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Medicare Part B provides coverage for medical needs such as outpatient care and doctor visits. This health insurance policy and Medicare Part A combine to make up what is known as Original Medicare. Eligibility for the federal health insurance program requires you to be over the age of 65, to have a disability or to have a life-threatening disease.
In 2021, the standard monthly premium for Part B is $148.50, which is either deducted from your Social Security benefits or paid out of pocket. Part B coverage makes sense for most individuals due to its cheap monthly premiums, but you should evaluate your current health insurance coverage before enrolling in the federal plan.
What is Medicare Part B and what does it cover?
Medicare Part B is a portion of Original Medicare, which is the federal health insurance program for individuals who are 65 and older or who have a qualified disability.
Part B is known as the medical insurance portion of Medicare, meaning that it provides coverage for preventive and medically necessary services. This is in contrast to Medicare Part A, which solely provides coverage relating to hospital expenses.
Some examples of Medicare Part B expenses include:
- Ambulance services
- Lab tests
- Doctor visits
- Some medical equipment
Medicare Part B eligibility and enrollment
Medicare Part B is available for U.S. citizens and legal residents that fall under one of the following criteria:
- Over the age of 65
- Under the age of 65 with a disability
- Have end-stage renal disease
- Have Lou Gehrig's disease
If you contributed to Social Security during your working life, then you will be automatically enrolled in Medicare Part B three months before your 65th birthday.
If you do not receive benefits from Social Security, then you will need to manually enroll in Medicare Part B in order to receive coverage. Enrollment for you will begin three months before your 65th birthday and will end three months after. During this initial enrollment period, you will be able to sign up for any part of Original Medicare.
It is important to note that if you don't sign up for Medicare Part B during the initial enrollment period when you are first eligible, then you may have to pay a late enrollment fee of 10%. This will continue for every 12-month period that you are not enrolled in Medicare Part B.
For example, say you signed up for Medicare Part B exactly 12 months after your initial enrollment period. Then, you would be required to pay an additional $14.85 every month of Medicare Part B ($148.50 x 10% = $14.85) for a total of $163.35.
What does Medicare Part B cost in 2021?
Medicare Part B enrollees have to pay a monthly premium in order to be covered. For 2021, the standard Medicare premium amount for Medicare Part B is $148.50.
All individuals covered by Part B must pay this premium. However, if you get benefits from Social Security, the monthly amount will be deducted from your benefit payment account. If you do not receive benefits, then you will be given a monthly bill for Medicare Part B.
Along with the standard premium, Part B does have an income-related monthly adjustment. The monthly adjustment for Part B will vary based on your modified adjusted gross income (MAGI) reported on your federal income tax return every year.
For example, if you had a 2019 adjusted gross income of $100,000 reported on your tax return, then you would need to pay the standard monthly premium amount of $148.50 and the income adjustment of $59.40, which comes to a monthly total of $207.90.
For Medicare purposes, your premium for 2021 will be determined by your MAGI from the 2019 tax year. Premium amounts depending on your taxable income filed on your annual taxes are outlined in the table below:
Individual taxable income
Joint taxable income
Monthly Part B premium
|$88,000 or less||$176,000 or less||$148.50|
|Above $88,000 or up to $111,000||Above $176,000 or up to $222,000||$207.90|
|Above $111,000 or up to $138,000||Above $222,000 or up to $276,000||$297.00|
|Above $138,000 or up to $165,000||Above $276,000 or up to $330,000||$386.10|
|Above $165,000 and less than $500,000||Above $330,000 and less than $750,000||$475.20|
|$500,000 or above||$750,000 or above||$504.90|
Medicare Part B deductible
Medicare Part B comes with an annual deductible amount that must be met before coinsurance or copay benefits kick in. In 2021, the deductible amount is $203, meaning after you pay out of pocket for expenses that total $203, cost sharing will begin.
Typically, after you have reached the deductible for the year, you will be required to pay 20% of Medicare Part B approved expenses out of pocket.
For example, say you went to the doctor for a screening that cost you $150 and then also had a therapy visit that cost you $53. The total cost of these medical expenses would add up to $203, meaning you would have met your Medicare Part B deductible. Then, later in the year you had another screening that cost $150. Since this is a qualified Medicare expense, you would pay 20%, or $30 ($150 x .2 = $30), while Medicare would pay the remaining $120.
Is Medicare Part B right for me?
Medicare Part B coverage is right for you if you are currently not working and do not want to enroll in a Medicare Advantage plan.
In order to decide if you should enroll in Medicare Part B, you must first look at your health insurance situation before you turn 65 years old. This will help you determine if Medicare Part B makes sense for your health care situation. However, in most cases an individual will automatically or manually enroll in both Medicare Part A and B during their initial enrollment period. Then, they may select Medicare supplement policies, which would fill in the coverage gaps.
One situation in which you may decide to delay your enrollment is if you are still working. In this case, you can opt to continue on your employer group health insurance plan and not enroll in Medicare Part B.
In this case, you can avoid paying the late enrollment fee if that employer policy is a qualified health insurance plan as defined by the IRS. You should, however, confirm with your company's benefits manager that the health plan does qualify before you decide to push your Original Medicare enrollment.
Another Medicare plan to consider to replace Part A and B is Medicare Advantage. The plan, which is sold through private health insurance companies, provides health coverage that includes additional coverages such as dental and vision. Medicare Advantage policies can simplify your overall Medicare experience by allowing you to pay one monthly premium for all your coverages. Additionally, Advantage policies can provide added benefits such as vision, dental and prescription drug coverage. However, sometimes these policies will be more expensive when compared to Part A and Part B.