical equipment and drugs infused into the body.

Social Security processes Part B enrollments and Part B enrollment rules are strict and punitive. Those issues are addressed in another video about enrollment.

Although many are disappointed that Medicare does not cover routine dental or vision or items like hearing aids, Medicare coverage has improved over the years. In the 1960’s when Medicare began, health insurance was largely for illness and injury and that is how Medicare started too. Fortunately, over the years, Medicare, like private sector plans, has added coverage for many common wellness exams like mammograms or colonoscopies.

There can be occasional surprises with Medicare Part B. Some are unwelcome, like lab work not being covered because it was coded as “well care” while others are more welcome, such as the fact that some oral medications for cancer treatment that one would expect to be covered by Part D are covered by Medicare Part B. These drugs were grandfathered under Part B before Part D existed. Another significant departure from individual and group coverage is that Part B has no annual out-of-pocket maximum. As a result, we always recommend buying a Medicare supplement or enrolling in a Medicare Advantage Plan in order to obtain an out-of-pocket maximum for medical coverage.

Let’s touch on how Part B works. First, there is always a Part B annual deductible. In 2021, when our video was filmed, the Part B deductible was $203. In 2023, it is $226. Again, given that Part B has existed since 1966, one can see that the Part B deductible increases are incremental and modest. After the Part B deductible is reached, Medicare pays claims. With original Medicare there is coinsurance which is the patient’s responsibility. Coinsurance is usually 20% of the approved amount although it can be higher depending on how one’s physician relates to Medicare.

Physicians fall into one of three categories when one remains on original Medicare and the terminology used to describe these categories is not the usual “in-network” or “out-of-network” with which consumers are familiar. The largest category by far is physicians accepting Medicare assignment. Those physicians don’t ask for payment up front. They submit claims to Medicare and Medicare pays them directly. Doctors who don’t accept assignment may request payment from the patient at the time of service and can charge roughly 15% more than the Medicare allowed amount. They also submit claims to Medicare but the claim payment goes directly to the patient because those doctors didn’t “assign” payment to themselves. These two categories make up about 96% of practicing physicians.

Doctors who “opt out of Medicare” have no relationship with Medicare. They are supposed to execute what is referred to as a private Contract. This Contract spells out that they can’t submit claims to Medicare, that the patient shouldn’t submit claims to Medicare, that the patient understands the physician is setting fees without respect to Medicare fee schedules and the fees are the patient’s personal responsibility.

Almost everyone pays a monthly Medicare Part B premium. Only low-income Americans do not. In 2007, Medicare Part B premiums became income-indexed so higher income Americans pay more. In 2021, when our video was filmed, the monthly standard Medicare Part B premium was $148.50 with five more brackets topping out at a monthly high of $504.90. In 2023, the standard Medicare Part B premium is $164.90 with five more brackets topping out at a monthly high of $560.50. We filmed a separate video on how income-indexing or income related monthly adjustment amount (IRMMA) works but have included the 2023 IRMMA chart below for your information. If you are receiving Social Security, your Part B premium is automatically deducted from that payment. If you are not receiving Social Security and are on Part B, you will receive a bill from Medicare for the Part B premium you owe.

Please watch our video on Medicare Part B and encourage others to do so. Thanks.