Medicare Part B is an indispensable part of your health care during your retirement years. Together with Part A, Part B provides comprehensive health insurance coverage at an affordable price. It’s not perfectly comprehensive, though, so you’re likely to also add a private Medicare Insurance option to your coverage. To get started with your planning, or to review your existing plan, read this update on Medicare Part B coverage, enrollment, eligibility in 2022 and beyond.
Part B is the medical insurance aspect of Original Medicare. This coverage will help you pay for the cost of the “mundane” aspects of health insurance. Part A, on the other hand, covers big ticket costs like hospitalization. With Part B, you’ll get help paying for a slew of services and procedures like:
Generally, Part B covered items are split into two categories: medically necessary and preventative. An example of medically necessary services would be going to the doctor because of illness or injury. Preventative services would be various screening tests or immunizations covered by Medicare. Next, we’ll look at some of these services and procedures in more detail.
Under the heading of office visits come all kinds of services and procedures, but mostly this would entail doctors (both general and specialist), physical therapy consultations and treatments, and mental health treatment and therapy.
Coverage for these kinds of visits can range from the common cold or a sprained ankle to cancer diagnosis and consultation.
Durable Medical Equipment (DME) covers medical equipment that your doctor prescribes for you to use in your home or out-and-about (outside of a medical setting). Common examples of durable medical equipment include:
Any of these items must be medically necessary, not just for comfort or ease of life.
Part B covers many cancer treatments like chemotherapy and radiation. If you receive your cancer treatment in a doctor’s office or a facility, chances are that Part B will cover it. So, IV-based chemotherapy or other chemotherapy drugs you receive in a medical setting are covered. However, many oral chemotherapy medications aren’t covered by Part B; in those cases the drugs are covered by Part D drug plans.
While Part B covers many useful services and procedures, there are some gaps in coverage. Part B generally won’t provide any coverage for:
While some of these may make sense (cosmetic surgery), the lack of routine vision, dental, and hearing coverage can be problematic. You will need to look to private insurance companies to get help paying for these expenses.
You’ll pay for your Part B coverage through a monthly premium. You won’t start paying the premium until you actually enter the program. For 2022, the base premium is $170.10 p er month. The premium changes each year, usually by increasing, although there are some protections in place to mitigate against large increases from year to year.
If you are a high earner, you could be subject to higher monthly premiums. Income Related Monthly Adjustment Amounts (IRMAA) apply to people with incomes over $91,000 for single filers, and over $182,000 for joint fi lers. The income used to determine this is known as MAGI - Modified Adjusted Gross Income. MAGI is generally equal to your Adjusted Gross Income plus tax free interest. Your premium is calculated based on your MAGI from two years prior, so 2022 premiums are calculated based on your tax filings from 2020 .
On the other hand, people with limited income and assets may pay less than the standard Part B premium. If you qualify for Medicaid in your state, your state may pay your entire Part B premium on your behalf.
Besides these costs for coverage, you can also expect to experience out of pocket costs when you use your Medicare benefits. In other words, when you go to the doctor, buy durable medical equipment, or need an outpatient surgery, you’ll have to pay a part of the cost.
Under Medicare Part B, these costs are:
For 2022, the Part B deductible is $233. You must pay this amount in cash before Medicare will start helping you pay for Part B services. Once you’ve paid the deductible, then Medicare will pay for most of your Part B costs, but you’ll still have to pay:
You’ll definitely pay the 20% co-insurance; Medicare pays the other 80%. In some cases, though, you’ll have to pay an additional 15% as an Excess Charge. Excess Charges are imposed by medical providers that participate in the Medicare system, but don’t accept Medicare’s list of prices as payment in full. Most providers do accept Medicare’s prices. But for those that don’t they’re allowed to add up to 15% onto your bill.
You’ll pay these co-insurance amounts for the rest of the year. In January of the new year, you’ll have to pay the Part B deductible again.
The most important fact to remember about how much you’ll pay for Part B services is that there’s no cap on your spending. You’ll keep paying the 20% co-insurance (and 15% excess charges, if applicable) the entire year, no matter how much you’ve spent. This lack of spending protection is one of the chief reasons people opt to add a private Medicare Insurance coverage to their Part A and B benefits.
Before we discuss the various private Medicare Insurance options, we have to lay out the eligibility and entry rules for Medicare Part B.
In order to be eligible for Part B, you must be a United States citizen, or a permanent legal resident; if qualifying under the legal resident rule, you must have lawfully resided in the U.S. for five or more years. If you can check one of these boxes, you know that you’ll be able to get Medicare benefits at some point in the future.
You will actually enter Part B, and start using your benefits, when you meet one of these entry criteria:
If you’re covered by an employer plan, and the employer has more than 20 employees, you can choose to delay taking your Part B benefits if you prefer. You would do this if your employer coverage was more affordable or more comprehensive. If you do choose to delay your Part B benefits, you’ll be able to enroll whenever your employer coverage comes to an end.
