Medical insurance picks up where Part A leaves off
Medicare Part B picks up – to a large extent – where Medicare Part A leaves off, covering many of the outpatient services and products not covered by the “hospital insurance.”Part B coverage pays for a broad range of medically necessary services not covered during inpatient treatment, including ambulance services, certain surgical procedures, mental health care, physical therapy, transplants, urgently needed care and more. In addition, Part B covers preventive medical services, including diagnostic tests (such as MRIs, CT scans, EKGs and x-rays) and a host of screenings (such as pap tests, HIV screening, glaucoma tests, hearing tests, diabetes screening and colorectal cancer screenings).Part B also pays the costs of durable medical equipment such as wheelchairs, hospital beds and oxygen equipment.
Is there a premium for Part B?
Yes, and it tends to increase from year to year. For 2018, most enrollees paid either $134/month, or roughly $130/month, depending on their situation. The Part B premium for 2019 is $135.50/month for almost all enrollees, although about 3.5 percent of Medicare beneficiaries will pay a lower amount, as their Social Security cost of living adjustments (COLA) won’t be large enough to cover the full increase.
Here’s how the Social Security COLA and Medicare premium increases interact:
The Part B premium remained steady (for most enrollees) at $104.90 from 2013 through 2016. It increased in 2017, although because the Social Security COLA was just 0.3 percent for 2017, Part B premium increases for 2017 were very small for most enrollees. Unless the enrollee’s income exceeds $85,000, net Social Security checks cannot decrease from one year to the next. So the maximum increase in Part B premiums (which are deducted from Social Security checks) is limited to the amount of the COLA.
In 2017, most enrollees paid an average of $109/month in Part B premiums. But the exact amount that beneficiaries pay in premiums varied depending on the dollar amount of their Social Security cost of living adjustment (COLA).
People who were new to Medicare for 2016 (but who were protected for 2017 by the provision that prevents net Social Security checks from declining) were paying $121.80/month in 2016, and their premium increase for 2017 averaged about 4 percent, since it was limited by the COLA that applied to their Social Security checks.
But standard premiums in 2017 were $134/month for people who were new to Medicare, and for people who pay their Part B premium directly, rather than having it withheld from their Social Security check (either because they paid into a different retirement system in lieu of Social Security, or because they have not yet elected to take Social Security). This impacts about 30 percent of Part B enrollees, although that includes low-income enrollees for whom state Medicaid programs pay the Part B premiums.
For 2018, the standard premium remained at $134/month for Part B coverage. The COLA was larger for 2018 than it had been the previous two years, but still not quite large enough to bring everyone’s premiums up to $134/month. So the people who were protected from rate hikes that exceed the amount of their Social Security COLA paid an average of $130/month in Part B premiums in 2018 (up from an average of $109/month in 2017, but still lower than the standard premium).
Medicare Part B enrollees with income above $85,000 ($170,000 for a married couple) pay higher premiums than the rest of the Medicare population. The 2018 high-income premiums for Part B coverage range from $187.50/month to $428.60/month, which is unchanged from 2017. For 2019, high-income beneficiaries will pay Part B premiums that range from $189.60/month to $460.50/month.
The income levels for the various brackets changed in 2018, which means that people with unchanged income might have found themselves in a higher Part B premium bracket in 2018, and the adjustment resulted in more enrollees paying the highest premiums. The bracket changes only affect Medicare beneficiaries with income above $107,000 ($214,000 for a married couple), but the premium increases were substantial for people who were bumped into a higher bracket as a result of the changes.
In 2018, the highest income bracket was $160,000 and up ($320,000 and up for a married couple). But for 2019, there’s a new bracket for the highest-income Medicare Part B (and D) enrollees. Those with income above $500,000 ($750,000 for a married couple) will pay $460.50/month for their Part B coverage, versus $433.40/month for people in what was previously the highest income bracket, but which will now be the second-highest bracket.
The Part B deductible
Enrollees who receive treatment during the year must also pay a Part B deductible, which is $183 in 2018 and $185 in 2019. Typically, Part B users also pay 20 percent of the Medicare-approved amount of medically necessary services, preventive medical services and durable medical equipment referenced above.
How do I enroll in Part B?
If you are already receiving Social Security or Railroad Retirement benefits, you will be notified three months prior to your 65th birthday that you are about to become a Part A Medicare consumer and that Part B is an option. You’ll receive the Part B card at the same time as the Part A card.
If you choose not to enroll in Part B, you must return the card or the premium will automatically be deducted from your Social Security checks. If you keep the card, Part B coverage kicks in the month you turn 65.
If you’re not already receiving Social Security or Railroad Retirement benefits, you’ll have an opportunity to enroll in Medicare B (along with Medicare A) during a seven-month window that includes the three months before the month you turn 65, the month you turn 65, and the following three months. If you enroll in the three months prior to the month you turn 65, your coverage will be effective the month you turn 65.
It’s important to note that if you fail to enroll in Part B during your seven month enrollment period, the program will offer you another opportunity to enroll each succeeding year (January 1 – March 31). The catch? If and when you do eventually enroll in Medicare B, for each year that you were eligible for Part B but turned it down, your monthly premium will be increased by 10 percent, and the higher rate will be in place for as long as you have Part B.
So if you wait three full years to enroll after your initial enrollment period, you’ll pay premiums that are 30 percent higher than the normal price, for as long as you have Part B coverage (generally, for life). The penalty does not apply, however, if you delay your Part B enrollment because you have other coverage in place from a current employer or your spouse’s current employer.
Delaying Part B
If you have health insurance through your employer, or through your spouse’s employer, you may want to delay enrollment in Part B. You’ll need to check with your employer or HR department to make sure that your employer-sponsored coverage will pick up where Medicare A leaves off, but assuming it does, you may want to delay enrolling in Medicare Part B, since it has a premium.
As long as you enroll in Part B either while you (or your spouse, if your coverage is through your spouse’s employer) are still employed, or within eight months of the end of employment, you’ll be able to enroll in Part B without any penalty. This is regardless of what time of year it is, and regardless of how long ago you turned 65.
If your employment ends, you may be eligible to continue your employer-sponsored coverage via COBRA. But coverage under COBRA does not have the same protections as far as access to Part B and the ability to enroll without a penalty. Once your employment ends, you’ve got eight months to sign up for Part B (regardless of what time of year it is, and without a penalty). You can have COBRA coverage during that eight months if you wish. But once it’s been more than eight months since your employment ended, you no longer have open access to Medicare Part B, even if you’re still covered under COBRA.
Once it’s been more than eight months since your employment ended, the details above about late enrollment in Part B apply. You’ll only be able to sign up for Part B between January 1 and March 31 (with coverage effective July 1), and late enrollment penalties can be applied to your premium. This is something to keep in mind if you elect COBRA once your employment ends; if your COBRA runs out in the middle of the year (and you haven’t yet enrolled in Part B) you won’t have access to Part B at that point – you’ll have to wait until the following January – March enrollment period, with coverage taking effect in July and a late enrollment penalty that will apply to your Part B premium for the rest of your life.