Medicare Part B: Medical Insurance
By Jenn King
key takeaways
Medicare Part B provides coverage for clinical research, ambulance services, durable medical equipment, mental health (inpatient/outpatient), and some outpatient prescription drugs.
There are three enrollment windows to sign up for Medicare part B, if you missed the enrollment windows you will pay a 10% penalty of the standard monthly premium for each 12-month period that you delayed enrollment.
The monthly premium for Part B in 2022 is $170.10.
If you are not already enrolled in social security benefits you will have to sign up for Medicare part B via the Social Security Administration.
Medicare Part B (medical insurance) is part of Traditional Medicare and generally provides outpatient coverage for medical services and doctors’ appointments for those over age 65. There are 2 types of services:
Medically Necessary Services – whatever might be needed to diagnose or treat your condition
Preventative Services
It also covers things like:
Clinical research
Ambulance services
Durable Medical equipment
Mental Health – Inpatient/Outpatient
Some outpatient prescription drugs
A more comprehensive list of what Medicare Part B covers can be found on the Medicare.gov website - https://www.medicare.gov/coverage/is-your-test-item-or-service-covered.
For those who have been covered by group insurance for all their working years, transitioning to Traditional Medicare’s Part B can be a little confusing as there are nuances about Part B enrollments, costs, etc. that should be understood BEFORE you turn 65. We hope to explain some of those nuances here.
ENROLLMENT
When can you sign up for Medicare Part B?
You can sign up for Part B during your Initial Enrollment Period which is a 7-month period starting 3 months before you turn 65, the month you turn 65, and ending 3 months after you turn 65.
Side note: If your birthday falls on the 1st of the month, your Initial Enrollment period is the 7 months surrounding the month prior to the month of your birth. So, if my birthday is November 1st, my enrollment period is July 1 – Jan 1st.
After the Initial Enrollment period, you can sign up during one of these other enrollment periods:
General Enrollment Period – Between January 1 – March 31st each year. Coverage starts July 1.
Special Enrollment Period – these are limited, 8-month periods of time after you or your spouse stops working or you lose group health plan coverage whichever is first.
Let’s look at examples of how this might work.
Example 1: Your spouse is employed, and you are over age 65. You opted NOT to sign up for Part B because you had coverage through your spouse’s group health insurance. Your spouse decides to retire.
You have 8 months from the time your spouse stops working to acquire Part B coverage without incurring a penalty.
Example 2: You retired prior to age 65 and decided to opt for COBRA coverage because you wanted to maintain your current doctors with your old health insurance plan. You turned 65, but because of family challenges, did not sign up for Part B as you knew you had coverage via COBRA. You stayed on COBRA for 18 months and now want to transition to Medicare. You are not in your Initial Enrollment Period (age based) OR the General Enrollment Period (January – March). Now you now will have to pay Part B penalties AND wait for the General Enrollment period in January to enroll in Medicare.
Bottom line, the end of COBRA coverage (or retiree health insurance coverage) DOES NOT QUALIFY YOU for a Special Enrollment window.
The same is true for the end of your Marketplace coverage. This also DOES NOT QUALIFY YOU for a Special Enrollment window.
What about Open Enrollment between October 15 to December 7th? Can I enroll then?
This Enrollment period for Medicare Part A or B can ONLY be used by people with Medicare to sign up for drug coverage or Medicare Advantage coverage or switch the coverage you already have. So, NO, it cannot be used for your initial enrollment.
I’ve heard of Part B penalties if you do not enroll when you are supposed to, how does that work?
If you’ve missed any of the above enrollment windows, you will pay a penalty that equals 10% of the standard monthly premium for EACH 12-month period that you delayed enrollment, AND you will pay that penalty FOR THE REST OF YOUR LIFE!
Here’s the GOOD NEWS, if you enroll in Medicare through the General Enrollment period and if LESS than 12 months have passed, you will not face the Part B penalty. You need a FULL 12-month period to incur a penalty.
Let’s look at an example. Bob is now 66 and had not enrolled in Medicare. His Initial Enrollment period ended in November, and he missed the enrollment window. He does decide to enroll during the General Enrollment period that following January. As a result, his new coverage becomes effective on July 1. Because only 8 months will have passed (November – July), the Part B penalty would not apply.
COST
Do you have to pay for Medicare Part B?
Yes. The monthly premium for Part B in 2022 is $170.10. Remember your Medicare coverage is Individual coverage, so this cost is per person.
The premium will also be adjusted upward if your household income is above a certain amount. This additional premium is called an Income Related Monthly Adjustment Amount (IRMAA) and will be discussed in a later blog post.
Are there Deductibles/Co-Insurance (Copays) for Part B Care?
Yes and Yes.
Annual Deductible in 2022 = $233
Co-Insurance = 20% coinsurance amount for covered services
Medicare Supplements will often cover the costs of both Deductibles and Co-Insurance depending on which supplement you decide to purchase. As you would expect, the more robust coverage for deductibles/co-pays, the more expensive the supplement. Further details on Supplement policies will be covered in a separate blog post.
SOME LOGISTICS…
How do you sign up for Medicare Part B?
If you turn 65 and are already collecting Social Security (either disability or retirement), you will be automatically enrolled.
A couple of side notes:
You can choose to keep or decline Part B (i.e., you are covered by a spouses group insurance)
For our friends from Puerto Rico and those that live outside the U.S. – there is NO automatic enrollment for Medicare Part B. You must sign up for it yourself.
If you are not yet collecting Social Security benefits, you will have to initiate the sign up for Medicare Part B. This can be done through Social Security via ssa.gov (easiest/quickest option), a call to Social Security or visit to your local Social Security office.
To help avoid any gaps in coverage, it is important to note that coverage STARTS based on when you sign up.
How do you pay for Medicare Part B?
If you are already receiving Social Security, your premium will automatically be deducted in your monthly Social Security benefit payment (or Railroad Retirement Board benefit payment).
What if you have delayed filing for Social Security, but have turned 65 and are filing for Medicare?
You will get a premium bill every 3 months for your Part B premiums and can pay online through various online tools, or pay directly from your bank account, or via check.
Helpful Resources
As you can see, there are a number of things to be aware of as you approach that magic age of 65 and sign up for Medicare. Here are some great resources to learn more:
Medicare.gov – This is the official government resource for all things Medicare
https://www.ssa.gov/benefits/medicare/ - If not automatically enrolled, this is where you would sign up for Medicare, but it also has tons of information about Medicare.
The Retirement Continuum Class - Medicare Segment – Our 2020 online course that discusses the various aspects of Medicare. The numbers are slightly outdated, but the overview and explanations are still applicable today.
All of these can give you even more detailed information as well as our other blog articles within the Medicare Series.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Paragon Wealth Strategies, LLC [“Paragon”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Paragon. Please remember that if you are a Paragon client, it remains your responsibility to advise Paragon, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Paragon is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Paragon’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.wealthguards.com. Please Note: Paragon does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Paragon’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Also Note: IF you are a Paragon client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.