Most people enter Medicare when they turn 65, so we’ll look at the details of enrolling in Part B.
If you’ve elected to receive Social Security at or before age 65, your enrollment in Part B will be automatic. If not, you’ll need to manually enroll. You can do this during your Initial Election Period (IEP). Your IEP lasts for a total of seven months and begins three months before the month you turn 65.
You can enroll in Part B at any point during your seven month IEP, but it’s best to do so during the three months prior to your birth month. That way your coverage will begin on the first day of the month you turn 65.
If you decide not to enroll during this time (and you don’t have qualifying employer coverage), or you somehow miss it, your enrollment will be considered late whenever you do enroll. If your enrollment is late enough, you can be subject to late enrollment penalties.
Once your enrollment in Medicare Part A and B is confirmed, you’ll be able to enroll in the private Medicare Insurance plan of your choice.
In some ways, Part A and B of Medicare are radically different from other forms of health insurance. For instance, there are multiple deductibles, no drug coverage, and no out of pocket spending limit. Private Medicare Insurance plans are designed to pick up where Parts A and B left off, helping you implement more complete coverage.
The Medicare Advantage program is an alternative method of receiving your Part A and B benefits from a private insurance company. When you sign up for a Medicare Advantage plan, you’ll present your plan card to providers (not your Original Medicare card). For every service or procedure you receive, you’ll pay the co-payment or co-insurance specified by the plan. Your providers and facilities will then bill the plan directly for any other amounts owed. The Medicare program is not involved in any of these transactions.
When you enroll in a Part C plan, you’re getting the protection of an Out of Pocket Maximum (OOPM) spending limit. Every Medicare Advantage plan has an OOPM. You won’t spend more than this on your medical care in any given year. This feature is an important protection not available from Original Medicare.
Many Medicare Advantage plans also provide prescription drug coverage. Since Part B doesn’t provide this coverage, this is also an upgrade over Original Medicare. Besides these benefits, many Medicare Advantage plans offer other services that go beyond what Original Medicare provides. These Extra Benefits can include:
To enroll in a Medicare Advantage plan, you must meet the eligibility requirements for Original Medicare. You must remain actively enrolled in Part B. There are no age restrictions. When you first become eligible for Medicare, you’ll have a seven month enrollment window to choose a Medicare Advantage plan. This seven month window will match your Original Medicare IEP.
Medicare Supplement Insurance is the other major option for limiting your out of pocket costs for medical coverage under Medicare. This coverage is also known as Medigap because it’s described as filling in or covering the gaps in Parts A and B.
Medigap coverage is also available from private insurance companies. This coverage is designed to work with Original Medicare. Medigap plans come in 12 standardized coverages known as “Plans.” The 12 Medigap plans are: A, B, C, D, F, G, K, L, M, N, High Deductible F, and High Deductible G. Every one of these plans provides you with a slightly different protection against the gaps in Medicare. The number of options available allow you to pick the right level of coverage for you. When trying to find a low cost Medicare Supplement plan, make sure to consider the likely out of pocket costs you’ll still face. Don’t leave more gaps uncovered than you can afford to cover out of pocket.
When you use Medicare Supplement Insurance, you’ll present both your Original Medicare card and your Medigap card to your provider. Your provider will bill both Medicare and your Medigap plan. Depending on which plan you choose, you may still have to pay a share of the cost.
The eligibility rules for Medicare Supplement are similar to those for Part A and B. In fact, you must be actively enrolled in both Parts of Original Medicare in order to get Medigap coverage. Depending on the state in which you live, you might also have to be 65 years old or older to get Medigap. This means that if you enter Medicare early due to illness or disability, you may not be able to enroll in Medicare Supplement Insurance until you turn 65.
Part D of Original Medicare provides two ways to get drug coverage from a private insurance company: Medicare Advantage Prescription Drug Plans (MAPD), which we’ve already looked at, and standalone Prescription Drug Plans (PDP).
People who enroll in Medigap plans usually also enroll in standalone PDP because Medigap plans don’t provide drug coverage. Except for very rare Medicare Advantage plans, you can’t enroll in both a standalone PDP and a Medicare Advantage plan at the same time. If you choose a standalone PDP, you’re restricted to sticking with Part A and B alone, or using Medicare Supplement Insurance.
Standalone Prescription Drug Plans will help you pay for medications, but you’ll have to share in the costs. You can expect to pay:
Under Part D, there is no annual out of pocket maximum for drug costs. However, there are provisions to severely limit your spending on medications if you take very expensive ones.
In order to enroll in a standalone drug plan, you need to be either actively enrolled in Part B, or entitled to Part A. There are no age minimums or maximums for standalone drug plans. You will be able to enroll in a Part D plan during your Medicare Initial Election Period.
By reviewing Medicare Part B coverage, enrollment, eligibility in 2022, you should be able to choose the private Medicare Insurance plan that will best protect you from high out of pocket spending. As the Medicare premiums and deductibles change each year, don’t forget to review your coverage and make changes as necessary during the Medicare enrollment periods.
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